The solar industry says tax credits included in a spending bill that passed Congress Friday would more than offset the carbon emissions of lifting the oil export ban also included in the measure.
Approximately “10 million metric tons … will come from lifting the oil export ban,” while use of solar energy through 2020 will more than offset those greenhouse gas emissions, Rhone Resch, president of the Solar Energy Industry Association, said on a call with reporters. Solar subsidies will reduce 100 million metric tons of carbon dioxide, while placing the U.S. “in first place as a global leader” in solar energy and emissions reduction.
Environmentalists have strongly opposed lifting of the 40-year-old oil export ban in recent days, given President Obama’s commitment to a global climate change accord reached Saturday in Paris. Resch says the solar industry does not take a formal position on the export ban, but is pointing out the emissions offsets of the solar credits.
The spending bill extends the Investment Tax Credit for solar installations five years, but begins phasing out the subsidies beginning in 2020.
The credit will help states comply with President Obama’s Clean Power Plan to reduce greenhouse gas emissions, such as carbon dioxide, from the nation’s existing fleet of power plants, Resch said.
The credit “becomes a bridge to the Clean Power Plan’ by allowing the industry to continue to reduce the cost of solar energy as the emission regulations are being implemented. He said states looking to comply with the plan “need to understand the value of solar as they are putting together their state mechanisms” to comply. Ultimately, “the [solar credit] makes it easier to comply with the Clean Power Plan.” Most scientists blame greenhouse gases emitted from the burning of fossil fuels for driving manmade climate change.
Resch said the subsidies will inject $30 billion into the economy by 2020, adding 20 gigawatts annually of low-carbon electricity to the grid, while creating 420,000 jobs and doubling the size of the industry. That will make solar “almost the same size as the utility industry” is today. He also said the subsidies will ensure the industry hits its goal of hiring 50,000 veterans by 2020.
Under the current program, credits would drop from 30 percent of the project cost to 10 percent in 2017. Under the next omnibus program, the credit will stay at 30 percent until the end of 2019 and then slowly begin to drop to 26 percent in 2020, 22 percent in 2021, and finally 10 percent in 2022, but that will apply only to larger projects. Credits for residential solar will be zeroed out in 2022.
Solar installations are projected to increase 54 percent through 2020 as a result of the five-year extension of the federal Investment Tax Credit, according to consultants GTM Research, which released its economic analysis for the industry earlier this week.
The company’s forecast shows the extension fostering $40 billion in incremental investment in solar between 2016 and 2020. The tax credit extension “will result in a 20 gigawatt annual solar market in the U.S. by 2020,” says Shayle Kann, GTM’s senior vice president. “At that rate, more solar will be installed each year than was added to the grid cumulatively through 2014.” The biggest growth will be in utility-scale solar projects, as opposed to residential rooftops, GTM reports. Utility projects will see 73 percent more solar projects built by 2020.
