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How Solar Spending Could Change in the Next Two Years

In the past several years, the solar energy business has been booming. Tons of new business and residential customers have installed full-scale solar systems in order to generate clean energy and save money in the long term. Part of this increase in spending has been due to a significant federal tax credit, which up until now has credited buyers for up to 30 percent of the cost of solar installation.

However, by 2016, this tax credit could disappear, completely changing the rates of solar energy purchasing and installation.

How the Tax Credit Will Change

The federal solar investment tax credit (solar ITC for short) was implemented in 2006, with a multi-year extension that took place in 2008. Under this program, any business or residential consumer would receive a 30 percent tax credit for any solar system installed. To date, this program has helped spur increased solar activity, year after year.

Starting next year, this program is set to expire. By the end of 2016, residential customers will no longer have access to this tax credit and businesses will only receive 10 percent instead of the original 30.

The Lasting Effects

Since solar energy systems take time to develop, this means that any business that wants to take advantage of the program will need to get started by mid-2016. Because of this, it’s likely that there will be a surge in solar installations between now and the middle of next year as businesses and residents scramble to get a solar energy system in place.

After 2016, the effects are unpredictable. Solar purchases could stabilize over time, or businesses could be less likely to install a solar system since there will no longer be as many incentives to do so. It’s also possible that the tax credit will receive an extension and continue to be effective for 2017 and beyond. Only time will tell.

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