The US Government has approved an additional five years for the Investment Tax Credit and Production Tax Credit, benefiting wind and solar developers.
US Governments Returns Support to Wind and Solar
After many long months of deliberations and lobbying, the US Congress has approved a five-year extension to the hugely successful Investment Tax Credit, which has buoyed the country’s solar industry for several years. The US Congress also approved a five-year extension to the Production Tax Credit, which has similarly been a critical support for the country’s wind energy industry.
Both the Investment Tax Credit (ITC) and Production Tax Credit (PTC) were included in the omnibus appropriations bill (PDF), which was filed by the US House of Representatives Wednesday morning.
“Beyond any shadow of doubt, the US solar market has just been given the most lucrative and government backed seal of approval yet seen in the PV industry,” said Finlay Colville, head of Solar Intelligence at Solar Media, and one of the industry’s leading analysts.
“By extending the solar investment tax credit for five years with a commence construction provision and a gradual ramp down, bipartisan members in both Houses have reestablished America as the global leader in clean energy, which will boost our economy and create thousands of jobs across America,” said Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA).
Saved from a “Cliff-Edge”
Analytics firm IHS proclaimed the extension as saving the US solar industry from a 2017 “cliff-edge,” repeating numbers the company had published a fortnight ago which showed the US solar industry would suffer a drop of 6.5 GW in 2017 from 2016 numbers if the ITC was not extended.
GTM Research predicts that the five-year extension to the solar ITC will result in 25 GW of additional solar capacity installed over the next five years, a 54% increase over a scenario in which the ITC was not extended. This would result in a 20 GW annual solar market in the US, and would foster $40 billion in incremental investment into the solar industry between 2016 and 2020.
“Currently there are 200,000 solar jobs, and the extension is likely to add another 140,000 jobs or more,” added Rhone Resch. “And with this extension, the solar industry can achieve its pledge of employing 50,000 veterans by 2020, a goal our industry takes very seriously. These jobs are stable, well-paying and cannot be exported overseas.”
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Solar Stocks Skyrocket
Solar companies have also seen their stock values increase on news of the tax credit extensions — following existing increases in the wake of the successful Paris COP21 agreement. SunEdison saw its stock skyrocket 24% in trading on Wednesday to finish above $6 for the first time since early November, representing a 54% increase in stock price since close of trade last Friday. Canadian Solar stock jumped 7%, SolarCity stock jumped an impressive 34%, and Trina Solar saw its share price climb as well, but only 4.8% — though Trina Solar had already seen its share price jump significantly on the back of company news.
“A five-year extension of the ITC will lead to more than $125 billion in new, private sector investment in the US economy,” continued SEIA’s Resch. Going on:
“And much of this growth will come from small businesses, which make up more than 85 percent of America’s 8,000 solar companies. Over the last year, these companies told us they needed the extension of the ITC to provide their businesses with certainty, and SEIA has been working tirelessly to achieve that goal. Tonight, we’re happy to see that Congress has responded.
“Solar power in this nation will triple by 2022, hitting 95 gigawatts. That’s enough to power 19 million homes and represents 3.5 percent of U.S. electricity generation- up from 0.1 percent in 2010. And the extension will offset 100 million metric tons of CO2 annually- equivalent to the emissions from 26 coal fired power plants.”
Wind Stocks Jump
Several major wind energy players also saw their own stocks jump marginally on the back of the news. Vestas Wind Systems saw its stock price jump over 6% since Monday, and is well into an astonishing five-year stock price high. Spanish renewable energy companies Gamesa and EDP Renovaveis (the parent company of EDP Renewables North America) both saw their stocks tick upwards slightly as well.
“This agreement will enable wind energy to create more affordable, reliable and clean energy for America by providing multi-year predictability as we have called for,” said Tom Kiernan, CEO of the American Wind Energy Association. “The later years of this agreement will provide some challenges that the wind industry will work to overcome with our employees, partners and champions.”
“The U.S. is home to some of the most productive wind turbines in the world because of this successful policy,” Kiernan continued. “That’s due in large part to wind power champions in Congress, and leadership across both Republican and Democratic administrations.”