The US solar sector stands to get a significant boost from the Obama administration’s 2016 budget draft, with a permanent extension of government tax credits for renewables proposed to Congress.
Currently, America’s solar Investment Tax Credit is structured as a tax credit towards 30 per cent of the fair market value of an installed solar array, but is due to be wound back to 10 per cent at end-2016, and then removed.
“Whether or not the ITC gets extended beyond 2016 still remains to be seen, but we believe this proposal certainly increases the chances of some sort of a positive outcome compared to the current step down of ITC to 10% beyond the 2016 timeframe,” Deutsche analyst Vishal Shah said in a note on Tuesday.
Shah says one of the possible outcomes is the grandfathering of all projects that start before the end of 2016 timeframe – as under current law, all projects have to be completed before end-2016 to get the 30 per cent ITC.
Another potential scenario, he says, is a much more gradual step-down of the ITC from 30 per cent to 10 per cent over multiple years.
The budget proposal also includes a request for $7.4 billion for clean energy technologies, along with a list of funding and incentives for the industry.
A majority of the money would be directed to the DoE, for such key initiatives as grid modernization ($356 million); $44 million to establish a 10MW scale pilot Supercritical Transformational Electric Power facility; $2.72 billion for energy efficiency; and $325 million for the Advanced Research Projects Agency, including R&D for transformational clean energy technologies.
The budget also calls for $4 billion of the funds to go towards The Clean Power State Incentive Fund, to support state efforts to cut emissions.
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