Congress also allocates funds for renewables and energy storage R&D; Directs Interior Department to set goal of at least 25GW of solar, wind and geothermal production on public lands by 2025
Federal tax credits for solar installations have been granted a reprieve. When the U.S. Congress passed a $1.4 trillion spending bill on Monday, December 21, it extended the current 26% Solar Investment Tax Credit for systems installed through the end of 2022 and allowed a tax credit of 22% for systems installed in 2023. In 2024, only large-scale projects will receive tax credits of 10%. The credit may also be used for energy storage provided certain conditions are met.
The federal credit is in addition to New Mexico’s solar state tax credit which was reinstated in March 2020. The state tax credit is equal to 10% of the total installation costs of your solar system up to $6,000 per taxpayer per taxable year.
In a disappointment to the solar industry, the Congressional bill did not include a provision that would have allowed the Federal tax credits to be transferred into a direct payment to installers.
The spending package also extended the 60% Production Tax Credit for wind power projects through 2021 and granted offshore wind developers tax credits through 2025.
Also included is $35 billion in funding for clean energy, nuclear energy and carbon capture research and development over the next five years. According to an article in GTM, $1.5 billion is allocated to improve photovoltaic efficiency and costs, improve manufacturing and recycling and improve solar integration into the grid. Energy storage, including long-duration technologies such as pumped hydro and compressed-air, will receive $1.08 billion; $2.36 billion will be applied towards grid modernization; and $625 million will fund wind research. Carbon capture and storage will get more than $6.6 billion, and another $500 million will go towards reducing the carbon emissions of cement and other carbon-intensive industries.