Increased Incentives, Lower Prices Spur Solar Energy Development

Due to increases in federal and state incentives throughout the United States, along with declining prices of solar panels, the U.S. should see further growth in solar energy development in 2010.

The world solar market took a slight hit in 2009 due to the global economic downturn. Countries like Germany and Spain reduced Feed-In-Tariffs while the U.S. suffered with the lack of tax equity investments that have recently spurred the solar PV market. However due to the extension of the Investment Tax Credit (“ITC”) to 2016, mandated growth for solar energy on the state level and declining panel costs, the solar photovoltaic market looks to a bright future.

Key Solar Energy Drivers

  • States’ Renewable Portfolio Standards (“RPS”) for solar
  • Solar generates most power during peak “high demand” time
  • Declining costs of solar panels
  • Extension of the federal ITC to the end of 2016
  • Removal of the $2,000 cap on tax credits for residential solar systems

Challenges to Solar Energy Development

  • Costs are high relative to traditional power sources
  • Limited transmission capacity for utility-scale solar energy
  • Well-intentioned but cumbersome mix of incentives from local, state and federal agencies to weave into projects
  • Lack of financing incentives for residential and commercial projects

The market growth of solar will likely accelerate in 2010. The long-term extension of the federal ITC, new rules that allow electric utilities to use the ITC, and the establishment of the Cash Grant in lieu of the ITC will all help drive market growth. In addition, the American Recovery and Reinvestment Act of 2009 (ARRA) provides funds for state energy offices. Many states are using some of these funds to increase budgets for incentive or grant programs or to install solar on government buildings. The market is now responding to these new policies. However, due to the poor housing market and restricted capital availability, the solar market will respond slower to these initiatives than it might have in a stronger economic environment. Companies have announced plans for many large solar projects, including solar thermal electric projects, utility-owned projects, and third-party owned projects.

Vert Investment Group guides solar developers to maximize the value of their projects. Vert’s strong relationships with leading institutional banks, private investors and utilities allow Vert to craft and close successful transactions for all parties.  Click here to send Vert an e-mail describing your solar power project financing needs;  we’ll respond immediately to discuss how we might be able to assist you.

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