By Robert Bradley Jr.
Aaron Nichols on LinkedIn provided a history of federal solar tax subsidies, beginning with Jimmy Carter. His point was to show that the numerous extensions (15 by my count) were bipartisan. My point, instead, is that on-grid solar is inherently noncompetitive against free market energies. [Note: AN blocked me]
Solar tax credits were not “created by the Inflation Reduction Act” or “invented by the Biden Administration,” Nichols begins. He continues:
The first solar energy incentives were created in 1978 by Jimmy Carter’s Administration. They’ve even enjoyed bipartisan support and been renewed by Republican administrations! Here’s a high-level history of solar tax credits:
1978: The Energy Tax Act of 1978 set the first federal solar ITC at 10% of project costs. Congress extended and modified this credit through the early 1980s, eventually making a 10% solar ITC permanent in 1992.
1992: The Energy Policy Act of 1992 established the PTC for renewable electricity. Originally aimed mainly at wind power, it provided 1.5¢ per kWh for the first 10 years of a project’s operation.
Solar was not initially eligible for the PTC, but this law reaffirmed the permanent 10% ITC for solar.
2005: President George W. Bush signed the Energy Policy Act of 2005, a landmark energy bill establishing a 30% ITC for solar investments. This included a new 30% residential solar credit. The 30% rate was initially temporary but was later extended by the Obama administration.
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2008: The Emergency Economic Stabilization Act of 2008 (enacted under President Bush and continued by President Obama) extended the 30% ITC for eight more years and removed the $2,000 cap on the residential credit.
2009: In response to the financial crisis, the American Recovery and Reinvestment Act of 2009 (Obama administration) introduced a cash grant option (the Section 1603 Treasury Grant Program) in lieu of the ITC.
2015: The Consolidated Appropriations Act of 2016 (enacted Dec 2015 under President Obama) provided a long-term extension with a phase-down for the solar ITC. It maintained the 30% ITC for projects commencing through 2019, then scheduled step-downs: 26% for 2020, 22% for 2021, and thereafter dropping to 10% for commercial and 0% for residential in 2022.
2020: In late 2020, under President Trump, Congress extended the phase-out schedule for solar credits by two years. COVID-19 relief legislation (Dec 2020) kept the ITC at 26% for projects begun in 2021 and 2022 (instead of dropping further), with 22% for those begun in 2023. There was speculation that President Trump might veto this extension, but he ultimately signed it into law.
2022: The Inflation Reduction Act (IRA) of 2022, passed under President Biden, not only renewed and increased these clean energy tax credits but also redesigned them. It restored the ITC to 30% and guaranteed it for at least a decade, revived the PTC for solar and other renewables, and introduced bonus credits and elective pay.
Comment
“Clean energy doesn’t have to be Red vs. Blue (and historically hasn’t been),” Aaron Nichols ended. “Investment in solar energy infrastructure benefits us all.”
Really? Tell that to Sunnova clients and investors. Tell that to beleaguered taxpayers. One wonders how long Mr. Nichols will still have employment, his job description being
I’m a NABCEP-certified PV professional who’s worked in solar sales, installation, and marketing. I’ve researched and written on federal clean energy policies and have served as a source on the U.S. solar market for several major publications, including Business Insider, USA Today, and NerdWallet. My writing has appeared in Solar Today, PV Tech, and Solar Power World.
One hopes his skill set can be redeployed to non-political profit centers. The private sector needs him more than a dying industry does. (And he should unblock me at part of his changeover.)
Appendix: My ITC Summary
In Wind and Solar Power: Old, Uneconomic, Government Dependent, I provided this similar summary of the Investment Tax Credit (ITC)
Fast forward to the 1970s when U.S. price controls on natural gas and oil led to shortages and fears of Peak Oil and Peak Gas. Solar became the political energy of choice for President Carter, beginning with a 10 percent Investment Tax Credit in 1978. Extensions followed in 1980, 1986, 1988, 1989, 1990, and 1991.
The Energy Policy Act of 1992, increasing the ITC to 30 percent of invested capital, was extended in 2006, 2008, 2009, 2016, 2018, 2019, and 2022, the most recent being in Biden’s Inflation Reduction Act. In all, solar has received 15 extensions of its “temporary” program to date.
Not good, and time for change.
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Both parties are corrupt, which proves that neither party is corrupt.
That is, I think, that neither party wants to accuse the other of corruption? Got it. 🙂
It was a dumb idea from the get-go. I doubt that it purchased much, if any, “energy independence”, and the only thing it accomplished was screwing up the grid.
It might have made sense in 1978. Truly the technology has improved amazingly. It’s not until the early 2000s where there was enough knowledge to know it was a terrible idea.
Now do California.
What was wrong with W. that he went for it? Did he believe in it or was it just to get allies on the left? By the way, I liked the Oliver Stone movie, “W”.
His EPA Administrator, Christie Todd Whitman, convinced him.
I remember W seemed like a nice guy, and I’m so glad both other guys could not beat him, but often I see a bad policy and think – I know what name will turn up when I look into this one. Yep. W.
One would think that after nearly 50 years the SV industry would be ready to stand on its own without additional infusion of tax payer dollars.
It SV is as economically viable as proponents claim, it should have been weaned off the Government teat a long time ago.
And look how far it has progressed in those decades.
Not much.
It is ready, but no one in policy positions or apparently anyone else but a handful of stock analysts are capable or inclined to look in the utility scale solar sector for the few leaders. Oh well
Is it ready? Spain might argue.
I was in the electric power industry. It sounds like “ResourceGuy” was not? There is not one US authority that runs water, gas and electric, there are hundreds. Hundreds of little authorities responsive to local agendas with humongous debt-funded capital assets paid off over decades, paying aged, often unionized salaries and retirement benefits. It is totally unsurprising that most of the industry could give utility scale solar a try. It is shocking that almost nobody has.
“Aaron Nichols on LinkedIn provided a history of federal solar tax subsidies, beginning with Jimmy Carter.”
I remember that Carter shut down the White House Christmas lights to “set an example” and also had solar panels installed on the roof. (Guess they couldn’t handle a few Christmas lights? 😎 )
One of the first things Reagan did was have them removed.
I also remember the gas lines, skyrocketing inflation rates, paying Panama to take back the Panama Canal, American Embassy hostages held by Iran for over a year (until the day before Reagan was sworn in).
The version of the Big Beautiful Bill which has come back from the Senate continues the large wind and solar subsidies that have, for the last decade, driven investment away from gas-fired generation and into wind & solar backed by batteries.
If the House doesn’t remove those subsidies before its final vote this week, then wind and solar will continue to completely dominate utility spending for new-build electric power generation.
With the consequence that the quick expansion of America’s power generation capacity needed to support President Trump’s policy of rebuilding America’s industrial base will not happen.
BB, The hysterical selfie videos I saw from Democrat Senators seemed to indicate that Republicans were ready to dump these subsidies, but Democrats managed to keep them in place or at least were taking credit for such. I testified at a PSC hearing in March that someone has to address the topic of adequacy soon or there will be far too much wind/solar for the remaining thermal plants to balance; that is, the grid’s hard limit will be how much thermal generation is available. Trying to rely on natural gas to do the whole task will reach infrastructure limits I fear.
I don’t care what Aaron Nichols thinks or says. Fire up all fossil fuel and nuclear generators. Build new fossil fuel and nuclear generators. Remove all wind and solar from the grid. Withdraw all subsidies, tax preferences, environmental forgiveness and mandates for wind and solar.
Notice that for 47 years, American tax policy has been used to refund directly (dollar for dollar) to people who have complied with the ideas of politicians who legislate energy policy.
Also notice that for 47 years, all energy policy has resulted in ZERO effect of reducing the atmospheric concentration of CO2, which is the sole purpose of those policies.
At some point useless policy must be discarded as a waste of time, effort and money. Insanity is defined as doing the same thing over and over while expecting different results.
Now do ethanol. Is there anything stupider (more stupider?) than turning food into fuel?
It would be nice, but we all have to pay homage to Iowa each time we fill up. It’s a farm lobby thing no matter how ignorant.
And if you’re following politics, Musk is throwing another hissy fit over solar and EV subsidies. All the while complaining about the debt and the deficit. Musk’s a genius entrepreneur and visionary, and also a child.
Now he’s threatening to start a new American political party.