Palm Desert Helps Secure Solar Tax Credit

Provisions in the economic stimulus package going to the U.S. House of Representatives today could make it easier for cities across the country to start Palm Desert-style energy loan programs.

Palm Desert city officials helped author the changes that would ensure residents who take out the loans can cash in on the 30 percent federal income tax credit for solar installations.

Another provision will allow cities and counties to issue tax-free bonds to fund loan programs.

The federal tax code allows cities to issue tax-free bonds only for public improvements. The proposed changes will include renewable energy installations in the definition of public improvements.

The bond provisions mean cities will be “able to access capital on the open market at a much lower rate than if you were to go out and get (taxable) bonds,” said Palm Desert City Councilman Jim Ferguson, who has pushed for the changes. “Taxable bonds depend on the credit- worthiness of a city. Municipal (tax-free) bonds are viewed as a safe investment.”

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Solar Power Industry Remains Hot in California

Despite the turbulent economy, or perhaps because of it, solar energy remains a growth industry in California.

The amount of electricity generated in the state by solar energy soared in 2008, and applications for rebates under the state’s Million Solar Roofs program reached record levels in the last five months of the year.

“While we don’t have the final numbers yet, it appears we nearly doubled the amount of solar installed in 2008 versus 2007,” said Molly Tirpak Sterkel, director of the California Solar Initiative. “That’s a magnificent story.”

Experts attribute the surge in solar sales to a big increase in the federal tax credit, an ongoing state rebate and new innovative financing programs, as well as to mounting consumer concerns over global warming. The growth comes despite a U.S. economy suffering from a battered stock market, severe declines in house and car sales, and growing unemployment.

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New Federal Tax Credits For Solar Installations

On October 3, 2008 H.R.1424, the Emergency Economic Stabilization Act of 2008 was passed. Division B of this bill includes the Energy Improvement and Extension Act of 2008. This landmark legislation extends critical Federal Investment Tax Credits for solar customers and other renewable energy projects. This bill contains $18 billion in incentives for clean and renewable energy technologies, as well as for energy efficiency improvements.

See the entire bill, including Division B: Energy Improvement and Extension Act of 2008.

As part of this legislation, the solar investment tax credit (ITC) has been extended for 8 years through December 31, 2016. Here are the key provisions of the ITC: Read more