By Robert Bradley Jr.
Ed. Note: This repost is timely given the end of the Investment Tax Credit and the Production Tax Credit for unstarted projects as of July 4, 2026, pursuant to the One Big Beautiful Bill of 2025. For started (‘safe harbor’) projects, it is business-as-usual, which explains why the projects were started in the first place. If an unstarted project is completed by year-end (highly unlikely), it would also receive the ITC and PTC. Tomorrow, the history of wind power tax subsidization is chronicled.
“Nothing is so permanent as a temporary government program.”
– Milton and Rose Friedman, Tyranny of the Status Quo (1983), 115.
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 (14 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 (14 extensions)
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. [6]
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 14 extensions of its “temporary” program to date. [8]
That’s 14 extensions: 1980, 1986, 1988, 1989, 1990, 1991, 1992, 2006, 2008, 2009, 2016, 2018, 2019, 2022.
Not good, and time for change.
Which is why solar was referred to as subsidy mining.
Why do we need government tax credits? We already receive substantial benefits from the sun. Like: light, warmth, crops and the very basis of life itself. This is an example of the “benefits” of windmills.
https://www.fox4news.com/news/texas-sues-wind-turbine-company-allegedly-abandoning-3000-blades-west-texas
Plus as my U.C. Berkeley science major friend tells me, “all during daylight savings time, we get an extra hour of sunlight. And with every 4th year being a leap year, we get an extra year of sunlight.“
Back in the day I would have taken that for a good joke.
These days I’m sad that it was probably delivered in all seriousness.
The extra year of sunlight during a leap year is probably what make renwables so cheap and profitable.
If only the rest of the world knew that time has become as relative as gender,
they’d make every year a leap year and increase the current green energy output by 75%.
Might as well pass a law to make Pi 3.14, while they’re at it.
Don’t know if true, but a good quote nonetheless. I read somewhere that an Indian chief commented that only a white man would cut a foot off the bottom of a blanket and sew it to the top and claim he had a longer blanket in reference to someone explaining daylight savings.
Don’t say that too loudly. If the government finds out we benefit from the sun they’ll want to tax us for it.
I must be mistaken, but I thought we already were taxed.
Taxes on food.
Taxes on lumber.
Yet another example of an abuse of power by the government. The same as California abused their power concerning electricity and fuel the feds are abusing their power concerning subsidies and tax credits. If they can’t handle their authority responsibly it should be taken away from them.
In my submission to the Finkel enquiry in Australia in 2016, I aimed to find an optimum mix of battery firmed solar and coal fired generation on the basis that there might be some combination lower cost than just coal fired. If there is an optimum, I could not find it. It was ALWAYS lower cost to install more coal fired generation than some combination of solar-battery-coal.
That analysis was based solely on serving average daily demand rather than getting into detail of peak lopping using batteries rather than gas. There may well be a case for using batteries for peak lopping in a low base demand grid like that developing in Australia due to encroachment of rooftop solar.
Realistically, it does not make sense to use a grided power network to interconnect grid-scale solar farms. Solar can find economic application off-grid. Hybrid diesel-solar-battery in Australia are achieving unit costs between $350-$400/MWh. Diesel/fuel oil alone ranges from $400-$1000/MWh.
To put those costs in perspective, Latrobe Valley charged $23/MWh at transmission level back in 2003 before the grid became weather dependent.
Looking at what Finkel managed to screw up when he rose to prominence I’ve always wondered just how he managed to rise that high.
A classic case of post turtle.
I was staggered by the level of BS his report contained. I did estimates on the capacity of solar and battery that looked outrageous at the time and thought the report would not garner support. My estimate for a transition of the NEM was AUD1.5tr. They are now looking to spend more than that.
Australia could have a fully rejuvenated coal powered grid for a small fraction of the cost.
The government spends money as if it is other people’s money.
“The government spends money as if it is other people’s money.”
Humor – a difficult concept.
— Lt. Saavik
It is called the Peter Principle.
Meanwhile China ended its remaining 9% VAT export rebate to their giant panel producers on April 1, 2026. It had been a 13% reclaim credit during production until late 2024. During 2026 the export VAT rebate for battery producers is being phased down from 9% to 6%.
Government bureaucracies never end. The grow and flourish like weeds, even if they accomplish nothing or waste money.
What isn’t well-known is that the Solyndra debacle actually began prior to Obama as the first DoE loan was done under GW Bush as part of the Solar America Initiative. Later the Obamanistas doubled-down on the stoopid by pumping more cash into the company just before it went belly-up.
In 1985 the domestic solar hot water heating industry in the USA evaporated almost overnight when the tax credits expired.
It was a very loud CEO at Solyndra who got the California delegation to pressure on Obama to do the wrong thing and pump more taxpayer funds into the failing company after WS shunned it. Of course that same executive team took its bonuses on the way out of the faux shell company that was never ever a legitimate player in the solar industry. Obama and Pelosi could not even apologize to the American people–scumbags.