Environment & Energy Insights

Odds on an Solar Investment Tax Credit (ITC) Extension Seemingly Rising by the Minute

Posted by Jeffrey Karp on 12/16/15 7:22 PM
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Members_only.jpgDespite “grinchy” recent predictions from some, the solar industry looks set to receive some holiday cheer with the odds on an investment tax credit (ITC) extension seemingly rising by the minute. Many credit the ITC as one of the predominant factors behind the surge of solar in the U.S. Despite some pushback from House Republicans last week, the lower chamber is set to vote on an omnibus appropriations bill by the end of this week, which includes a five-year extension of the credit.

The five-year extension would include a three-year continuation of the current 30% credit, keeping the status quo intact through 2019. This would be followed by three years of graduated step-downs. The credit would step-down to 26% in 2020 and 22% in 2021. It would finally drop to 10% in 2022. Some have speculated that the extension was a trade for a repeal of the decades-long oil export ban, which has been a sore spot for the GOP in recent years.

Until recently, and despite some pockets of great optimism, everything from posts on this page to share prices to long faces at conferences reflected pessimism regarding the possibility of an extension. However, while the bill’s failure is always a possibility, odds on an extension for the solar investment tax credit have risen dramatically in recent weeks. In short, it looks like the optimists have won this round. Admitting that one is wrong doesn’t always have to be painful… 

Topics: Structured Transactions & Tax, Solar Energy, Renewable Energy, Oil & Gas, ITC, Oil Export Ban, Investment Tax Credit, Congress


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