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Decreasing Solar Incentive Casts Shade on 2020

If you are thinking of investing in solar for your home or business in the coming years, you may be wise to do so in 2019. Why? The 30% federal Investment Tax Credit (ITC)–the largest solar incentive available in Oregon and many other states–is scheduled to begin phasing out in 2020. Fortunately, it will not all disappear overnight. It will step down incrementally over the next three years, landing in 2022 at a permanent 0% for residential installs and 10% for commercial installs.

The ITC has been an incredible boon for solar consumers for more than a decade. Back in 2006, when the ITC was created, American solar was just a hopeful glimmer of the economic beacon that it is today. Before this incentive existed solar was being installed at a rate of less than 200 megawatts per year, a number that has increased to roughly 10,500 megawatts in 2018. Indeed, the first decade of the ITC saw a 50% compound annual increase in the rate of solar adoption nationwide. This exponential growth spurt has completely restructured the industry, allowing supply chains and markets to take root in a way that simply wasn’t possible in 2006.

Along with the benefits of economies of scale have come consistent advances in the efficiency of solar panels. Taken together, these two forces have driven the price of photovoltaics down from nearly $6/watt in 2010 to under $2/watt in 2019. With its feet increasingly beneath itself, American solar has managed to become a fierce competitor to coal on the utility scale. Looking back, it is hard to deny that the ITC has strongly shaped the renewable energy landscape.

What will happen to the solar industry when the ITC is laid to rest? Certainly it will slow the market down, though to what extent is difficult to forecast. Regardless, a home or business owner who wants to reap the benefits of solar will certainly find it more difficult to make it pencil when they have to pay for the 30% of their system that is currently covered by incentive.

Fortunately, the window of opportunity is not yet closed. As long as a project is connected to the grid before December 31st of this year, it will qualify for the full 2019 incentive rate. If solar is a priority for your family or your business, make sure you do not get taken off guard by the loss of the ITC.

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