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1603 Investment Tax Credit (ITC) Grant-In-Lieu To Be Extended For Two Years Delivering Major Benefit To Solar Farm Investment
In the USA in 2011, solar farm project demand can be forecasted to reach 1750MW pushed by the utility scale installations. Because of the 15% year over year decrease in panel cost per watt, unsubsidized project install charges should drop to $5-$6/watt regarding residential scale together with $3.75-$4 for utility level, which in turn should help push the American market demand up 119% yoy in 2011 vs. 800mw in the year 2010. Relying on the latest trends in energy policy legislation, Commercial Solar Design proposes greater probability involving an extension of treasury cash grant-in-lieu of 30% investment tax credit (ITC), which may possibly add appreciably to the upside of our outlook and enhance solar farm investment drastically.
Non-residential installs will gain an increased share of the United States photovoltaic market with 76% of the market place in 2011, up from 69% in 2010 (136% year in and year out). In terms of the regulatory landscape, even though the crucial wide-ranging energy reform bill has been taken off the table, an important "domestic manufacturing and energy jobs" bill presented in the House of Representatives in the later part of July included an extension of the cash grant-in-lieu for thirty percent ITC (investment tax credit) . Commercial Solar Design is in fact advising that there's an improved likelihood of passage of this bill in congress once the Congress assembles after the August break. This particular bill is then likely to be merged with the energy bill in the the House or could be connected to the tax extender's bill later this year. As a whole, passage of renewable energy tax credits is definitely high on the agenda of tax committees in the US Congress.
The discussion draft of "Domestic Manufacturing and Energy Jobs Act of 2010" released during the last week of July confirms that the extension for the cash grant program for 2 years is the key photovoltaic topic included in the bill. This draft excludes the much hoped for climate change bill including "cap and trade" along with a national Renewable Portfolio Standard (RPS). This watered down version of the "energy" bill is anticipated to be passed in the House of Representatives when United States Congress resumes after the August recess the week of September 13th. However solar farm investment will proceed together with favorable IRR (internal rate of return) with or without having a 1603 extension
The Treasury cash grant-in-lieu of the thirty percent ITC (investment tax credit) program was created in August '09 to offer an upfront hard cash grant equivalent to 30% of the applicable project price to the solar farm contractors and developers and including commercial and utility size projects. A sizable majority of the contractors and developers didn't have taxable revenue to make use of the 30% ITC, and thus, the cash grant program was a substantial incentive for the solar power contractors/developers. Since there seemed to be a lack of clarity around the taxability of the hard cash grant until late April the incentive was underutilized.
This Treasury cash grant program was obviously a most important success and extension of the program provides considerable benefit to solar farm investment and demand estimates in 2011.
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