Solar Investment Tax Credits Under Threat in 2024

Prominent Republican leaders, including Donald Trump and Ron DeSantis, are indicating a possible overhaul of the Inflation Reduction Act's solar provisions, meaning billions of dollars for sustainability measures such as commercial solar projects will be gone, should they emerge victorious in the 2024 presidential election.

The Inflation Reduction Act, an important legislative achievement of President Joe Biden's administration, offers up to 40% tax credits for solar energy installations. These incentives are playing a crucial role in guiding the nation, towards renewable energy. However, the solar investment tax credit (ITC), a key element in the success of commercial solar companies, might face an early termination.

Criticism from Republican circles centers around the need for a review of the substantial federal support for solar energy provided by these tax credits. Reflecting this view, potential political candidates are suggesting a strategic shift that could transform America's energy policy, directly impacting businesses in California.

Experts in the commercial solar industry are urging prompt action for businesses contemplating solar investments, warning that these incentives may not extend beyond the upcoming election cycle.

Currently, the Solar ITC is 30% of the overall project cost, plus another 10% if your facility is in an “energy community” (this applies to large swathes of California). Other tax deductions are also applicable but are not currently under threat. These credits, coupled with the significant reduction in energy costs as a result mean the average payback period is currently between 2-3 years.

This impending policy shift has already stimulated an increase in solar applications, with businesses rushing to capitalize on the benefits before any changes occur. Commercial solar companies are experiencing a surge in demand, but this boom could be short-lived.

While the exact nature of the proposed changes is still uncertain, the message is clear and urgent: the time to invest in solar energy is now. This is a crucial moment for your business to not only contribute to a more sustainable future but also to secure financial benefits that might soon disappear.