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The Solar Industry Wants a Tax Credit Extension. Should It Get One?

Four years ago, the U.S. solar industry was in the midst of “jockeying” to attach an extension of the Investment Tax Credit — the industry’s “most important public policy” — to whatever legislation lawmakers deemed appropriate.

As the credit neared its phaseout and the Obama administration’s Clean Power Plan awaited implementation, analysts warned of an “unprecedented boom” through 2016 before solar hit the skids and dropped into a pit of uncertainty through 2019.

For those in the industry today, the anxiety should feel familiar — if it ever went away.

In mid-December 2015, Democrats finally settled on a high-stakes bargain: In exchange for a lift of the longstanding oil-export ban — opposed by environmentalists and the Obama White House — the wind and solar industries got five-year extensions of their tax credits.

The deal was an especially sweet one for solar: Lawmakers extended the full ITC through 2019, while wind’s Production Tax Credit began phasing down more quickly.

Fast-forward to 2019 and an ITC extension is still SEIA’s “number-one priority,” according to an interview conducted with CEO Abigail Ross Hopper in May.

Despite similarities with the past, the industry is in a markedly different environment than four years ago. The Trump administration has aggressively distanced the U.S. from the Paris climate pact and dumped the Clean Power Plan. Solar only accounts for about 2 percent of electricity nationwide.

SEIA has taken the most aggressive stance in lobbying for an extension of the credit, once again assuming the mantle it took on in 2015. Its arguments this time echo many put forth four years ago — namely, that a credit offers certainty in a market that’s generally faced volatility (tariffs from the Trump administration, other trade negotiations and uncertain state policies, to name a few examples).

Though the solar industry, environmentalists and many politicians have lined up to support an extension, there are some doubts about whether it’s necessary for solar to continue thriving.

By nearly all measures, the resource is doing smashingly. Research out this summer from WoodMac indicates that solar will out-compete that of natural gas around the world by the early 2020s on a levelized cost of energy (LCOE) basis.

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