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Report: Tax credit extension would add 82 GW of US solar in next decade

The U.S. will install 82 GW of solar power capacity in the next decade beyond current projections if the U.S. Congress maintains a federal investment tax credit for the energy source at current levels, according to a new report from the Solar Energy Industries Association and consulting firm Wood Mackenzie.

The report, released Sept. 24, is part of the solar industry's push to extend the investment tax credit, or ITC, at current levels rather than let the credit ramp down under a 2015 agreement with Congress.

"The ITC has helped us add billions to the economy, employ thousands of Americans, and be a real solution for cities and businesses that want to do their part to reduce emissions," said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, or SEIA. "We're telling members of Congress to take this climate win now."

SEIA and Wood Mackenzie's forecast estimated that with a 10-year, full ITC extension, the U.S. will add 308 GW of new solar capacity in 2020-2030, 82 GW more than if the credit ramped down as scheduled.

In addition to driving additional solar installations, extending the ITC at current levels would drive $87 billion in new private-sector investment and create 113,000 American jobs compared with baseline investments by 2030, the report said. Of the 82 GW of projected additional solar capacity, 63 GW would be utility-scale installations, Wood Mackenzie senior analyst Colin Smith said.

An ITC extension would also result in heftier cuts in carbon dioxide emissions, removing an additional 363 million tonnes of carbon over the next decade, or 21% of all emissions from the U.S. electric power sector.

Under an agreement with Congress that then-President Barack Obama signed into law in 2015, the solar ITC for commercial filers was set at 30% for a commercial solar facility that started construction before 2020 and will ramp down to a permanent 10% for projects starting construction after 2021.

But the solar industry and supportive lawmakers in Congress are working to extend the credit at the 30% level. They argue that the Trump administration's work to roll back climate regulations and its decision to place tariffs on some imported solar products have altered the market conditions under which Congress reached its 2015 agreement.

In late July, a bipartisan group of lawmakers in the U.S. House of Representatives and U.S. Senate introduced a bill that would extend the 30% ITC for five years. Democrats with the House Committee on Ways and Means indicated they will introduce legislation before the end of 2019 that contains extensions for clean energy tax credits, potentially including the solar ITC.

Renewable energy advocates have also backed a bill from U.S. Sen. Ron Wyden, D-Ore., that would provide technology-neutral tax credits for clean electricity sources. But during a Sept. 23 speech, Hopper said she saw more potential for a solar ITC extension than Wyden's more sweeping bill.

"As we look at the political reality of this Congress, we think it's more likely that a Section 48 investment tax credit will get through," Hopper said at the Solar Power International and North America Smart Energy Week in Salt Lake City. "It is a known piece of legislation, a known policy that is already in place rather than a somewhat transformational concept of a tech-neutral bill."