Homeowners who purchase a solar electric system can now reduce their federal income tax liability by 30% the cost of the installation – effectively having the government pay close to a third of the cost. This is the first significant solar incentive available to homeowners in Idaho. The incentive for businesses is even greater. In addition to the 30% tax credit, businesses who install solar electric or solar heating systems can take advantage of accelerated depreciation on solar property over just 5 years.
Industry leaders forecast the extension and enhancement of the solar investment tax credit (ITC) will lead to dramatic growth in the U.S. solar market. Incentives in places as diverse as Germany and California have successfully driven the demand for solar installations. That demand has created new jobs in a future-oriented industry that reduces both the demand for foreign oil and the causes of climate change.
In the global competition for leadership in the solar industry, Germany upped the ante significantly in 2000 with a pioneering incentive for solar installations. The German renewable energy law, which goes by its German acronym of EEG, offers to buy power produced by renewable means at $0.48 per KWh, or twice the market rate, for a contract period of 20 years. Despite a cloudy northern European climate with half the sunshine of the U.S. sunbelt, the German solar incentives results have been impressive, including
• more than 50% of worldwide solar installations going into Germany
• 40,000 new future-oriented solar jobs in Germany, projected to grow to 200,000 by 2020
The improvements to the federal solar ITC are expected to spur growth in U.S. solar installations and narrow the gap in the international competition for solar technology and jobs. According to an economic study by Navigant Consulting, Inc. (commissioned by Solar Energy Industries Association) by extending the solar ITC by 8 years, the federal incentive is expected to “create 440,000 permanent jobs and unleash $325 billion in private investment in the solar industry.”
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New 2009 Solar Tax Incentive
New residential solar electric installations can benefit from a significantly improved federal tax credit that went into effect January 1, 2009.