U.S. oil producers, solar stocks gain after Congressional spending bill

The firm released its estimate amid news reports that Congress could vote today on a five-year extension of the credit, which is now slated to drop from 30% to 10% at the end of 2016.

News of a potential renewal of investment tax credit (ITC) for solar and wind projects has breathed new life into renewable energy stocks this week, amid a generally challenging environment in the energy sector. The tax credit will be phased down to 26 percent in 2020, 21 percent for 2021, and 10 percent for commercial projects after 2021.

Democrats extracted the extension in both solar and wind tax credits in exchange for not opposing Republican efforts to lift the 40-year-old ban on USA oil exports.

“The ITC extension now written into the omnibus spending bill will result in a 20 gigawatt annual solar market in the U.S.by 2020”, said Shayle Kann, Senior Vice President at GTM Research.

With new projects comes massive economic impacts.

Wind development has attracted more than $100bn in private investment to the United States economy since 2008, said the American Wind Energy Association.

Fourth, and, perhaps, most importantly, the ITC extension will bridge the demand gap expected from ITC expiration in 2016 and facilitate compliance with the U.S. Environmental Protection Agency’s Clean Power Plan (CPP), starting in 2022. This cost-reduction goal is the point many analysts, including the Department of Energy’s SunShot Initiative, consider true cost parity with fossil fuel generation sources and may herald a time when solar can stand on its own without any government support. In this note, we take a look at the potential implications that an extension could have on the solar market and First Solar (NASDAQ:FSLR) – the largest U.S. Solar equipment manufacturer.

“At that rate, more solar will be installed each year than was added to the grid cumulatively through 2014”. Combined with the historic Paris climate agreement, long-term certainty for the ITC sends a strong signal to the marketplace that investment in clean energy is the right way to drive continued economic growth and job creation.