In today’s Electrek Green Energy Brief (EGEB):
- Are you thinking of installing solar panels on the roof? You now have more time to obtain the current tax credit.
- Here are some of the big victories in green energy and climate change that came out of the US Congress.
- UnderstandSolar is a free service that connects you to the best rated solar installers in your region for customized solar estimates. Tesla now offers price matching, so it’s important to look for the best quotes. Click here to find out more and get your quotes. – *Ads.
Extension of tax credit for solar energy in coverage
If you are a home owner in the United States and are considering installing solar panels on roofs, there is good news. Congress has extended the current 26% roof tax credit incentive for solar energy, which was due to expire in late 2020, for two years.
The extension of the tax incentive to solar energy was included in a $ 1.4 trillion omnibus package that Congress approved along with the $ 900 billion COVID relief package.
According to the federal Investment Tax Credit (ITC) for solar projects, the residential solar tax credit will remain at 26% for 2021 and 2022. The ITC will then drop to 22% for projects that begin construction before the end of 2023.
This extension replaces the old residential solar energy plan that reduced credit to 22% in 2021 and then to zero after 2021.
Forbes explains how the new plan works in a hypothetical example:
Let’s say you have a contract for a $ 40,000 16 kW LG Solar system for your Connecticut home. The 26% federal credit would give you $ 10,400 off, compared to $ 8,800 off the 22% credit. This represents an extra savings of $ 1,600. You get the credit (dollar for dollar) of the year’s income tax when you install solar panels, and this is applied to the cost after state incentives.
Credits are expected to drop to 10% for large solar projects and 0% for small solar projects in 2024. But Ravi Manghani, head of solar research at Wood Mackenzie, said [via GreenTech Media]:
[The bill] it provides the industry with an extra full year to negotiate long-term tax credits or link renewable energy directly to future carbon policies with the friendly Biden administration.
Green energy wins in Congress
According to an analysis by independent research firm Rhodium Group, the US government’s comprehensive package saw “the most significant action on climate and energy in more than a decade”.
In addition to the above solar tax credits, wind power has also gained momentum. The package extends the production and ITC tax credit for onshore wind energy for one year to 60% of the total project value, and gives offshore wind projects, for the first time, a 30% ITC for projects that have started construction from from January 1, 2017 to December 31, 2025.
Rhodium details other highlights of the package:
The most impactful provisions focus on the gradual reduction of superheat hydrofluorocarbons (HFCs) and the advancement of carbon capture and storage. Over the next 15 years, the gradual reduction in HFC [an 85% cut] will reduce 900 million metric tons (MMt) of carbon dioxide equivalent – more than Germany’s total annual emissions. In the same period, additional carbon capture projects could reduce up to 585 million tonnes – more than Australia’s annual emissions.
The energy package authorizes nearly $ 40 billion in new research, development and demonstration funding for clean energy. It also reviews important parts of the Department of Energy’s R&D programs to focus on a broader range of clean technologies.
Axios points out that “the cumulative effect of 15 years of HFC and CO2 sequestration credits would more than neutralize the impact of two major Trump era decisions: weakening vehicle emissions standards and reversing methane rules for the oil and gas sector. gas”.
Sam Ricketts, co-founder of the environmental group Evergreen Action, said:
[T]its legislation is a signal for the economic recovery of clean energy that President-elect Biden will fully undertake starting next year.
Biden has made addressing climate change one of his central priorities, but he will face major challenges from Republicans.
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