Blog

At Innovative Solar Systems, LLC (ISS) our principals are concerned about the status of the federal government’s 1603 Grant In Lieu of Tax Credit Program that has fueled the growth of commercial solar systems. A possible extension may be in the works in our Capitol. The 1603 program expired at the end of 2011 and it didn’t look likely that the program would be extended even though many experts had predicted a negative impact on the installation of new PV (photovoltaic) commercial solar systems. Without the program, most new PV solar systems will have to be funded by tax equity partners (C-Corporations) that have sufficient taxable income to fully utilize the tax credits for both federal and state tax liability. In addition, the C-Corporations should be able to fully utilize the accelerated depreciation at the highest tax rate to achieve the maximum IRR (internal rate of return).

Solar Systems Implemented by The 1603 Grant

The PV solar industry has seen solar systems being completed in early 2012 that had been started in 2011 and were still eligible for the 1603 federal grant program. However, there were concerns that new PV solar construction would slow down dramatically as we got closer to the October, 2012 deadline to file paperwork for completed 1603 projects. Several years ago, many companies were enjoying good profit margins and had easy access to capital for the purchase of PV solar systems. Many of these companies have seen their profits and margins squeezed and are becoming less likely to invest their cash in renewable energy. Many companies seem more willing to sit on their cash while they wait for the economy to improve.

1603 Grant Extension Will Fuel Installation of New Solar Systems

Fewer Commercial Solar Systems being built

The principals at ISS believe that installation of new PV solar systems will be down at least 40-50% in 2012 from 2011 unless the 1603 grant program is extended. The latest news from the Capitol is that an extension is very possible. It appears likely that a 1603 extension will be included in a Transportation Bill that Congress should be voting on in the next several days.  The proposed extension will add another year to the popular program. Investors prefer grant money over tax credits. Call the principals at ISS today to find out why a PV solar system is a good investment in our future.