The Solar Investment Tax Credit (ITC) has been a hot topic in the energy sector for the better part of the last two decades. Originally established in 2005, this dollar-for-dollar tax credit was created to stimulate private and corporate investment in renewable energy and drive down the costs associated with this essential technology. After a period of large-scale success, the ITC was renewed multiple times, and in just 10 years the average Price Per Watt (PPW) for a solar installation has dropped from $8.50/Watt to $2.96/Watt (via EnergySage)!

In fact, solar’s price has fallen so much that it is now cost-competitive when compared to developing new power plants that use fossil fuels (via Forbes). With cost reduction of this magnitude, it is undeniable that the Solar ITC has done its job. However, all good things must come to an end; and with the solar industry developing and thriving, the Solar ITC is not up for renewal after its scheduled phase-out ending 2022.

For the first time in 13 years, the solar ITC dropped this year from 30% to 26%, and it will drop further next year to 22%. After that, the ITC for businesses will remain indefinitely at 10%, while homeowners will lose their tax credit entirely.

To put these changes in perspective, for a $100,000 solar project that means:

In 2020:
Tax Credit: $26,000
Depreciation benefits: $21,000
Average Payback Period: 4.5 years

In 2021:
Tax Credit: $22,000
Depreciation benefits: $21,000
Average Payback Period: 5 years

In 2022:
Tax Credit: $10,000
Depreciation Benefits: $21,000
Average Payback Period: 7 years

In a world where businesses are turning to alternative energy sources as a means to achieving energy independence and financial security, a quick payback period makes all the difference. Rooftop Solar is here to help. With simple photos of your recent electric bills, we’ll build a solar quote personalized to the unique needs of your business complete with conceptual designs and financial projections. Call today to learn more!