This article is a follow up to my previous post which outlined the basics of PV solar power. I’m going to talk about some tax incentives and how they effect the adoption of solar power. I am not an expert in this area so this is really a collection of research from trusted sources along with a little commentary.
Solar energy for the home or office is a long term investment with steady returns. Generally solar energy contributing to a home’s electric consumption returns between 4-12% annually with very little risk. As energy prices increase over time this percentage return also increases. The solar power which has already been paid for is now replacing electrical power that is more expensive.
As with many long-term investments the cost of solar energy has a large upfront cost with savings/returns being earned in future years. This upfront cost is one of the biggest barriers to widespread adoption of solar energy. As the initial investment decreases more people and companies are turning to solar to power their home or office.
Fortunately, the Federal Government (and many state governments) recognize the value of solar power and are willing to help homeowners install solar panels. Currently the Federal Government offers a tax credit of $2,000 to offset the cost of solar energy installations. This tax incentive is a major catalyst pushing the adoption of this clean sustainable energy.
Unfortunately it is not all good news. The renewable energy tax credits known as ITC and PTC are expiring at the end of the year. Without these tax credits solar energy installations (and many renewable energy projects) will slow. The House of representatives has passed a bill, The Clean Energy Tax Stimulus Act of 2008 (HR 5351) to extend these incentives and the bill is being discussed in the Senate. As can be expected, the problem is money.
The move has been applauded by solar and wind energy lobbyists and could be good news for solar startups and wind giants. Though, the bill conspicuously doesn’t say how these extensions will be paid for. Previous iterations of the bill called for cuts in gas and oil subsidies to fund the tax credits, but that move sank the bill in the Senate and garnered a threatened veto from the White House.
Craig Rubens, earth2tech.com
So far the Senate has discussed the new bill, but I haven’t seen information as to an upcoming vote.