The solar investment tax credit (ITC) can deliver a 10% internal rate of return to taxpayers on the U.S. government's initial investment, according to a new report published by the U.S. Partnership for Renewable Finance (PREF), a program of the American Council On Renewable Energy (ACORE).
The study examined the cashflows generated by tax revenues on solar leases and power purchase agreements and found that a $10,500 tax credit for a residential system can provide a $22,882 nominal benefit to the government in those scenarios over the life of the solar asset, and a $300,000 commercial solar credit can create a $677,627 nominal benefit in a similar time period, PREF explains.
SolarCity, a member of PREF, created the models for the study based on industry data and consulted with tax and advisory firm KPMG on the application of current income tax law and evaluation methodology for federal government incentives.
‘Everyone understands that solar power leads to cleaner air and greater independence from fossil fuel,’ says Lyndon Rive, SolarCity's CEO. ‘Far fewer people realize that solar incentives can pay for themselves. Solar power has become a political football in this election year, but the investment tax credit has been one of the most beneficial, bipartisan energy policies of this or any other generation.’
‘The ITC has been very effective in stimulating private-sector investment in solar energy, enhancing our nation's energy and economic security by diversifying our energy mix and improving our quality of life through a cleaner environment,’ adds ACORE CEO Dennis V. McGinn." This policy is both effective and fiscally prudent.’