Senators Gordon Smith, R-Ore., and Ken Salazar, D-Colo., have introduced legislation to the Securing America's Energy Independence Act (S.590), which would extend and expand solar energy investment tax credits for homeowners and businesses through 2016. Under the current law, the credits are set to expire at the end of next year.
The Energy Policy Act of 2005 provided a 30% tax credit for solar systems purchased for both residential and business applications. According to the government officials, these credits will expire after two years without legislative remedy – a term too short to encourage significant industry growth.
The Solar Energy Industries Association (SEIA), which supports the act, estimates that a long-term credit extension would create approximately 55,000 solar industry jobs by 2016 and encourage states to invest billions of dollars in renewable energy infrastructure. In addition, solar energy would displace four trillion cubic feet of natural gas under the bill, saving American consumers $32 billion over equipment lifetimes.
‘The Securing America's Energy Independence Act represents a pro-growth path toward developing clean, domestic solar energy,’ says Rhone Resch, SEIA's president. ‘American taxpayers want the government to invest in technologies that create jobs, reduce emissions, lower our energy bills and keep our energy dollars here in the U.S.’
S.590 includes the following provisions, which would take effect for all equipment installed retroactive to Jan. 1, 2007, and going forward:
-Residential solar tax credit – extends the 30% tax credit created in the Energy Policy Act of 2005 for the purchase of residential solar water heating and fuel cell property. Changes the maximum credit to $1,500 for each half-kilowatt of capacity for solar PV equipment and $1,000 for each kilowatt of capacity for fuel cells. Credits may be taken against the alternative minimum tax. This credit expires after Dec. 31, 2016.
-Business solar tax credit and fuel cell tax credit – extends a 30% business credit, established in the Energy Policy Act of 2005, for the purchase of fuel cell power plants, solar energy property and fiber-optic property used to illuminate the inside of a structure. Changes the maximum credit to $1,500 for each half-kilowatt of capacity for solar PV equipment. Credits may be taken against the alternative minimum tax. This credit also expires after Dec. 31, 2016.
-Accelerated depreciation – creates a three-year accelerated depreciation period for all solar equipment eligible for the business solar tax credit.