US government boosts solar budget but axes crucial tax credit



The US Department of Energy (DoE) has revealed its 2015 fiscal year budget with more funds allocated for solar but a crucial Investment Tax Credit (ITC) axed.

The ITC will be replaced at the end of 2016 with a refundable Production Tax Credit (PTC) that is based on the electricity produced by a system once it is already built. The ITC offered a 30% tax credit on installed solar systems.

US industry body the Solar Energy Industries Association (SEIA), has warned that this is less use to solar than other technologies because of the high initial capital costs involved.

“The PTC simply can’t address the upfront costs of fuel-free solar projects, and we believe the Administration’s sudden, 180-degree shift in tax policy could have devastating consequences on the future development of solar energy in America,” said Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA).

“While we appreciate the White House’s strong support of solar in the past, the ITC should be preserved as catalyst for future economic growth.

“The ITC has helped to make solar energy a true American success story. Replacing it with the PTC is the wrong move at the wrong time. Since the solar ITC became law in 2006, installed solar capacity nationwide has grown from 680MW to nearly 13GW,” added Resch.

Despite the tax change, the DoE’s discretionary budget for solar energy has increased by 9.8% to US$282 million, compared to what was spent in the fiscal year 2014. More resources will be ploughed into research into cost reduction for concentrated solar power (CSP) as the DoE looks to help the industry achieve grid parity and improved storage capability.

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