US poised to become largest solar market in the world

On October 3, 2008 the U.S. House of Representatives passed historic legislation extending the 30-percent federal investment tax credit for both residential and commercial solar installations for 8 years. This landmark legislation is the most significant federal policy ever enacted for the solar industry.

The solar investment tax credit (ITC) provisions will:

• Extend for 8 years the 30-percent tax credit for both residential and commercial solar installations;
• Eliminate the $2,000 monetary cap for residential solar electric installations, creating a true 30-percent tax credit (effective for property placed in service after December 31, 2008);
• Elminate the prohibition on utilities from benefiting from the credit;
  Allow Alternative Minimum Tax (AMT) filers, both businesses and individuals, to take the credit;
• Authorize $800 million for clean energy bonds for renewable energy generating facilities, including solar.

The solar tax credits were originally enacted in the 2005 and have created unprecedented growth in the U.S. The amount of solar electric capacity installed in 2007 was double that installed in 2006.

According to a new economic study by Navigant Consulting, Inc., the 8-year extension of the ITC will create 440,000 permanent jobs and unleash $325 billion in private investment in the solar industry. This study did not factor in elimination of $2,000 monetary cap on the residential credit, so the actual job creation and investment could be even greater.

Because solar energy components are manufactured near their markets, this extension will create manufacturing and installation jobs in all 50 states. The states that will enjoy the largest economic boost are California, Florida, Arizona, New Mexico, Nevada, New Jersey, Massachusetts, New York, Oregon, and Washington.

Similarly, the economies of Pennsylvania, Michigan, Ohio and the rest of the Great Lakes region will grow significantly as a result of the extension. This area of the country has suffered greatly from a huge decline in jobs in the automotive and traditional manufacturing industries.

According to the same study, more than 28 gigawatts of electricity will be produced from solar energy by 2016 - enough to power more than 7 million homes.

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