ITC Extension

The extension of the solar Investment Tax Credit (ITC) is a landmark decision for the solar industry and the future of renewable energy in the United States. On Friday, December 18, 2015 President Obama signed into law the ITC extension, a 30% tax credit for the installation of solar energy systems. The value is calculated based on the total cost of the solar project, including labor and delivery system, and it is applicable to both solar thermal and photovoltaic (PV) panels.

The 30% ITC has been extended through 2019. In 2020 it will drop to 26%, in 2021 it will drop to 22%, and in 2022 it will drop permanently to 10%. While the extension offers a brief reprieve, consumers considering solar installations should take advantage of the ITC sooner rather than later to see the largest savings.

What the ITC Extension Means for the Solar Industry

The ITC promotes job growth and technological innovation by providing companies in the solar industry with a reasonable amount of market security. According to the Solar Energy Industries Association (SEIA), since its initial implementation in 2006 solar installations have increased by an average of 76 percent each year.   Increased competition and improved technologies result in more efficient products, at lower costs to consumers. With the help the the ITC, it’s projected that 220,000 jobs will be added to the industry by 2020, and solar energy is projected to displace greenhouse gas emissions by 100 million metric tons annually.

What the ITC Extension Means for Commercial Construction

The credit extends to the delivery system as well as the solar collector and its components. So, a the cost of a boiler, for example, would be included in the total cost of the project when calculating the 30% credit. New commercial construction projects have the largest advantage under the ITC especially with the installation of radiant floor heating. Because the floor is the delivery system for the solar energy, the concrete, aggregate, Pex tubes, and labor associated with the concrete floor are all included in the total project value. This more than pays for itself, essentially providing the building with free heat for 30 years.