What will happen if the federal investment tax credit (ITC) isn’t extended?

“What will happen if the federal investment tax credit (ITC) so many solar developers depend on isn’t extended?” The question Herman K. Trabish asked in his recent article for Utiliy Dive . The answers he found were interesting and what some might not excpet.

“If the investment tax credit is not extended, we see it as a disruption, not a death for the industry,” said Maddy Yozwiak, U.S. Power and RECs analyst  and co-author of the recently-released report, “How extending the investment tax credit would affect US solar build,” from Bloomberg New Energy Finance (BNEF).

“It will be a disruption that will take years to recover from, but the recovery is there. Long-term costs continue to improve,” Yozwiak added. “That doesn’t go away, even without the ITC.”

“The difference between the two scenarios is like losing everything already installed,” Yozwiak added.

Many solar lobbying groups are fighting for the extension of the ITC and to beef up local incentives on the state or local level. SEIA, Solar Energy Industry Association, commented in a recent press release, “the ITC is set to drop from 30 percent to 10 percent for commercial systems and zero for residential systems at the end of 2016. According to the BNEF analysis, this will produce a sharp drop in industry activity in 2017.: This will set the stage for a “scramble to complete projects with contracts based on the current credit before the end of next year. That pipeline depletion, and weaker economics, will result in a drop of roughly 8 gigawatts (GW) in annual installations through 2017.  Such a dramatic drop would bring new solar installation activity to its lowest annual level since 2012.”

Bloomberg analyst Madeline Yozwiak says, “with a proposed five-year federal ITC extension, we anticipate an additional 22 GW of solar will get built by 2022. Without it, we still anticipate solar growth in the next decade, but it will be a much rockier ride.”