2024 will be a huge year for renewables and we can’t stop smiling about it.
There’s been some major solar news lately, with all signs pointing to the fact that U.S. solar power is on track to have an incredible year. The future was more uncertain when the 26% Federal Tax Credit was set to expire and decrease to 22% and then 0% in 2022. Then two key moments changed everything about how we feel about the solar industry’s future going into the new year. Let’s get into it. But first, how does a solar tax incentive work?
What can members do?
The ITC was established in the Energy Policy Act of 2005 extended multiple times by Congress since then. In 2020, homeowners could deduct 26% of their solar project’s total cost from their taxes, saving the average homeowner around $9,000, according to Energy Sage. This incentive stabilized the solar industry through its infant stages and the COVID-19 Pandemic. Some argue that the industry is now in its adolescent stage and no longer needs the kind of financial support that government subsidies offer. However, suppose the American energy landscape is to become cleaner and eventually replace dirty energy sources like oil and coal. In that case, tax incentives are just the first step toward the U.S. government showing a shift in allegiance toward renewable energy. The U.S. government has subsidized oil for as long as it has been available on the market. The Environmental and Energy Study Institute writes that “conservative estimates put U.S. direct subsidies to the fossil fuel industry at roughly $20 billion per year; with 20 percent currently allocated to coal and 80 percent to natural gas and crude oil”. We believe it’s time for wind and solar to get the same, if not better, treatment.
The first piece of great news – Solar gets some relief
On December 21st, 2020 , Congress passed a Covid relief bill. The package included a two-year extension of the 26% Tax Credit for solar power. American Solar enthusiasts everywhere celebrated (including yours truly)! This extension means millions of dollars back in the deserving hands of our future customers who make the switch to solar. The tax credit had decreased to 22% in 2023, but now the industry has some more time to grow and develop undeterred as it bounces back from setbacks due to the COVID-19 Pandemic. Take it from a company that added 300 employees from 2018-2020; a whole lot can happen in two years.
The second piece of great news
So now, with the 26% ITC extended, the only other thing that would mean a great 2024 for solar would be a significant shift toward renewable energy in planned power sources in the upcoming year.
On January 11th, 2021, The Energy Information Administration announced that solar would account for a whopping 39% of new power sources in 2021. They wrote, “More than half of the new utility-scale solar photovoltaic (PV) capacity is planned for four states: Texas (28%), Nevada (9%), California (9%), and North Carolina (7%). EIA’s Short-Term Energy Outlook forecasts an additional 4.1 GW of small-scale solar PV capacity to enter service by the end of 2021”. (EIA) Here’s a graph to show what that looks like.
Look at the ratio of gold and green to blue! This incredible news signals that renewables are going to have many good years to come.
