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Extending the full federal solar tax credit by four years (through 2024) for coalfield communities

May 01, 2019
Tony Skrelunas and Karl Cates and Seth Feaster

Key Findings

With the closure of the Navajo Generating Station, the Hopi tribe stands to lose about 80% of general fund revenue.

As cheap sources like wind and solar energy and natural-gas generation are on the rise, coal-fired power generation is increasingly becoming obsolete, leading to the loss of jobs.

Extending tax credits alone might not be enough, but developing a special policy provision that would value the relationship between these tribal communities and developers is essential.

Executive Summary

Federal tax credits for solar energy installations are on track to be phased out over the next few years in the winding-down of a program meant to help the nascent industry find its legs nationally.

The tax credit has existed in one form or another since 2005, and the thinking behind dialling it back year by year after 2019—and then eliminating it almost entirely in four years—is that by 2023 the solar industry will be strong enough to grow and flourish on its own, without tax-policy support.

The federal solar tax credit was extended in 2015 by Congress to create market certainty and to help the industry establish a strong foothold. Under the extension, the current 30% tax credit will be decreased annually going forward, to 10% by 2022. Yet it seems far too early to curtail the program in certain parts of the country.

Indeed, curtailment comes at the worst possible moment for vulnerable communities, particularly the Hopi and Navajo tribes, that are facing impending closure of a power plant or a coal mine that provides revenues critical for government services. The Hopi stand to be especially hard hit, with the loss of 80% of general fund revenue due to closure this year of Navajo Generating Station (NGS).

Press release: IEEFA U.S.: Solar tax credit extension through 2024 critical for coalfield communities

Please view full report PDF for references and sources.

Tony Skrelunas

Tony Skrelunas leads Navajo and Hopi community transition strategy around large-scale renewable energy projects and is a former director of economic development for the Navajo Nation.

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Karl Cates

Former IEEFA Transition Policy Analyst Karl Cates has been an editor for Bloomberg LP, an editor for the New York Times, and a consultant to the Treasury Department-sanctioned community development financial institution (CDFI) industry.

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Seth Feaster

Seth Feaster is an energy data analyst whose work focuses on the coal industry and the U.S. power sector.

Before joining IEEFA, he created visual presentations at the New York Times for 25 years with a focus on complex financial and energy data; he also worked at The Federal Reserve Bank of New York. 

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