Editor Note: As of Aug. 16, 2022, the solar tax credit (or Investment Tax Credit, ITC) has increased to 30%. To read more and get details on further incentive updates, see our Guide to the 30% Solar Tax Credit.
As 2021 forges ahead and the new Biden administration makes moves, many potential solar homeowners are asking: Will solar incentives increase under the Biden administration?
It’s an important question to ask. Solar prices are the lowest they’ve ever been, but solar incentives have been decreasing steadily. This might mean a tipping point for solar prices.
Is now the best time to buy, or should you wait in hopes the Biden administration will create new solar incentives?
THE SHORT ANSWER
- 26% Solar Tax Credit (or Investment Tax Credit, ITC) extended to 2023, but decreases to 22% in 2023 and expires 2024.
- Biden administration proposes extending 26% tax credit another 10 years, but has little hope of passing Congress.
- Biden administration calls for investment in clean energy to achieve net-zero emissions, but it remains unclear how this would affect residential solar.
- Deadlocks in Congress likely to limit extent of future solar incentives.
- Solar prices might be rising due to supply and demand pressures.
BIDEN’S HISTORIC SUPPORT OF SOLAR
Joe Biden has been a strong advocate of solar energy during his time in office, both as president and vice president. During the Great Recession in 2009, Vice President Biden oversaw the American Recovery and Reinvestment Act (ARRA), which dedicated nearly $90 billion alone to renewable energy priorities. This represented the largest federal investment in clean energy in U.S. history at the time.
The Obama-Biden administration also supported numerous pro-renewable initiatives, including the $4 billion Clean Energy Investment Initiative, which encouraged investment in promising renewable energy technologies.
In addition, the solar tax credit (officially the Investment Tax Credit, or ITC) was extended in 2012. This pushed the step-down and expiration of the 30% solar tax credit (ITC) to begin in 2020.
Overall, these actions and other market forces during the Obama-Biden administration saw installed solar electricity capacity increase from 0.62 million kW in 2009 to 35 million kW in 2016. That’s an enormous growth rate of 5,733% in just 8 years.
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BIDEN’S ACTIONS ON SOLAR SO FAR
As president, Biden has committed to building on renewable energy’s continued progress and has advocated for sweeping reforms and initiatives to support renewable energy.
These initiatives include a climate plan that calls for investing $2 trillion over 4 years in clean energy to achieve net-zero emissions nationwide by 2050.
In addition, Biden’s American Jobs Plan calls for a 10-year extension of the current 26% solar tax credit (ITC). The plan would also ensure those tax credits are paid directly to the solar homeowner instead of through the contractor.
However, these plans are just that, plans. Both of these pieces of proposed legislation either haven’t been introduced yet to Congress or have stalled in negotiations. And with very slim Democrat majorities in both houses of Congress, the path forward looks tough.
The one bit of good news so far for solar customers is the 2-year extension of the solar tax credit, which was passed along with COVID stimulus in December 2020. Unfortunately, the tax credit will decrease to 22% in 2023 and expire in 2024.
BIDEN’S FUTURE SOLAR PLANS
Beyond the proposals mentioned above, it is uncertain how much further the Biden administration can go in their renewable energy policymaking.
While the proposed Biden American Jobs Plan seeks to extend the solar tax credit another 10 years, its largest concentration is on investments in improving grid infrastructure, as well as renewable energy and storage R&D.
Unfortunately, these would have little to no effect on the price of solar for consumers in the short-term.
And realistically, stiff opposition in Congress is likely to limit the extent and scope of solar policy going forward.
So while it might be tempting to see what future solar benefits the Biden administration might propose, the likelihood of Congressional approval seems an uphill battle. And with current solar incentives set to expire, the clock might be ticking on true solar savings.
SOLAR PRICES MIGHT LEVEL OFF, RISE
In the past few decades, the price of solar panels has plummeted a mindblowing 99%, according to analyses by MIT. In 1975, the cost of solar panels was over $100 per watt! But today, solar panels can be found for less than $0.20 per watt.
However, this trend might be slowing down or reversing.
Because solar energy has become so popular in recent decades, the demand for solar panels has skyrocketed. This has meant an increased demand for the materials that go into solar panel manufacturing. These include the metals that go into framing and wiring, as well as the polysilicon in the solar cells.
These demand pressures have now met supply pressures as COVID-lockdowns lift.
After COVID hit, manufacturing and global supply chains froze. Now as global economies open up and solar projects resume, the backlog of manufacturing production is squeezing prices of materials. This has the potential to increase solar prices going forward until these backlogs and supply chains are ironed out, which could take years.
So while solar prices are at an all-time low, this trend might see a hiccup as post-COVID realities set in, and as markets react and adapt.
SHOULD YOU INVEST IN SOLAR NOW?
Deciding the right time to invest in solar energy can be tricky. Should you wait to see how far prices will fall? Will there be new solar incentives coming out? Or will solar incentives expire before you act? And will supply and demand pressures push prices higher?
It can be a difficult decision to make, but Green Ridge Solar can help.
Our solar experts can walk you through your solar options, as well as discuss the future of solar prices.
We can also chat with you about solar financing options and show you just how much you could save with solar panels.
Contact Green Ridge Solar today. We can provide a free solar analysis that shows your estimated solar savings and the design of the solar panels on your roof.