US to extend Investment Tax Credit for solar at 30% to 2032
Solar and renewables are here to stay, US Senator Joe Manchin and Democrats reached an agreement on a reconciliation bill, dubbed the Inflation Reduction Act of 2022. The bill includes $370 billion in spending for renewable energy and climate measures.
One of the most impactful provisions in the bill, is the long-term extension of the Investment Tax Credit, which has been instrumental in launching the solar industry we know today. The bill calls for a 10-year extension at 30% of the cost of the installed equipment, which will then step down to 26% in 2033 and 22% in 2034. The tax credit applies to individuals adopters of solar technology. The credit can also be rolled over to a following year.
There are also several “adders” for the tax credit depending on the type of organization, domestic product use, and project location. ROTH Capital Partners said that the investment tax credit could reach as high as 50% for some projects with the right adders applied.
The credit also includes the “direct pay” provision. This would allow a developer with little or no tax liability to treat the amount of credit as an overpayment of tax which would result in a cash payment refund in the amount of such overpayment being made to the developer.
“With long-term incentives for clean energy deployment and manufacturing, the solar and storage industry is ready to create hundreds of thousands of new jobs and get to work building out the next era of American energy leadership. This is a crucial window of opportunity that we cannot miss, and now Congress must seal the deal and pass this legislation,” said Abigail Ross Hopper, president of the Solar Energy Industries Association.