Sen. Schumer proposing dramatic change to solar tax credits

August 21, 2015 | By Jaclyn Brandt

With solar investment growing all over the state of New York, NY Sen. Charles Schumer announced a change in solar credits, which could change the industry forever.

A photovoltaic system on a roof near Poughkeepsie, New York. Credit: Labraun90/Wikimedia Commons

Sen. Schumer's plan would extend and change the existing federal solar investment tax credit (ITC) to support jobs at solar companies. The ITC is currently scheduled to phase down from a 30 percent credit to a 10 percent credit after 2016.

Sen. Schumer also asked for changes to the ITC's eligibility rules "that do not allow business and developers who invest in solar systems to gain from the tax credit until the solar panels they install are 'placed in service,'" Schumer explained.

Schumer explained that the reason for his new plan is because tax credits are not awarded until a project is completed, which creates uncertainties for customers. This is unlike the wind tax credit, which is awarded as soon as construction on a project begins.

"We can power up jobs in the Rochester- Finger Lakes Region by extending and modifying the solar investment tax credit. The success of the WilliamSun solar installation is an example of the tax credit's win-win-win impact. That's why I am first pushing to allow customers to reap the full benefits of this credit when they break ground on a solar project, rather than when they complete construction and why I'm pushing to extend the credit beyond 2016. WilliamSun was built by SED a local Wayne county company that has grown 300 percent in three years, it cut the Town of Williamson's utility bills by 27,000 a year for local taxpayers, and it's success is helping SED hire up to 25 additional construction workers this fall. The 30 percent solar investment tax credit has been nothing short of a bright success. And yet while the credit is on the books through the end of 2016, the job-creating benefits it creates are in jeopardy," said Schumer.

Schumer wants to the solar ITC to follow the wind ITC, so that solar investments would create more certainty, in turn creating more investments. Sen. Schumer said his plan would help reach President Obama's goal of 28 percent renewable energy by 2030.

"In order to meet this goal, the federal government previously expanded the solar investment tax credit, which currently allows companies, to receive a 30 percent tax credit on their investment in an eligible property," Sen. Schumer's office said in a statement. "Municipalities can also benefit from the 30 percent tax credit by contracting with a company that owns a solar energy facility."

Sen. Schumer said the plan would also increase solar among homeowners, because the cost savings for solar companies would be passed along to their customers.

Because solar projects, especially large-scale solar, often take numerous years to complete, Schumer thinks that providing the ITC the first year would encourage developers to undertake more solar projects.

Sen. Schumer's proposed changes would help companies like SolarCity, who is currently building a $900 million factory in Buffalo, which is expected to bring nearly 3,000 jobs to the area. He also spoke of companies like Sustainable Energy Development (SED), a solar company based in Wayne County.

"The Federal Investment Tax Credit has been instrumental in SED showing 300 percent growth in employment and revenue since we dedicated ourselves to the solar industry three years ago," said Kevin Schulte, CEO and founder of SED. "It is a fun and exciting industry to be a part of and we are hopeful that Senator Schumer can be successful in his work to change the ITC language so that projects that achieve the start of construction in 2016 can receive the credit and ensuring that wind and solar projects in our queue will get to the finish line and the job growth at SED and in the solar industry nationally can continue."

Sen. Schumer said the solar investment tax credit has played an important role in helping jumpstart solar energy projects.

"With stability provided by the solar investment tax credit, solar costs have dropped rapidly and continuously -- the average cost of solar has dropped by more than 73 percent since solar investment tax credit was expanded in 2006," he explained. "Residential costs have dropped by 45 percent since 2010, while utility-scale costs have dropped more significantly, with recent contracts at prices below $0.05/kWh. The solar industry now employs 174,000 workers in 50 states, including 3,300 in New York, compared to 15,000 workers in 2005."

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