I moderated a panel at MDV-SEIA’s Solar Focus event to discuss what is arguably the hottest, most impactful topic in the solar space today – the Investment Tax Credit (ITC), and specifically, its scheduled step-down at the end of calendar year 2016.
The ITC is a controversial topic. Arguably, and while this is probably not a popular opinion among readers of this page, the 30% ITC may have run its (very successful!) course. Hardware and install prices have plummeted in recent years. Traditional capital markets are being accessed through bond offerings and YieldCos. Even stodgy holdout utilities in the southeast are becoming more active in the solar space. More solar has been built in recent quarters than any other generation type.
And yet . . . solar remains a small part of the overall generation mix, and many states, including those with great insolation numbers, remain untapped markets. Some have estimated that up to one hundred thousand jobs might be in jeopardy if the step-down occurs. An ongoing 30% ITC would make it easier for many states to comply with their potential Clean Power Plan (CPP) obligations. The U.S. is arguably at the cusp of a real shift in its energy mix that might be delayed, if not derailed, if the credit is not extended.
As noted before, the panel was excellent. Tony Clifford, the CEO of Standard Solar and a very vocal proponent of an ITC extension, discussed the ways industry participants can support the ITC extension effort. Sara Rafalson of Sol Systems walked through a very visceral representation of what a drop to a 10% solar ITC would look like in individual states. Finally, Scott Hennessey of Solar City discussed federal legislative updates.
Some key takeaways from the presentations and the robust Q&A that followed:
- A 10% ITC renders most state markets unviable at a 7-8% cost of capital – the Northeast and California may still be in play (but expect overcrowding).
- An extension has garnered increasing Republican support in the Senate (the House is another matter).
- The Solar PACs have had real trouble keeping up with opposition spending due to lack of donation support.
- The panelists seemed to agree that ‘start of construction’ is the extension path with the greatest odds.