I attended the Solar Power Finance and Investment Summit this past week. The most common theme of the summit was the ITC expiration.
What is ITC?
ITC stands for Investment Tax Credit. In this instance, it is a 30% tax credit for residential and commercial solar systems. The ITC started in 2006 and has been extended a couple of times, but is currently set to expire Dec 31, 2016. When it expires, the tax credit will drop to 10%. Learn more about the ITC.
Why was it discussed at the Summit?
The ITC has helped facilitate a lot of growth within the solar industry, and many smaller solar installers depend on this credit to stay in business. The removal of this credit could cause a major loss of jobs and growth in the solar industry. Both are huge detriments to the economy and the planned deprecation of carbon output based energy creation (Coal).
What was the feedback from the Summit?
I sat in on many panels and talked individually with business owners, financiers, and lawyers about their thoughts on the expiration of the ITC. I got mixed feedback including the following:
- The ITC will be extended, so there is nothing to worry about.
- The ITC has made it easier for many companies to start solar, but not all are keeping the industry’s best interest in mind. The expiration of the ITC would act as a cleanse, and only the strong would survive.
- The expiration of the ITC will require companies and their backers to come up with more creative financial models that are still profitable and enticing to their customers.
- The expiration of the ITC can be leveraged as a carrot to close more business now. This will create a large backlog to address immediate business needs while a transition plan is figured out.
Current solutions for the possible expiration?
Companies aren’t waiting for the worst case scenario to happen. A good example of this is SolarCity’s recent MyPower financing that lets the consumer file for the ITC, but includes a balloon payment in the 2nd year, after solar install, which is equivalent to the ITC.
How does it impact you?
If you want to take advantage of the ITC, then now would be a good time to do so. There are a lot of factors to consider, which I’ll be adding in upcoming blog posts. In the interim, if you are considering installing solar and you want a Free and Unbiased opinion of the approach you should take, feel free to contact us, and we’ll provide insight for your specific situation.
Additional thoughts from the Summit
There was a lot of great information that I picked up at the Summit, which I’ll be adding in upcoming blog posts. The topics will range from residential solar to large power plant size deployments. Make sure you Follow or Like us to be alerted of new posts.