Congress passed one of the largest relief packages in modern American history Monday, in an attempt to provide aid to the millions of Americans struggling from the financial fallout of the COVID-19 pandemic.
The bill also includes long sought-after gains for renewable energy and climate change.
Notably, the bill contains a two-year extension of the federal Solar Investment Tax Credit, which currently saves homeowners thousands of dollars on the cost of solar panel installations. The credit was supposed to phase out entirely for homeowners by the end of next year.
Solar installers in Indiana were already experiencing a surge in business, as Hoosiers rushed to install panels before the credit dropped by 4% at the end of this year, and had predicted next year would be even busier.
The tax credit's extension would change that and, advocates say, will support economic growth as unemployment rates remain high.
The $900 relief package, now awaiting signature from President Trump, also includes a $600 stimulus payment for most people and a $300 weekly supplement for those unemployed. It also allocates billions for distributing a vaccine, rental assistance and transportation.
Here's what you need to know about what the COVID-19 relief bill means for solar power in Indiana.
Relief bill includes big wins for renewable energy, climate change
The bipartisan COVID-19 relief bill includes some of the biggest climate legislation in a decade.
Aside from extending the solar tax credit, the bill also includes $35 billion for renewable energy and efficiency.
In research and development, almost $4 billion would be allocated for the solar, wind, hydropower and geothermal sectors. About $2.9 would go toward the Advanced Research Projects Agency-Energy and $500 million would be used for researching industrial emissions.
Riding the 'solar coaster':Tax credits could be extended as part of COVID-19 relief bill
The bill also allocated $11 billion for nuclear energy and $1.7 billion for assisting low-income families in installing renewable energy.
The Production Tax Credit for wind projects also won a one-year extension, and another tax credit for offshore wind projects was created.
Other climate-centered measures in the bill include:
- Reducing the production and use of hydrofluorocarbons in air conditioners and refrigerators by 85% over the next 15 years. These chemicals are thought to be several times worse for the climate than carbon dioxide.
- Reauthorizing an Environmental Protection Agency program that works to reduce emissions from diesel engine.
- Allocating $2.6 billion for the U.S. Department of Energy's sustainable transportation program
- Allocating $6 billion toward efforts for removing and storing carbon from the air.
The tax credit was supposed to end next year for homeowners
The solar tax credit was implemented in 2005 and was initially supposed to last just two years. But after a series of extensions, the credit is currently in the midst of a multi-year phase-out process.
The credit, which at the moment reimburses homeowners for 26% of their solar panel installation, was going to drop down to 22% by the end of this year. By the end of 2021, it would have disappeared entirely for homeowners, although businesses would still have been eligible for a 10% credit.
The solar tax credit can save homeowners thousands of dollars on their solar installation.
Although the price of solar power has fallen 82% in the last decade, they are still a hefty investment for most families, amounting to as much as $10,000 or more. A 26% tax credit for an installation of that cost lessens the burden by as much as $2,200.
Solar advocates say the tax credit could help drive jobs
Solar installers were already experiencing a surge in interest before this end of this year. Of the installers IndyStar spoke with, one had hired 12 new employees and another was in the process of opening a new location.
Advocates for solar power say this is proof that policy can drive consumer behavior and determine whether or not someone purchases solar panels.
Solar power is one of the fastest-growing job markets in the country, according to the U.S. Bureau of Labor Statistics. Between 2019 and 2020, the industry added 51% more jobs.
Scrub Hub:What is a green power program, and how can it help me buy renewable energy?
As the COVID-19 pandemic leaves millions unemployed in its wake, solar supporters say the benefit of the tax credit's extension could lead to economic growth and add more jobs.
"Big-picture wise, the economy has never been as tough of a spot as since the 1930s. That there's a real case to extend the federal tax credit," said Jesse Kharbanda, executive director of the Hoosier Environmental Council. "It will unequivocally help the industry carry out installations, which will translate into more jobs."
Indiana is phasing out net metering, but some are fighting it
Indiana is also in the middle of phasing out net metering, an incentive that pays homeowners for the extra power that their solar panels generate into the electric grid.
In 2017, the General Assembly passed a bill phasing out net metering over a period of five years.
Under the law, anybody who installed solar panels before Dec. 31 that year would be eligible for full net metering credit until 2047. Anybody who installed solar panels after that date, but before July 2022, would be eligible for full credit until 2032. Solar panel installations after that date would not be eligible for full net metering credit.
The law also required that the Indiana Utility Regulatory Committee establish a new credit rate for solar owners' extra power, although it will be lower than the full credit currently in place.
The law that phases out net metering also allows state utilities to file a petition to end net metering for their customers earlier than the statewide deadline of July 2022.
Vectren was the first utility to file a petition with the IURC under this law, and proposed ending net metering for their customers as soon as January 1 2021. Their proposal has not yet been approved.
Other utilities have until March 1, 2021 to file similar proposals.
Environmental advocacy groups, including the Hoosier Environmental Council and Solar United Neighbors, plan to fight the net metering phase-out this upcoming legislative session, but are expecting headwinds as legislators direct attention to the pandemic and ongoing financial crisis.
If you're considering solar panels, make the move early
If you're considering installing solar panels and want to get it done before these changes, solar installers have a piece of advice: Start early.
Installation itself can take several weeks, and interconnecting the system can take a few longer, said Zach Schalk, Indiana program director for nonprofit Solar United Neighbors.
Because solar power is an industry that requires skilled workers, it's hard for companies to add labor when they get a boost in interest, said Steve Ricketts, a co-owner and manager at Solar Energy Solutions. As a result, work can stack up for months at a time.
Though the tax credit has been extended two years, it's possible that solar providers' time will be stretched in the coming years as the net metering deadline approaches.
"You may struggle to find a credible and reputable installer to work with," Ricketts said. "They will be fully booked."
Contact IndyStar reporter London Gibson at 317-419-1912 or lbgibson@gannett.com. Follow her on Twitter @londongibson.
Connect with IndyStar’s environmental reporters: Join The Scrub on Facebook.
IndyStar's environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust.