Dive Brief:
- Southwestern Public Service Company (SPS), an Xcel Energy subsidiary, has put up a Request for Proposals (RFP) for photovoltaic (PV) solar projects in its Texas service territory.
- The SPS RFP, which closes October 10, stipulates that proposed projects should be operational by December 31, 2016.
Dive Insight:
The RFP deadline was likely chosen because the federal investment tax credit (ITC) for solar will drop from 30% to 10% starting in 2017, changing the solar value proposition.
Because of that shift in the ITC, industry watchers expect a boom in solar building over the next two years and a collapse after it. The boom-bust cycle is anticipated to be particularly extreme in Texas because it is one of the most untapped solar markets in the country and has just begun showing signs of gathering momentum, such as the June formation of its own solar industry group, the Texas Solar Power Association (TSPA), according to the Solar Energy Industries’ Association.
The expected boom-bust cycle for the solar industry may be avoided if Congress responds to industry advocates’ call for a change in the tax credit similar to the change in the wind energy industry’s production tax credit (PTC). Instead of making only wind projects “in service” by the December 31, 2013, deadline eligible for the tax credit, the 2013 PTC made projects “in construction” by that date eligible if they are completed by December 3, 2014.
The change in the wind PTC created a building boom that is expected to continue into 2015 and take the wind energy value proposition to unsubsidized market competitiveness. A similar alteration to the ITC could continue the solar boom long enough for it to achieve grid parity.
