Editorial: The new plan to slash rooftop solar incentives is better — but still too extreme
One of the most significant changes to the federal tax bill passed in December and introduced on Jan. 3 is the repeal of the Affordable Care Act’s (ACA’s) solar tax credit. The tax bill makes good on a Democratic Party plan to eliminate the credits by limiting the amount that can be given to households with only solar power.
The solar tax credit was created under the ACA as part of a compromise that allowed for a market-based system to be established for electricity and heating systems owned and operated by residential and small commercial customers to be eligible for a 20% credit on their electric bills.
The tax bill did not create a new subsidy for solar energy to be eligible for the tax credit.
However, the solar tax credit was not to end at the conclusion of the 2020 tax year, but would instead be phased out over a period of three years for residential and small commercial customers. As discussed in a recent article in the Columbia Journalism Review, a proposed phase-out of the solar tax credit also would require the new subsidies to be paid out over a longer period of time.
In the early minutes of Trump’s speech at the 2017 National Defense University, the president announced that the U.S. would be withdrawing from the Paris Climate Agreement. He also promised to renegotiate NAFTA, including a possible renegotiation of the North American Free Trade Agreement, which would significantly impact the U.S. solar industry.
The U.S. solar sector is a big market player with large installed base of solar panels, with many of the biggest names in the industry represented in the Trump administration. According to the recent NPD Group report, the U.S. solar industry represented approximately $4.5 billion in installed solar capacity as of April 2018, and was projected to grow to $6.2 billion by the end of 2019.
The new solar tax credit repeal would
