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Investment Tax Credit Extended Through 2022 (and beyond)

Image: EnergySage

The reason that Power Purchase Agreements (PPAs) have been attractive to solar customers and the investor community is because the federal government has offered the solar customer and investor a tax credit worth 30% of the PV system cost. Called the Investment Tax Credit (ITC), it was set to drop to 10% for commercial projects (including school districts) and to expire for residential customers at the end of 2016. Given the long lead times for school district projects, many investors were already cautioning school districts that the economic proposal might have to be revised if the project was not completed by the end of 2016. For that reason, school district projects that planned to use PPAs began to stall.

Good news though! The passage of the federal omnibus spending bill on December 18, 2015 breathed new life into the solar market by extending the 30% ITC for four more years - stepping the credit down after 2019. You can read more about the extension of the ITC in this factsheet created by the Solar Energy Industries Association.

Tax laws do change over time, so be sure to check on the current status of the ITC before making a final commitment to purchase.

If you have any questions about financing your solar projects, please do not hesitate to contact us!