What commercial solar developers need to know about the ITC extension
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The end of 2015 brought the great news that the US congress renewed the solar Investment Tax Credit (ITC) for an additional three years. There has been a lot written about the broader impact on the industry, but not much about how the commercial project developers can take advantage of the ITC extension.

What you need to know about the ITC extension

Originally set to expire at the end of 2016, the 30% ITC is now extended through 2019. After that it gradually ramps down 4% each year through 2021. In 2022 the ITC will drop to 10%.

One of highlights for commercial solar developers is the “commence construction clause” that the ITC can be claimed in the year that the project begins construction, rather than waiting for the system to be placed in service. This in effect extends the 30% tax credit benefit beyond 2020, only requiring that systems be placed in service by 2023.

How you can take advantage of solar ITC extension

1) Revisit projects that stalled due to financing

The uncertainty surrounding the solar ITC extension increasingly hurt investor confidence in the solar industry. With its future now secure for another 3 years, it is a great opportunity to revisit projects that struggled to secure financing in 2015.

Take a look at your portfolio and look for projects that may have been passed over because they were a higher risk, such as large projects that might have had trouble being completed by the end of 2016.

2) Reach out to prospects that were not ready to install solar before the end of 2016.

Large commercial projects can take a long time to develop, so you may have prospective customers that are now great candidates for solar. Now those same projects have until 2019 to work through the process and begin construction.

As 2016 progresses, the “commence construction clause” is a great selling point for companies looking to purchase their systems and want to offset some of this year’s taxes. The system doesn’t need to be completed in 2016 to earn the credit, it just needs to be under construction.

3) Get involved with your local SEIA chapter

With the battle to extend the solar ITC settled, solar advocacy groups are now turning toward more local fights, like protecting net metering. As recent events in Nevada demonstrate, a change in local solar policy can create a sudden and radical shift in your local solar market.

Your local SEIA chapter plays an important role in shaping and tracking potential legislation, and leading the fight against utility policies that could hurt the solar marketplace. By supporting and becoming involved with these organizations, you help keep your local industry healthy. They also offer networking and educational opportunities that can help you build your business.

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