Meeting Supply Needs During ITC Phase Down Crunchtime
Manufacturing and global sourcing for utility solar projects have a new challenge closing in. Between the tariffs and federal solar Investment Tax Credit (ITC) phasing down this year, financiers and project developers are in a tighter spot for meeting project timelines with every passing week.
ITC Takes Its First Step Down After 2019
Solar project developers have until the end of the year to take advantage of the full 30 percent tax credit. The schedule is set to reduce to 26 percent in 2020, to 22 percent in 2021, and further down to a standing 10 percent for utility and commercial solar projects in 2022.
The IRS provided guidance as to when certain touchstones in solar projects must be completed in order to qualify for the full 30 percent tax credit. Construction must commence by either “starting significant physical work” or incurring a 5 percent minimum of the total project cost within the year of construction. The solar facility must be operating fully by 2024.
Effects of the ITC Phase Down on the U.S. Solar Industry
Half of all U.S. states have over 100 megawatts of solar production currently in development, with 11 states developing up to a half-gigawatt. Wood Mackenzie predicts a 26 percent growth, reaching nearly 7.8 gigawatts in the utility solar market in 2019 in order to stay ahead of the ITC deadlines.
Not surprisingly, this state of urgency not only squeezes construction crews on timelines, but also puts pressure on developers to find suppliers that can meet demands within the calendar year.
In order to make this happen, crews need the hardware to commence construction. Otherwise, an empty site, even graded and blueprinted, can stay stuck in limbo while waiting for orders to be fulfilled from suppliers that can’t keep up with demand.
Utility Solar Developers and Financiers Race the Phase Down
All this is adding up to shortened timelines and supply and demand issues. Relying on a third party can be tough when it comes to trusting the equipment needed to reach those 5 percent safe harbor construction guidelines will be delivered on time. For financiers, this is no time for back-order issues.
Both financiers and developers need a company that is equally nimble and robust in order to deliver under these tight turnaround times. Many are realizing that it could be much riskier to trust in less-experienced suppliers that might not have the capital to reach desired supply capacity.
There’s never time to waste in the solar industry, or with any major construction enterprise. Project deadlines always need to be respected in order to complete projects that pay dividends. Generally, the sooner a solid facility is online, the sooner those dividends can start rolling back in.
Now more than ever, timetables must be respected and achieved. With Array’s 30 years of experience and our elegantly designed DuraTrack HZ v3®, we’re able to meet the increased demand without breaking a sweat or breaking your budget. We have the capital, the knowledge, and the strategy to help bring in projects on time, even during this industrywide pinch.
Reach out today to get your project on track and capitalize on the full 30 percent tax break with Array Technologies, your trusted and proven supplier.