US solar tax credits survive but demand could yet take a hit

Facebook
Twitter
LinkedIn
Reddit
Email
Source: Flickr/Miran Rijaveck

The solar investment tax credit (ITC) has survived a major round of tax reform in the US.

Fears over an effective shortening of the ITC and the wind power industry’s equivalent, the production tax credit (PTC), to just four years were allayed. A final bill was agreed on Friday with President Trump potentially signing it before Christmas.

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

“After weeks of negotiations, the final tax legislation…maintains the solar ITC for both commercial developers and for homeowners in its current form,” said Abigail Ross Hopper, president and CEO, Solar Energy Industries Association (SEIA). “This is a great victory for the solar industry and its 260,000 American workers and we commend our bipartisan solar champions in Congress for their diligent efforts to maintain solar’s critical role in America’s economy.

“As an industry, we are pleased that the final version of tax reform legislation protects the ITC, and we look forward to continuing to deliver on our promise of affordable, reliable American energy,” she added.

A research note from ROTH Capital also highlighted that an attempt to include a 100% clawback of ITCs value when companies with foreign subsidiaries calculate their tax bill was reduced to just 20% in what it considered to be a positive surprise.

Sting in the tail

It’s not all good news however with the broader objective’s of Trump’s tax reform likely to reduce the appetite for tax credits.

A company, or individual, that invests in solar deployment receives a percentage of that, currently 30%, to be claimed in tax credits. These can be used to offset a tax bill or, if a company had a surplus, sold at a discount to someone else looking to settle up with the IRS.

With US corporation tax being slashed from 35% to 21% as part of the reforms, the demand for tax credits is likely to drop.

21 May 2024
Understanding the PV module supply to the U.S. market in 2024 & 2025. The conference gathers together developers, independent power producers and module suppliers to the U.S. solar market as well as EPCs, banks, investors, technical advisory and testing & certification specialists.
8 October 2024
PV Tech has been running an annual PV CellTech Conference since 2016. PV CellTech USA, on 8-9 October 2024 is our second PV CellTech conference dedicated to the U.S. manufacturing sector. The event in 2023 was a sell out success and 2024 will once again gather the key stakeholders from PV manufacturing, equipment/materials, policy-making and strategy, capital equipment investment and all interested downstream channels and third-party entities. The goal is simple: to map out PV manufacturing in the U.S. out to 2030 and beyond.

Read Next

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 28, 2024
Seattle, USA
Solar Media Events, Industry Events
March 12, 2024
Frankfurt, Germany
Upcoming Webinars
March 13, 2024
9am EDT / 1pm GMT / 2pm CET
Solar Media Events
March 19, 2024
Texas, USA