A stalemate in Washington next year over tax reform could help solar developers by preserving the 30 percent investment tax credit for solar projects
until it expires at the end of 2016.

By Rory Carroll/Reuters

Regardless of who wins the Nov. 6 U.S. presidential election, Congress is expected to target tax loopholes and government subsidies as part of an effort to rein in federal spending and cut the deficit.

But an agreement between Democrats and Republicans is not expected to come easily, and an impasse could keep the ax away form the tax credit.

“It’s one of those unusual situations where the gridlock that prevails around Congress could actually work to our benefit,” Paul Detering, chief executive of San Francisco-based solar project developer Tioga Energy, told the Renewable Energy Finance Forum conference in San Francisco last week.

The tax credit allows buyers of residential and commercial solar systems to reduce their tax bills by 30 percent of the cost of a new solar energy system. Because of the hefty upfront cost of buying a system, the U.S. solar industry relies heavily on this incentive, and others at the state level.

But while Congressional deadlock could help preserve the tax credit, breaching of the “fiscal cliff” on Jan. 1 would result in automatic cuts to some programs. If this happens, government payouts to solar projects assisted by a U.S. cash grant program would automatically be cut almost 8 percent, dealing a blow to
projects expected to come online next year. MORE …