Securing America’s Energy Independence Act Will Extend Solar Federal Income Tax Credits Through 2016

Congress has introduced the Securing America’s Energy Independence Act (SAEI) to extend tax credits for renewable energy technologies, including solar panels and fuel cells, through 2016. If passed, this bill will do a tremendous amount to accelerate America’s adoption of renewable energy. The bill extends the existing solar tax credit in several different ways. The new tax credit will be more generous and easier for more people to use.

H.R. 590 in the House, introduced by Rep. Mike McNulty (D-NY), and S. 590 in the Senate, introduced by Senators Gordon Smith (R-Oregon) and Ken Salazar (D-Colorado), would take effect for all equipment installed retroactive to January 1, 2007 and going forward. The bill includes the following provisions:

Accelerated Depreciation: Creates a three-year accelerated depreciation period for all solar equipment eligible for the business solar tax credit. This is an improvement on the current six-year accelerated depreciation period.

Business Solar Tax Credit and Fuel Cell Tax Credit: Extends a 30 percent business credit, established in the Energy Policy Act of 2005, for the purchase of fuel cell power plants, solar energy property, and fiber-optic property used to illuminate the inside of a structure. Changes the maximum credit to $1,500 for each half-kilowatt of capacity for solar photovoltaic equipment. Credits may be taken against the alternative minimum tax.

Residential Solar Tax Credit: Extends a 30-percent tax credit, created in the Energy Policy Act of 2005, for the purchase of residential solar water heating and fuel cell property. Changes the maximum credit to $1,500 for each half-kilowatt of capacity for solar PV equipment and $1,000 for each kilowatt of capacity for fuel cells.

The Energy Policy Act of 2005 (H.R. 6), which expires in 2008, expanded the business energy tax credit for solar and geothermal energy property to include fuel cells and microturbines installed in 2006 and 2007, and to hybrid solar lighting systems installed on or after January 1, 2006.

The Solar Energy Industries Association (SEIA) is undertaking a major campaign to support the bill. The organization estimates that a long-term extension would create approximately 55,000 solar industry jobs by 2016 and encourage states to invest billions of dollars in renewable energy infrastructure. Solar energy would displace four trillion cubic feed of natural gas under the bill, saving American consumers $32 billion.

“The United States has the best solar resources in the industrialized world, and we should be a world leader in developing technologies that put these resources to work for all Americans,” said SEIA’s President Rhone Resch. “This bill strengthens America’s economic future as well as our energy security. It will stimulate economic investment and create high-quality renewable industry jobs in every state across the U.S.”