Congress made a transformational deal that could add 39GW of renewables over 5 years!
While the UK is sadly cutting its solar subsidies (though a bit less than expected), the U.S. seems about to renew its solar and wind power investment tax credits. Reports from Washington DC claim that a new compromise was reached between both parties, trading a lifting of the ban on U.S. crude oil export for a 5-year extension to the renewable energy tax credits.
This is a huge deal, because while both wind and solar are becoming competitive with dirty sources of power on their own (prices have been falling very rapidly -- see the graphs here), the extra boost provided by the federal incentives makes them no-brainers for a much larger number of companies and citizens. It's a bit like pushing down the price curve to what it will be in a few years, accelerating the transition, while also compensating a little for all the government aid that fossil fuels have received over decades.
The impact of this deal should not be underestimated. Bloomberg New Energy Finance (BNEF) calculated that the impact will be simply massive:
The extension will add an extra 20 gigawatts of solar power—more than every panel ever installed in the U.S. prior to 2015, according to Bloomberg New Energy Finance (BNEF). The U.S. was already one of the world's biggest clean-energy investors. This deal is like adding another America of solar power into the mix.
The wind credit will contribute another 19 gigawatts over five years. Combined, the extensions will spur more than $73 billion of investment and supply enough electricity to power 8 million U.S. homes, according to BNEF.
Note that they are talking about an extra 39 gigawatts of clean energy that would not be build without the tax credits. This is in addition to all the wind and solar that would be built without it, which is still a large number.
Below you can see a graph showing cumulative solar PV installations in the US:
GTM Research/Screen capture
An additional 20GW would be about as much as the total installed now. While 2015 is shaping up to be the best year ever for solar in the U.S., this record probably won't stand very long because of this new deal.
This second graph break down new installed capacity in the U.S. by quarter:
GTM Research/Screen capture
The beauty is that 5 year is long enough for the cost of wind and solar to keep dropping enough so that if in 5 years the credits can't be renewed, at least prices will be decidedly below those of dirty sources of energy and the momentum will not be nearly as affected. I still hope that the credits will be extended for another 5 years after that, just to take us further along the steepest part of the exponential curve and help truly clean up the U.S. power grid.
The tax credits, valued at about $25 billion over five years, will drive $38 billion of investment in solar and $35 billion in wind through 2021, according to BNEF.
$5 billion per year is nothing for the U.S. government, especially since the credits don't actually cost $5 billion thanks to the fact that taxes are paid by all the workers who are employed by those renewable energy projects, as well as by the utilities who sell the energy, etc. And it probably more than pay for itself it you take into account all of the externalities that are not priced into burning fossil fuels at this time.
Bloomberg has graphs showing the BNEF numbers for each year for both wind and solar, check them out.