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1603 ITC (Investment Tax Credit) Grant-In-Lieu Might Be Extended For 2 Years Offering Critical Upside To Solar Farm Investment
Throughout the U.S. in 2011, solar farm installation demand is estimated to achieve 1750MW driven by the utility scale installs. Because of the fifteen percent yoy drop in panel prices per watt, unsubsidized project install value ranges are going to decrease to five to six dollars per watt for non-commercial scale and $3.75-$4 for utility scale, which in turn should help send the American market demand up 119% year in and year out in 2011 versus eight hundred megawatts in 2010. Based on new developments with regard to energy policy legislation, Commercial Solar Design points to higher chances of an extension of treasury hard cash grant-in-lieu of 30% ITC (investment tax credit), that could possibly contribute appreciably to the upside of Commercial Solar Design's forecast and strengthen solar farm investment dramatically.
Non-residential installations will certainly gain an increased share of the US solar farm market with seventy six percent of the market in 2011, way up from 69% in 2010 (136% yoy). In terms of the regulatory landscape, even though the primary comprehensive energy reform bill appears to have been removed from the table, the "domestic manufacturing and energy jobs" bill introduced in the House in late July included an extension of the real money grant-in-lieu for thirty percent investment tax credit (ITC) . Commercial Solar Design is hinting that that there is a greater likelihood of passage of this bill in the legislature after the Congress assembles following the August recess. This unique bill is then expected to be merged together with the energy bill in the the House or may very well be attached to the tax extender's bill later on this year. Overall, passage of renewable energy tax credits is undoubtedly high on the agenda of tax committees in the United States Congress.
The discussion draft of "Domestic Manufacturing and Energy Jobs Act of 2010" circulated in the last week of July includes that the extension of the cash grant program for 2 years is the paramount photovoltaic subject within the bill. The draft limits the much anticipated climate change bill including "cap and trade" and a domestic Renewable Portfolio Standard (RPS). This watered down package of the "energy" bill is expected to be approved in the House when Congress resumes after the August break the week of September 13th. Even so solar farm investment can continue with acceptable IRR (internal rate of return) with or without a 1603 extension
The Treasury real money grant-in-lieu of the thirty percent ITC (investment tax credit) program was launched in August 2009 to give an upfront cash grant equal to 30% of the applicable project total price to the solar farm contractors plus developers and including commercial and utility scale projects. A considerable majority of the contractors and developers did not have taxable income to utilize the 30% investment tax credit (ITC), and as a consequence, the cash grant program became a large incentive for the solar energy contractors/developers. Because there was a lack of clarity surrounding the taxability of the real money grant until late April the incentive was basically underutilized.
The Treasury hard cash grant program was a major success and extension of the program provides vital benefit to solar farm investment and demand estimates in 2011.
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