US: Solar Investment Tax Credit Extended at 26% for Two Additional Years

Extended renewable energy tax credits have been included in a $1.4 trillion federal spending package alongside a $900 billion COVID-19 virus relief spending bill. The solar investment tax credit (ITC), which was scheduled to drop from 26% to 22% in 2021, will stay at 26% for two more years. The wind industry also received a limited extension of its production tax credit.

This means that solar projects in all market segments — residential, commercial, industrial, utility-scale — that begin construction in 2021 and 2022 will still be able to receive a tax credit at 26%. All markets will drop to a 22% tax credit in 2023, and the residential market will drop to 0% while the commercial and utility markets will sit at a permanent 10% credit beginning in 2024.

You can view the language updates for the commercial/utility market beginning on pg. 2439 and the residential solar market beginning on pg. 2448 here. 

An extension of the ITC has seen support from many outside the industry, including congressional leaders and a group of bipartisan mayors. Various bills have been introduced in the last few years attempting to extend the solar ITC, but nothing has stuck. While there have been attempts to get an investment credit for energy storage installations, nothing involving batteries was included in this spending package.

“We are heartened to see Congress step up to provide Americans with some relief after our country has been mired in a public health and economic disaster,” said Abigail Ross Hopper, president and CEO of SEIA. “This pandemic has taken an immeasurable toll on American families, and our deepest sympathies are with those who have lost loved ones and those who are suffering economically because of the ongoing crisis. Over the next few years, we have an opportunity to build a stronger, more reliable, and more equitable American energy economy, and the action Congress is taking today is a helpful down payment.”

Some energy storage language was included in the spending and relief package. The Better Energy Storage Technology (BEST) Act authorizes $1 billion over five years for federal investments into energy storage R&D.

Comments from Energy Storage Association CEO Kelly Speakes-Backman:

“In addition to elevating energy storage as a top, cross-functional R&D priority of U.S. Department of Energy, the BEST Act establishes a new competitive grant program for states, utilities and private companies to deploy energy storage in a variety of applications. This demonstration program advances storage technology innovation and grid operations and sets the foundation for future storage deployments to protect our electric infrastructure against disruption as it enables a zero-carbon energy supply mix. We look forward to working with DOE and Congress to ensure this important program is fully funded and operates effectively.

“The inclusion of the Better Energy Storage Technology (BEST) Act as part of the year-end spending and relief package is further proof of the bipartisan, bicameral support for energy storage to improve grid reliability and flexibility.”

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