Renewable Energy Tax Credit Validates Industry
Huge boost for the renewable energy industry. Congress has just renewed tax credits for investing in wind and solar power. The House and Senate agreed to grant extensions to the 30 percent investment tax credit (ITC) for solar energy and the 2.3-cent-per-kilowatt-hour production tax credit (PTC) for wind power. Both of which will see their tax credits extended to at least the end of the decade.
The PTC for wind power will see full tax credits through 2016. It will then be reduced each following year until its expiration in 2020. The ITC for solar on the other hand will receive full tax credits for both commercial and residential systems through 2018. It then will taper off in yearly increments to settle at 10 percent in 2022.
Technologies such as geothermal, marine energy and small hydropower will receive one-year extensions to their 30 percent ITC under the joint spending and tax measures.
"This is one of the most significant stimulus policies for the renewable sector I've seen in the past 10 years," said Alex Klein, senior director of renewable power research at the consulting firm IHS Inc.
This is more than just tax credits for the industry. This is validation. That renewable energy is not a fade, but our future. It appears that renewable energy is in full throttle. Both Democrats and Republicans are acknowledging that it is here to stay. We are looking at an exciting new frontier, one that we should all be excited to explore.
These industries can now breathe a little easier as they aim to reach clean energy goals. The Renewable Electricity Futures Study found that “Renewable electricity generation from technologies that are commercially available today, in combination with a more flexible electric system, is more than adequate to supply 80% of total U.S. electricity generation in 2050 while meeting electricity demand on an hourly basis in every region of the country.”
The ITC and PTC could also help assist with states compliance to deadlines for U.S. EPA's Clean Power Plan in 2022. The CPP will require a 32 percent cut in utility-part carbon emission from 2005 levels by 2030, with a few states seeing decrease necessities as high as 45 to 47 percent.
States will likely be looking to invest in both solar and wind technologies to meet these goals.
Alex Klein said, ”There will be a lot of build in markets where there's a need for CPP compliance. We expect a lot of incremental wind build in Texas and a lot of growth in solar in the Southeast and the Midwest."
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