In today’s Electrek Green Energy Brief (EGEB):
- Are you thinking of installing solar panels on the roof? You now have more time to get your current tax credit.
- Here are some of the great victories of green energy and climate change that have come out of the US Congress.
- UnderstandSolar is a free service that connects you to the top solar installers in your region for custom solar estimates. Tesla now offers price matching, so it’s important to buy the best prices. Click here to learn more and get your bids – * ad.
Credit extension for solar taxation on the roof
If you are a homeowner in the United States and are considering installing solar panels on your roof, there is good news. Congress has extended the current 26% solar tax credit coverage incentive, which was due to expire at the end of 2020, for two years.
The expansion of the solar fiscal incentive was included in a $ 1.4 trillion omnibus package that Congress adopted along with the $ 900 billion COVID aid 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 decrease to 22% for projects starting construction before the end of 2023.
This extension replaces the old solar plan for households which reduced credit to 22% in 2021 and then to zero after 2021.
Forbes explains how the new plan works in a hypothetical example:
Say you have a contract for a $ 40,000 LG 16kW solar system for your Connecticut home. The 26% federal credit will give you a $ 10,400 discount, compared to a $ 8,800 discount on the 22% credit. This represents an additional saving of $ 1,600. Get the credit (dollar for dollar) from income taxes for the year you install the solar panels and apply the cost under state incentives.
Credits are set to fall to 10% for large solar projects and 0% for small solar projects in 2024. But Ravi Manghani, head of solar research for Wood Mackenzie, said [via GreenTech Media]:
[The bill] gives the industry a full extra year to negotiate longer-term tax credits or link renewable sources 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 omnibus package has seen “the most significant action on climate and energy in ten years.”
In addition to the above solar tax credits, wind energy has also gained momentum. The package extends the production and ITC tax credit for onshore wind for one year to 60% of the total project value and offers to offshore wind projects, for the first time, 30% ITC for projects that started construction from January 1, 2017 until December 31, 2025.
Rhodium details other remarkable packages:
The most impactful provisions focus on the gradual reduction of heating hydrofluorocarbons (HFCs) and the advancement of carbon capture and storage. Over the next 15 years, the gradual reduction of HFC [an 85% cut] will reduce 900 million metric tons (MMt) of carbon dioxide equivalent – more than total annual emissions in Germany. Over 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 clean energy research, development and demonstration funds. It also reviews most of the Department of Energy’s research and development programs to focus on a wider range of clean technologies.
Axios points out that “the 15-year cumulative effect of HFC and CO2 sequestration credits would offset more than the impact of two major Trump-era decisions: lowering vehicle emission standards and downgrading methane rules for the oil and gas sector.”
Sam Ricketts, co-founder of the environmental group Evergreen Action, said:
[T]his legislation is an advance payment for the economic recovery of clean energy that President-elect Biden will make in full, starting next year.
Biden has made tackling climate change one of his central priorities, but he will face major challenges from Republicans.
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