In 2017 the federal solar investment tax credit (ITC) will be cut by 66 percent, falling from 30 percent to 10 percent of the total solar project value.
This legislative change will be significant for the industry, and it will also be a test. Overall, we believe that while the industry may be overestimating its ability to reduce the cost of capital (even in a mature marketplace with a mature asset class), the future is quite promising for solar in a number of markets as project costs continue to decline.
This two-part series provides the reader a strategy with which to analyze the changing solar landscape and the interactions between declining costs of capital for the solar project asset class, declining install costs for these projects, and electricity offtake rates. It also offers certain key perspectives and observations based on this analysis.