Congress extends tax credit through 2018 to spur alternative energy

By Greg Ruland Wednesday, December 23, 2015 A retired cabinet maker on Grand Junction’s north side borrowed $30,000 to install a solar array atop his home workshop this fall, one of several moves the middle-aged man made this year to get his “ducks in a row” before age or happenstance prevents him from making decisions on his own. The retired craftsman said his choice to go solar was motivated by several factors, saving thousands of dollars in energy costs chief among them. Without the 30 percent investment tax credit currently available to offset the purchase, however, Mark Blair said he would have deferred. “We couldn’t have done it. It’s just too much money,” he said. Blair said he will apply the money he would normally pay to Grand Valley Power to pay off the loan through Atlasta. Blair borrowed through Atlasta. His return on investment is not expected before he repays the loan. Solar panel vendors across the country rejoiced last week when Congress extended through 2018 the 30 percent investment tax credit on solar energy installations. Starting in 2019, the credit will taper off in yearly increments of 10 percent through 2022, after which it will presumably expire, “Scientific American” reported Monday. The credit, which applies to both residential and commercial property, is a dollar-for-dollar write down on federal tax owed in the year the array is purchased, said Teddy Aegerter, a sales associate at Atlasta Solar Center, 1111 S. Seventh St. For Blair, that means a savings of $10,000 on his 2016 income tax. “With the federal tax credit set up to expire in 2016 ... people were really rushing to get it for 2015,” Aegerter said. “It actually increased our business because people wanted to take advantage of the tax credit (before it expired).” Business picked up dramatically at Atlasta starting in September. Sales have been strong through the fourth quarter, he said. “The credit is used when homeowners (like Blair) purchase solar systems outright and have them installed on their homes,” Aegerter said. For residential projects, homeowners like Blair apply the credit to reduce personal income tax. For commercial projects, the company which “installs, develops or finances” the solar arrays takes the tax credit. Atlasta works mostly with homeowners, he said. In another positive development, homeowners are enjoying a quicker return on their solar investment since the cost of materials for solar panel production has gone down in recent years. Cheaper systems have expanded the motivation of solar array buyers, who now see the purchase as a way to market their home. Financing is available through Atlasta from a Salt Lake City bank that specializes in home improvement loans, but there are many ways to pay. Wrapping the purchase into a mortgage refinance, for example, is another option, Aegerter said. “People are getting an average return on their investment (through savings on electricity) within six to 10 years,” he said. “It’s an added value. For every $18,000 you invest, you can expect a return of $20,000 when you sell.” Blair said he was skeptical he would see any return on his investment before 2027. Since the tax credit was introduced in 2006, the value of solar energy array transactions has grown 1,600 percent across the U.S., reflecting “a compound annual growth rate of 76 percent,” the Solar Energy Industries Association estimated. Projecting a rosy future, the association said investment the tax credit extension will: ■ Add 72 gigawatts of new capacity to the nation’s electrical grid by 2020. ■ Push net solar capacity to more than 100 gigawatts, or roughly 3.5 percent of all electricity produced in the U.S. ■ Increase investment in solar by $40 billion between 2016 and 2020. ■ Double the current number of jobs in the solar industry to 420,000. The move will also help states comply with the federal Environmental Protection Agency’s Clean Power Plan, which launches in 2022 and requires a 32 percent cut in utility-sector carbon emissions from 2005 levels by 2030, “Scientific American” reported. “Some states (will see) reduction requirements as high as 45 to 47 percent” as a result of the plan, the magazine said. The leader of the Colorado trade association representing solar was even more confident about the effects of the extension, predicting “$125 billion in new, private sector investment … and … a tripling of deployed solar by 2022.” “The extension will provide certainty to our industry,” Rebecca Cantwell, Colorado Solar Energy Industries Association executive director, said in a news release.