Solar Tax Credit Extension Enables Growth in Commercial Sector

Dexter Gauntlett also contributed to this post.

The 30% solar Investment Tax Credit (ITC) has officially been extended through 2021. The solar industry is now expected to continue its steady growth over the next 6 years and avoid the worst of the so-called 2017 cliff. Before the extension, the commercial ITC was scheduled to drop to 10% after December 31, 2016 and result in a sharp decrease in installed solar capacity in 2017 (shown in the chart at left below).

Under the recent extension, projects that start construction by 2019 will receive the current 30% ITC, while projects that begin construction in 2020 and 2021 will receive 26% and 22%, respectively. All projects must be completed by 2024 to obtain these elevated ITC rates. Guidehouse Insights recently revised our solar capacity forecast to reflect the ITC extension, reducing the 2017 cliff by increasing the installed solar capacity from 2017 to 2022.

Expected Capacity Before ITC Extension

(Source: Guidehouse)

Expected Capacity After ITC Extension

(Source: Guidehouse)

Note: Capacity is forecast in MW DC for these charts.

The extension of the commercial ITC has opened a new window of opportunity for commercial building owners over the next 6 years. Because of this, it is especially important to provide resources for the commercial sector to facilitate the decision to go solar. Guidehouse, Inc. has been working with the U.S. Department of Energy (DOE) Better Buildings Alliance (BBA) for 2 years to promote solar PV for commercial buildings.

In 2015, Guidehouse focused on two commercial sectors identified as having untapped potential for commercial solar development: healthcare and hospitality. We also focused on leased buildings across all commercial sectors, which face particular barriers to installing solar PV.

Guidehouse interviewed solar developers, trade organizations, hotel groups, hospitals, building owners, and building tenants to better understand the benefits and barriers, technical and financial considerations, and strategies for installing solar PV systems in these sectors. We discussed some of our findings last year, and the following guides were recently published by the BBA:

• On-Site Commercial Solar PV Decision Guide for the Healthcare Sector
• On-Site Commercial Solar PV Decision Guide for the Hospitality Sector
• Promoting Solar PV on Leased Buildings Guide

In addition to these guides, the BBA published 10 case studies highlighting successful solar PV projects completed for healthcare facilities, hospitality businesses, and building owners that lease their buildings. The case studies include roof, carport, and ground-mounted systems ranging in size from 30 kW to a 5.5 MW portfolio of projects across multiple states. These case studies are all available on the Renewables Integration page of the BBA website. Stay tuned for additional BBA solar PV resources in 2016.