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