[font face=Serif][font size=5]Tax Credit Extension Gives Solar Industry a New Boom[/font]

[font size=4]With the extension of the investment tax credit, previously set to expire at the end of 2016, solar developers get renewed incentives.[/font]

By Richard Martin on December 28, 2015

[font size=3]The United States solar market is wrapping up the best three-month period in its history, with a total of three gigawatts worth of solar photovoltaics capacity forecast to be installed from October through the end of the year. In all, about 7.4 gigawatts of solar photovoltaics will be built in 2015, surpassing last year’s record total of 6.3 gigawatts, according to a new report released on December 9 by the Solar Energy Industries Association and produced by GTM Research.

That, however, is just a trickle compared to the flood of new projects expected to come online in 2016. GTM Research forecasts that the market will more than double next year, reaching 15.4 gigawatts of solar power installed in 2016. Worldwide, growth in solar installations is expected to rival the boom occurring in the United States. Berlin-based research firm Apricum forecasts that 54 gigawatts will be installed worldwide in 2015, with new capacity additions reaching 92 gigawatts by 2020. The largest market for solar photovoltaics will be China, with 180 gigawatts of total capacity installed by the end of 2020, followed by the U.S. (83 gigawatts) and Japan (57 gigawatts).

Prices for solar panels and other components continue to fall. But the largest reason for the expected U.S. surge in 2016 was the scheduled expiration of the federal investment tax credit at the end of the year. That changed when Congress passed an omnibus spending bill that includes a five-year extension of the investment tax credit for solar and wind power projects.

Established by the Energy Policy Act of 2005, the investment tax credit provides a tax credit of 30 percent of the value of solar projects. Annual solar installations have grown by at a compound rate of 76 percent since the act was implemented in 2006. Under the new scheme, the 30 percent solar tax credit will extend through 2019 and then decline gradually to 10 percent in 2022. After 2022 the credit will be eliminated for residential solar installations and will continue at 10 percent for commercial ones. Overall, the move by Congress will add an extra 20 gigawatts of solar power over the next five years, according to Bloomberg New Energy Finance—more than the total installed in history up to the end of last year.

…[/font][/font]