Notably, the bill includes direct pay and outlines a 5-year extension of the solar Investment Tax Credit (ITC) at 30% through 2025, followed by a two-year stepdown period. The stepdown would begin in 2026 at 26%, move to 22% in 2027 and then drop to 10% for commercial and utility-scale solar projects and 0% for residential solar in 2028.
“We’re heartened that members of Congress are stepping up to fight for American jobs by growing solar energy at this critical moment,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA). “These leaders recognize that we can achieve our economic goals while also tackling longstanding issues in our country such as climate change and the inherent inequalities of our energy economy. It’s time for us to translate these good intentions into action.”
As a result of the COVID-19 pandemic, the solar industry has already lost 72,000 jobs and continues to experience financing challenges associated with tax equity markets drying up. Adding a direct pay option will enable solar companies to take the ITC as a cash payment, supporting companies that need immediate relief so they can hire back/keep workers on the payroll. While the proposed value of the new direct pay provision is 85% of the ITC value, this provision is a starting point for conversations about the policy.
The legislation also creates an investment tax credit for energy storage and includes an additive measure that would increase the value of the ITC by 10% for companies that meet certain labor requirements.
The Growing Renewable Energy and Efficiency Now Act focuses on the ITC, the primary vehicle used to incent clean energy deployment in the United States. The ITC is a proven policy that is responsible for adding $140 billion in private investment and creating thousands of new businesses and job opportunities for Americans across the country.
Over the next few days, the House will review the infrastructure package and propose amendments to the landmark bill.