Now that the election is over and a new administration has taken the reigns, those in the energy industry are trying to assess what the next four years will bring and how it will affect them. It is well established that President Biden is a strong supporter of renewable energy and has proposed a plan that will set the U.S. on a course to 100% clean energy and a net zero carbon economy by 2050. Renewable energy sources such as solar will play a big part in achieving this goal and that means the government will be investing heavily into these industries in the coming years, creating more jobs and opening new opportunities for investors and entrepreneurs.
Although the objectives of the plan are clear, the specifics of how it will be accomplished have yet to be determined. This has led to much speculation. However, there are some key areas where the solar industry can expect to see movement in a positive direction.
Solar Investment Tax Credit (ITC) Extension
For the past several years, the federal government has allowed homeowners and businesses to deduct the total cost of the purchase and installation of a solar panel system off their taxes. Originally, the tax incentive was set at 30% and scheduled to gradually be reduced and phased out by 2023 leaving only a permanent 10% tax credit available to businesses only.
However, upon taking office, Biden extended the solar tax credit, currently at 26%, for two more years. Industry groups such as the Solar Energy Industry Association (SEIA), which is the official voice of the solar industry, is advocating for a long-term extension of the ITC so it can continue to drive investment into solar installations nationwide. In addition, SEIA also advocates applying the ITC to backup battery systems so that those will solar panel installations (some two million nationwide) will be able to affordably purchase energy storage systems as a retrofit to their existing installations.
Other possibilities include restoring the ITC to the previous 30% level and working through the Environmental Protection Agency to implement policies that encourage solar investment and deployment by both utilities and the private sector.
Tariffs On Foreign Solar Panels And Inverters
It’s a little known fact outside the industry that solar panels and inverters manufactured overseas and in Canada are subject to a trade tariff upon entering the U.S. First imposed by the previous administration, the tariff started out at 30% in 2018 and was scheduled to drop by 5% each year until ending in 2022. The tariff is currently at 18% and represents an unnecessary tax that Americans must pay above and beyond what the rest of the world pays for the same technology. Moreover, the intended effect of encouraging U.S. manufacturing and creating jobs was mixed at best.
If the current administration is serious about making solar more affordable and driving investment, this is one area that will need to be addressed. It’s unclear where President Biden stands on this issue, but it will certainly be one that brought to his attention by SEIA and others in the solar industry.
Create More Opportunities In Solar
Part of the new administration’s overall energy plan is to rebuild America’s outdated energy infrastructure and encourage the development of electric vehicles among many other green initiatives. This will undoubtedly require a large workforce and that means new jobs, specifically in the solar industry.
Renewable energy is now the cheapest form of power production in the U.S. That means it is cheaper for a utility to build a solar array or wind farm than it is to build a coal, natural gas or nuclear power plant and much more will be needed to achieve the administration’s stated goals.
In addition, homeowners and businesses across the nation are waking up to the benefits of owning their own power and have begun to install solar panel systems on their homes and businesses at a record pace. This is no longer just an environmental fad relegated to those on the east and west coasts. Solar is now a viable, practical and money-saving investment for those in the heartland as well.
If the solar industry is successful in extending the ITC, eliminating tariffs on foreign made solar panels and building a new, green infrastructure and automotive industry, the demand for jobs and the opportunity for investment and entrepreneurship in the solar industry will be great.
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