Supporting solar

NRCA supports legislation to aid the solar industry during the COVID-19 pandemic

As Congress continues to address the economic consequences of the unprecedented COVID-19 pandemic, NRCA is working to support legislation to remedy the severe disruption within the U.S. solar energy industry.

The problem

With an estimated 250,000 employees and more than $19 billion in annual infrastructure investments, the solar industry has experienced extraordinary growth in recent years. A substantial portion of the roofing industry is engaged in the installation of rooftop photovoltaic products and systems that are a vital source of renewable energy and help families and businesses reduce electricity costs. NRCA has a long record of partnering with allies in the solar industry to support its continued growth.

Unfortunately, the plummeting economy is threatening thousands of jobs and critically important investments in renewable energy across the U.S, and it is clear the solar industry has been hit especially hard. Solar companies are experiencing numerous problems, including supply chain delays, tightening of tax equity markets and building owners’ financial concerns as a result of stay-at-home orders, which could lead to a loss of up to half the industry’s workforce.

These challenges will likely be concentrated in the second half of 2020 with losses of up to 54% relative to forecasts and rooftop solar business down by as much as 70%, according to the Solar Energy Industries Association. Financing for solar investments through the tax equity markets is rapidly evaporating, which means solar projects may lose billions of dollars in financing. Left unaddressed, this situation will dramatically decrease the number of gigawatts of solar energy deployed and severely damage efforts to expand solar energy for years to come.

Call to action

In response, NRCA is urging Congress to take the following necessary legislative actions to stabilize the solar industry, which will save jobs and preserve the country’s ability to generate renewable energy.

NRCA recommends Congress extend the Solar Investment Tax Credit. The Solar Investment Tax Credit currently permits a building owner to deduct 26% of the cost of installing a new solar energy system from his or her federal taxes. Established by the Energy Policy Act of 2005, the Solar Investment Tax Credit is one of the main reasons solar power has grown 10,000% since 2006.

To continue the growth of solar energy in highly disruptive economic conditions, the Solar Investment Tax Credit should be extended at the 30% level for a minimum of three years. This should include a multiyear extension of the Section 48 commercial credit and Section 25D residential credit and postponement of the corresponding placed-in-service deadlines. Enacted with bipartisan support, the Solar Investment Tax Credit has a tremendous record of incentivizing renewable energy deployment, creating nearly a quarter of a million well-paying jobs, and driving down electricity costs for consumers, businesses and municipalities. The tax credit also has generated an estimated $140 billion in private investment since its inception.

Congress also should provide a direct payment option in lieu of the Solar Investment Tax Credit. Given the precipitous decline in economic activity resulting from stay-at-home orders and other COVID-19 measures, solar companies are concerned with staying solvent during the downturn. Many companies currently are unable to finance projects and keep workers employed. Permitting building owners to receive Solar Investment Tax Credit direct payments immediately rather than during the next tax season may encourage new solar projects and ensure the continuation of those in progress.

NRCA urges Congress to extend a direct payment option for all qualified solar energy projects for the length of the Solar Investment Tax Credit period. This would help provide much needed liquidity and allow solar companies to retain employees in anticipation of future growth. There is precedent for such a measure in the American Recovery and Reinvestment Act of 2009, which Congress approved during the Great Recession. The measure successfully helped sustain solar companies as the tax equity market dried up at that time, similar to what is happening now.

Manufacturing and shipping delays of equipment that qualify for the Solar Investment Tax Credit are jeopardizing the tax credit qualification of projects currently under development and in construction. Legislation to address the crisis in the solar industry should adjust safe harbor deadlines to account for COVID-19 delays, preserving jobs and stabilizing the industry. This can be accomplished by modifying and extending existing IRS regulations to accommodate all equipment purchased through the end of 2020.

Work continues

It is critical Congress takes prompt action to address the crisis in the solar energy industry. NRCA supports adoption of its outlined policy prescriptions to prevent massive layoffs and major damage to the country’s capacity to generate renewable energy. NRCA will continue working with allied stakeholders to support the solar industry and the companies and workers who depend on its success.

Duane Musser is NRCA's vice president of government relations in Washington, D.C.

This column is part of Rules + Regs. Click here to read additional stories from this section.



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