As we enter the eighth month of the pandemic, we see a rise in Covid cases. Another lockdown may be around the corner for Americans. People are doing what they can to mitigate the spread and reduce the inundation of hospitals. Families are staying indoors, at home. With winter quickly approaching, households can expect a rise in their utility bills. There will inevitably be an increase in demand for electricity.
The Solar Energy Industries Association
Nearly 50 years ago, solar advocates came together to form the most extensive solar coalition in America, the SEIA. The SEIA, Solar Energy Industries Association, according to their website, “is the national trade association for the U.S. solar industry. We embody the innovation and entrepreneurship that defines solar energy.” Since 1974 SEIA has worked to increase accessibility to Solar. They also push for legislation to help promote solar power and incentivize people to convert to solar. The organization has been a significant factor in contributing to the growth of the solar industry. According to the U.S. Department of Energy, in the last two decades, “installations have increased 35-fold to an estimated 62.5 gigawatts today. The increase in installations is enough capacity to power the equivalent of 12 million average American homes. Since the beginning of 2014, the average cost of solar photovoltaic panels has dropped nearly 50%.” Much of this is due to the work done by the SEIA.
Net Energy Metering
The SEIA recognizes that one major contributor to this growth is the N.E.M, Net Energy Metering. It is a tool, process, and incentive to go solar. N.E.M helps to reduce costs and offset rising energy consumption. Net Energy Metering allows households to exchange energy for credits with a utility company. Later, the homeowner can turn in those credits for electricity; this tends to be when the household’s energy consumption exceeds the solar energy. The homeowner can then pull power from the electrical grid at a reduced cost because of the credits that were amassed earlier in the year. The credit value is determined by the number of kilowatts given back to the grid. It is an efficient and effective method to keep costs down.
The Investment Tax Credit
Another critical policy that the SEIA supports is the ITC, investment tax credit. This tax credit is an absolute game-changer. There has not been a more vital nor useful tool in increasing demand for solar. The solar investment tax credit is precisely that. It is a 26%, dollar for dollar, federal tax credit based on 26% of your total solar investment. The Federal government allows homeowners to include the cost of solar photovoltaic panels installed, system-balancing equipment, and the cost of labor. The ITC may consist of everything that goes into the installation. Reducing homeowners’ taxes will put more money into their pocket. According to the SEIA, the ITC has directly resulted in increasing solar growth by 52%. This tax credit has played a significant role.
The SEIA Promotes the Expansion of the ITC
The President of SEIA, Abigail Ross Hopper, stated to reporters on November 17th, 2020 about their number one priority. The SEIA wants to prioritize the expansion and broadening of the ITC. According to President Hopper, “broadening the solar industry’s key federal tax credit will provide the most measurable relief as it weathers the economic difficulties of the pandemic.” It is no surprise that the SEIA continues to advocate for a continuation of the ITC. The SEIA hopes to go back to the original 30% ITC rate and extend that five years.
ITC’s End Date
If the ITC is not extended, then the current solar investment tax credit runs out of time. After 2021 the ITC rate will be zero. When the ITC was first passed, the rate was 30%. It has declined to 26% this year. Next year it will fall to 22%, and by 2022 it will be obsolete at 0% for residential installations. The time to act is now. The ITC will drop another 4% in less than two months. The SEIA and solar community are doing what they can to promote and extend the ITC for many more years. Congress has not called for a vote yet on ITC. If you would like to learn more about the SEIA, click here. If you would like to learn more about going solar, check out our blog here. If you’re ready to take the next step, sign up for our free quote here.