By: Martin DeBono
The Federal Investment Tax Credit (ITC) is a business-minded policy that has helped accelerate growth of clean electricity generation in the past decade in the U.S. Solar energy is a key component in this acceleration. Since the ITC was introduced in 2006, the solar industry has experienced an average annual growth rate of 50%. And U.S. solar capacity is set to double in the next five years.
The solar industry now employs almost 250,000 Americans across the country and, given its impressive economic potential, has a 105% projected job growth rate through 2026. Importantly, many of these jobs can’t be shipped overseas. On the residential front, encouraging investment in home repair and construction supports local communities. Locally owned-and-operated businesses that affix new roofs, repair plumbing or install solar panels can’t outsource labor to the other geographies; they need to invest in talent in their own backyards. The growth of rooftop solar in the U.S. via policies like the ITC essentially represents the growth of a regionally-based home improvement vertical that is directly tied to supporting jobs that can’t be exported.
Moreover, thanks to the tax incentive made possible by the ITC and to homeowners who want more control and choice in their energy use, rooftop solar is finding new avenues of deployment that further support local jobs. These avenues include going to market through residential roofing channels. Greater collaboration between the roofing and solar industries allows solar technology to reach more homeowners through the millions of new roofs installed annually. In turn, it allows roofers to broaden their skills and grow their businesses. Compared to the 105% projected job growth of the solar industry, traditional roofing jobs are expected to grow only 11% through 2026. And with expected turbulence on the horizon for the U.S. economy, such a partnership can support both solar workers and roofers as they navigate challenging business times.
Starting in 2020, the ITC is set to being dropping from its current rate of 30% of eligible costs. After 2021, the residential ITC is eliminated, and the commercial ITC settles at 10%. This step-down is a threat to tens of thousands of well-paying, durable American jobs and runs counter to consumers’ growing expectations of greater resilience and choice in energy use. Notably, 76% of Americans support expanding access to solar energy and 81% of all registered voters believe that solar energy is good for the economy.
If the ITC is allowed to expire, it will undercut an industry that has begun to thrive and has the potential to contribute mightily in the coming years and decades to the American economy through the creation of local jobs. Elimination of the ITC, even a gradual one, flies in the face of what a significant percentage of Americans need and want.