US Congress Unlocks $400B investment into Solar and Wind Energy through 2023

The US Congress reached a deal to extend the existing federal solar investment tax credit through 2019. 

Most important to me, the tax credits will phase down from 30% to 26% in 2020, 22% in 2021, and a permanent 10% in 2020. Also, Congress will extend the "commence construction" language to solar.  With this vote, both Republicans and Democrats are acknowledging that Independence from volatile fuel prices is part of the American policy agenda.

Rhone Resch first put the tax credit in place in 2005, and covers 30 percent of a solar energy system’s cost. Rhone has shown an extraordinary ability to extend the tax credit with the regularity that has been sorely lacking in other renewable energy industry. In fact, with this deal, the solar industry (and Rhone) has established itself as the dominant player that is able to negotiate on behalf of the entire renewable energy industry – including wind power.

In recent year, many accused solar and wind power of achieving “grid parity” with coal and natural gas simply through these subsidies. With this extension, solar and wind will continue to face these criticisms.

In the wake of the Paris deal, the United States in now on track to meet 90%+ of its incremental electricity generation additions from zero emissions sources like solar and wind through 2023 and beyond. The solar industry is raising and investing over $20B every year in the United States, and has created one out of every eighty jobs since the financial crisis. It’s bringing people out of the economic devastation of the home building industry into gainful employment, with meaningful careers that involve building, making, and creating. Wind energy will reach 5% of total electricity in the USA next year.

Three miles off Block Island below grey Atlantic waters, steel and concrete anchor this country’s first offshore wind farm, which will provide power for 17,000 homes. Midwestern winds in Iowa will provide 40% of its electricity by 2020.

This tax credit extension will certainly ensure the death of coal and meet the emissions reductions required under the Clean Power Plan early.

By that date, Solar and Wind will together meet over 15% of total US electricity with over 400 gigawatts of installed capacity. The US electricity market will be over-supplied, ensuring that on top of expected coal retirements, expensive natural gas capacity will be also be retired.  The entire framework for Wholesale Power Markets will have to be reconstituted to accommodate solar and wind projects.

The federal credit extension will also accelerate a rush by overseas solar manufacturers to locate manufacturing plants in the United States. By 2023, over 50% of solar modules, inverters, and other components will be manufactured in North America.

Solar power reached grid parity in Germany in 2011 and in 18 other countries since then. Solar power is already at grid parity for over 25% of Americans — but not all Americans. This new extension will bring grid parity to almost every American by 2023.