At 11:00pm, EST, November 4, Barack Obama was officially declared the presumptive 44th President of the United States of America. Congratulations, Senator Obama! There’s no way of knowing what the four years of his term will bring to the nation, or the world, or really even to the solar industry: but during his campaign, the Senator made some bold statements about his intended support for renewable energy, and “a planet in peril” was referenced during his acceptance speech last night. So let’s take a look at the history of solar legislation in this country so we can understand more fully what Obama’s promises really mean.
- 1978: Congress passed both the Public Utility Regulatory Policy Act (PURPA) and the Energy Tax Act (ETA). PURPA allowed independent energy producers to connect to municipal grids and let utilities purchase power from large-scale solar plants (for example), while the ETA incentivized the adoption of renewable energy technologies and efficiency standards with tax credits. The credits phased out under Reagan fewer than ten years later, but it did kick off a round of R&D and excitement about renewables. The ETA included the National Energy Conservation Policy Act (NECPA).
- 1980: The Crude Oil Windfall Profits Tax Act (WPT) bulked up the tax credits available for both residential and commercial renewable energy installations. The bump was more significant to commercial customers, whose credit went from 10 to 15% of system size (residential incentives increased from 30 to 40% but remained based on the first $10k of costs).
- 1981: The precursor to our current MACRS was introduced in the Economic Recovery Tax Act (ERTA), allowing for the accelerated depreciation of most renewable energy equipment.
- 1982-1986: It was sweet while it lasted, but the public fervor for renewable energy sparked by the oil crisis of the late 1970s came to an end with the repeal of all of the ETA’s tax credits, culminating in the Tax Reform Act of 1986 where even the basic 10% ITC was snatched away. Different sectors of the renewables market received different new levels of tax credits, all phasing out by the late 80s.
- 1992: The Energy Policy Act of 1992 (EPACT) saw a return of the 10% ITC. Keep in mind this was during the Gulf Wars and oil prices were once again in the public eye. The EPACT swept production incentives into the marketplace as well, later extended by 1999′s Tax Relief Extension Act.
- 2005: Let’s just pass over that awkward decade or so of stagnant waters. The Energy Policy Act of 2005 resurrected some bits and pieces of 1978′s NECPA, looking for a reduction of 2% in our annual energy usage by fiscal year 2015. Section 204 of the bill stipulated 20,000 new solar energy installations to be completed in federal buildings by 2010. It also put in place an investment tax credit equal to 30% of solar system costs (capped at $2k for residential systems).
- 2007: For the first time ever, legislation for a renewable portfolio standard (RPS) passed the House. Although similar legislation had passed the Senate a few times previously, the bill didn’t make it through to law due to extenuating circumstances (too many swing votes to get past a filibuster was the going excuse). But the fact that such a bill passed the House was historically significant and very encouraging to the industry.
- 2008: The much-maligned bailout bill snuck, under its skirts, the hotly contested ITC extensions for renewables. Solar got 8 more years of its cherished 30%, while wind got another couple years of breathing room. Plus, 2005′s miserly cap of $2k for residential systems was lifted. There was much rejoicing.
Which brings us to the present day, poised on the brink of a new year and a new presidency. Obama has called for $150 billion to be invested in clean energy over the next ten years, with the aim of spurring huge private sector growth; to see that we get 10% of our electricity from renewable sources by 2012, and 25% by 2025; and to reduce our greenhouse gas emissions by 80% by 2050 through the use of a cap-and-trade system. What this amounts to is a vigorous RPS. If you take a look at the legislation outlined above, you’ll see that this would pretty much be the biggest, boldest stride for renewable energy in the history of our country. We’ve reached a turning point with energy in this country. If Obama and his first Congress can realize the new President’s vision, we’ll be looking at rampant growth across all sectors of a new clean economy, taking our place among world leaders in renewable energy. The American solar industry, we can hope, will soon outshine the rest.
Sources: Energy Information Administration; SEIA; EERE; barackobama.com
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