The U.S. government has been trying to pave the way for renewable energy to come into mainstream use by developing plans and programs to encourage its use by homeowners, companies, and industries. One of the most effective strategies to influence people to shift to renewable energy is by implementing tax credits.
Over the past decades, the federal government has been offering renewable energy tax credits in the form of the solar investment tax credit (ITC) and the wind production tax credit (PTC). Before 2015 ended, the tax credits that were going to expire during the period were given a validity extension by five years. This means individuals and companies using renewable energy can enjoy tax incentives for a little while longer.
The National Renewal Energy Laboratory (NREL) recently investigated the effects of the extension in tax credit validity on the scope of renewable energy use. In its latest report, the group looked into the potential shift in renewable energy use, based on two factors: cost of energy from natural gas, and the tax credit extension.
Results of the study revealed that periods when tax credit extensions were implemented increased the potential number of investments in renewable energy technology going through the early part of the next decade. Much of the growth in the renewable energy sector was traced to newly established solar and wind energy systems.
The report states that the energy capacity attributable to renewable sources could reach up to 53 GW by 2020. Although the impact of new renewable energy systems will gradually lessen going to 2030, what’s essential is the spread of more wind and solar energy systems throughout the country as the extension on tax credits is implemented.
In addition to this, tax credit extensions were also associated with reduction of carbon dioxide (CO2) emissions by the energy systems.
NREL operates under the wing of the U.S. Department of Energy – Office of Energy Efficiency & Renewable Energy.