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President Obama has proposed the permanent extension of the investment tax credit (ITC) for solar energy projects in his 2016 budget.

The move was pre-empted earlier in the day by a Reuters report quoting an unnamed official ahead of the new US budget announcement for 2016. The extension of the ITC and wind power’s production tax credit (PTC) would be continued.

The announcement also includes an increased budget of US$7.4 billion for clean energy and a new US$4 billion fund to encourage states to accelerate their carbon reduction plans. Clean energy would be one potential use of the finance.

The US ITC is scheduled to drop from 30% to 10% at the end of 2016.

The President's budget is likely to face oppostion from Republicans, who now control the Senate and the House of Representives.

Shayle Kann, senior VP at GTM Research told PV Tech in September 2014 that the cut would mean no new utility solar plants coming on line in 2017.

“The ITC reduction is going to have the biggest immediate impact on the utility scale sector. What are going to see is a huge boom in installations completed in 2016 and then a complete collapse in 2017,” said Kann.