The big question many of our customers are asking: Should I wait to go solar until President-Elect Biden takes office and potential new incentives are announced?
Simply put: why wait? There are many unknowns within the green plan and questions around how much policy will get pushed through without a bipartisan Congress. Additionally, the ambitious clean energy plan is geared towards large impact change – which means, it will have a principal effect on utility and large-scale community solar projects. However, by putting 5% down clients will lock in current pricing and a minimum of 26% in Investment Tax Credits.
The energy plan has three primary agenda items impacting business owners and their solar projects:
- Investment Tax Credit: It has been proposed that the ITC credit will increase to 30% and potentially it could turn from a credit to cash-back, eliminating the need for tax liability. Historically, in Biden’s Vice Presidency administration, when the ITC was raised to 30%, businesses were able to apply it retroactively. Additionally, with the tax deadline at April 15th, should the opinion change prior to then, a business could make the decision not to apply the ITC to 2020 taxes.
- Rising Energy Costs: Biden’s plan to eliminate $20 billion/year in oil and brown energy subsidies and aggressive methane pollution limits for new and existing oil and gas operations may cause a short-term increase in energy prices as production shifts to renewable.
- Supply and Demand: COVID’s impact on the solar industry caused a massive surplus in materials. This drove the costs of materials down as manufacturing companies looked to generate operating cash. With demand expected to increase substantially, costs will increase – the current spot market has shown increases since the President-elect was announced. Manufactures will look to take advantage of the changing market and recover lost revenue.
The Solar Energy Industry Association (SEIA) would like to see Biden issue executive order to eliminate the tariffs on solar cells and modules, extend solar tax credits for at least five years and implement standalone credits for storage. Biden has said “On day one, Biden will use the full authority of the executive branch to make progress and significantly reduce emissions.”
So why go solar now? Customers who go solar now take advantage of 2020 pricing before it rises with increased demand. They can safe harbor the ITC rate (should it not increase) and yet, still will be able to leverage new incentives as outline by Biden and SEIA. Plus, they have a plan in place to mitigate or eliminate electricity pricing as energy costs rise. There is no game changing technology on the horizon for solar, so every day with the utility is more money leaving your business. De-risk the future of your business – go solar now – take advantage of the state and federal incentives, hedge against rising electricity costs, and lock in solar project costs before they begin to rise. Furthermore, the risk of waiting could be costly; if no new legislation in enacted, Federal incentives for solar will decrease every year, costs for power from the utility are expected to rise faster than inflation.