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By cy

August 7, 2023

Seizing the Sun's Bounty and the Impact of Federal Incentives on Solar Progress

   

Solar panels on homes

Picture the year being 2005. The solar panel arrays were still a rare sight, mostly confined to the roofs of the eager early adopters. That year, President George W. Bush signed into law the Energy Policy Act, introducing for the first time the Solar Investment Tax Credit (ITC). It started as a modest 30% credit with an upper cap of $2,000 - a cautious, yet a hopeful harbinger of a new age in American renewable energy.

Fast forward to 2023; it's a different world. Solar panels aren't an uncommon sight anymore. As per SEIA data, the solar industry consistently grew over the years, thanks to the robust federal policies such as the ITC. However, it was not a smooth journey. By 2020 from 30%, the solar ITC was scheduled to enter a phase-out period. A 2021 26% credit would drop to 22% in 2022 and continue stepping down until a permanent 10%.

Yet, the solar industry withstood these changes, demonstrating resilience and adaptability, but this was not without repercussions. Forecasts predicted a potential slump in solar installations due to the stepdown of the ITC. This is where the narrative switches from resilience to resurgence.

Enter 2022, and with it, a surprising twist. The Biden administration surprised the industry with the Inflation Reduction Act, which breathed new life into the ITC. Not only was the planned stepdown halted, but a revitalized 30% tax credit was extended till the end of 2032 for both business and residential installations. This legislative change plowed the field for substantial growth, leading to increased installations and savings for homeowners, effectively making solar on residential properties locked in at 70% of the cost. This in turn, translated into incredible savings for homeowners - savings that could reach an average of $9,000 on electricity bills over the system's lifespan.

But the surge of the solar industry in 2022 was not just about strategy, resilience, and public acceptance; it was about job creation and economic success. In the United States, the story of solar was not solely about kilowatts and carbon emissions; it was about job opportunities. A total of 125,580 people found employment in the renewable energy sector in 2022, marking a 4.5% increase from the previous year. In all, over half a million workers found a place in the renewable energy sector, personifying how pivotal the solar industry is in fostering employment opportunities.

The evolution of the ITC mirrors the progress of the solar industry, from a fledgling in 2005 to a front-runner in American energy by 2023. However, the race doesn't stop here. The glowing horizon of the solar industry forecasts a future not just bright but dazzling. As we step further into the Solar+ Decade, reports from the International Energy Agency reveal that we may witness a near tripling of cumulative solar PV capacity in the coming years.

The Solar Energy Industries Association (SEIA) affirms this bright future. They posit that under a business-as-usual scenario, solar energy could account for about 15% of electricity generation by 2030. However, with a continued bold policy framework and collective societal effort, we may very well see this figure reach an impressive 30%.

The Solar Investment Tax Credit has been more than just a financial boost for potential solar adopters. It has fueled the growth of an industry, catalyzed job creation and is paving the way for a decade of solar dominance. And as the stars align, the time is right for us to continue extending our support, policy-wise and personally, and champion a future powered predominantly by the sun.

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