After the new budget bill was signed, it seems that solar energy has a bright future for the next 6 years, gaining an investment tax credit extension of 30%. This is largely due to the agreements signed at this year’s COP21 in Paris, a conference revolving around climate change, global warming, and the lowering of greenhouse gas emissions by focusing on renewable energy sources.
Even if the 30% extension will not remain at this amount throughout the period, dropping at 10% by 2022, it will not mean that solar energy growth will be slowed. It is estimated that national supply of electricity through solar power will suffer a growth of over 300%, rising from below 1% to 3.5%, with claims from the Solar Energy Industries Association stating that power capacity will triple, reaching 95 GW. Jobs in this field will also be boosted by 140.000, reaching almost 400.000 workplaces.
Without the Investment Tax Credit extension, the market would suffer considerably. But through this move, companies like SunEdison and Enphase Energy are expected by Wall Street to grow by 32% in the coming weeks. The cumulative sum of investments will allegedly reach $40 billion by 2021 as solar power becomes more cost-effective, gaining increased popularity among new customer demographics.
This extension will minimize the side-effects from the subsidies cuts which will gradually go into effect next year. Said extension is heavily criticized by the Republican party, stating that companies focusing on solar energy production should be left to function independently, without government help, in order to prove their sustainability and viability as.
This criticism shouldn’t be applied in our current predicament. Because climate change threatens to affect us more and more in the coming years, everyone needs a massive boost in renewable energy production, regardless of the market’s expected sustainability without government funding. By eliminating the reliance on energy production through fossil fuels, greenhouse gas emissions will suffer from a massive decrease, with the COP21 agreement requiring the US to cut its emission by at least 50% until 2022.
Wind power was also included in the newly signed bill, but the subsidies cuts will be taken into effect at a much faster rate. Their production tax credits were boosted at 2.3 cents/kWh for the next year, with a steady yearly decrease of 20% for the following years, until it will reach 0.92 cents/kWh in 2019. Energy from wind turbines has been increasing over the past decade, with wind turbine farms spreading all across the US.
The effects of an absence of this type of ITC extension has been clearly seen in 2013. Wind power suffered a massive 92% drop, with 30.000 jobs being eliminated in the process. Unfortunately, only 7.000 of said jobs were regained by 2014, but this will surely chance in the near future as this type of renewable energy gains more popularity.
Because solar energy has a bright future for the next 6 years, fossil fuel energy may one day suffer a complete dismissal. Even if this will shake the commercial markets to the core, the benefits gained from clean energy reliance are immeasurable. If climate change continues to grow at a fast rate, we may someday lose the ability to do something about it, effectively sentencing human civilization to death.