This summer, Congress passed, and President Biden signed into law the historic Inflation Reduction Act (IRA). Although the bill is somewhat oddly named and doesn’t clearly communicate it, this might be one of the most significant events in recent years for the renewable energy industry, particularly the future of solar energy in America. So what does the bill do for solar energy?
What the bill does
The IRA is projected to reduce U.S. greenhouse gas emissions some 40% below 2005 levels by 2030, which is a huge step toward reaching President Biden’s goal of cutting them in half by 2030. Additionally, the bill has provisions that will impact energy costs for millions of American families while simultaneously helping to create a projected 9 million new, high-quality jobs in clean energy and manufacturing industries, including electric vehicle production and incentives for wind and solar.
The role incentives play
Before the passing of the Inflation Reduction Act, the solar Income Tax Credit (ITC) for installing solar energy was set to go away entirely for residential installations in 2024. However, with the passing of the IRA, the ITC has not only been extended but also raised. The new bill sets the ITC at 30% for private residential installations from 2022-2032, with the first step-down beginning in 2033 when it drops to 26 percent.
This change in the ITC is massive news for anyone considering adding solar to their private residence. The Investment Tax Credit will also be extended to non-residential projects and increased to 30 percent for utility-scale, commercial, industrial, non-profit, and third-party-owned installations. Additionally, under the IRA, commercial solar installations will now qualify for the Production Tax Credit (PTC), and system owners can choose either the ITC or PTC as an option.
The impact on the solar industry
It’s safe to say that the Inflation Reduction Act and its improvements to ITC will significantly impact the number of solar installations we see in the coming years. This will likely result in a rise in consumer demand, which may mean you’ll want to start speaking with a proven and qualified solar installer to reserve your spot in line sooner rather than later.
To learn more about the amazing benefits of solar and how you can invest in environmentally friendly, clean, renewable energy, contact an All Energy Solar representative.