As of January 1st, 2020, the federal Solar Investment Tax Credit (Solar ITC) is now 26%, instead of 30% as it was previously. This comes after an extension to the Solar ITC at the 30% level was removed from the annual house spending package on December 16th, at the request of the White House.
The 26% credit will be afforded to projects that begin construction* after January 1, 2020, and before December 31, 2020.
While SEIA will continue to lobby for more favorable tax credits in 2020, the Solar ITC is scheduled to step down again in 2021 and 2022. See the step-down schedule is as follows:
2019 → 30%
2020 → 26%
2021 → 22%
2022 → 10% for commercial & utility-scale, 0% for residential
In addition, batteries and energy storage did not receive a standalone tax credit in this federal spending bill. As has been the case, you can only access the Solar ITC for energy storage if it is paired with solar or other ITC-eligible technology. See the National Renewable Energy Laboratory’s Federal Tax Incentives for Energy Storage Systems white paper to learn how the two technologies can be paired (note that all references to the 30% ITC in this white paper should be changed to 26% for projects starting in 2020).
What stopped the higher Solar ITC from being extended? Green Tech Media shares their thoughts in a recent piece, “How the White House Killed Clean Energy Tax Credits.”
Want to learn more about how this impacts your solar project? Our account managers and project managers will work with you to develop a project development schedule that maximizes available incentives. Reach out to us today.
*”Begin construction” refers to starting physical work of a significant nature, which includes off-site work as well as on-site work, or meeting the 5% Safe Harbor Test by paying 5% or more of the total cost of the facility in the year that construction of the solar facility begins.