PV Installations Rise amid 1603 Grant Concerns

Posted October 4th, 2011 by SRECTrade.

A recent report conducted by the Solar Energy Industries Association (SEIA) and GTM Research found that the US solar PV industry continued its growth through the first two quarters of 2011. Despite a slight decline in residential PV installations from Q1 to Q2, commercial and utility-scale solar installations surged, accounting for over 200 of the 314 MW installed in Q2 alone.

The impressive growth is partially attributed to the somewhat unpredictable schedule of the federal 1603 cash-grant, which covers 30% of project costs for commercial solar systems. Toward the end of 2010, project developers scrambled to get as many projects in the pipeline as quickly as possible over concerns that the grant would expire at the end of the year. Q4 in 2010 installed over 360 MW of capacity, up from roughly 187 MW in Q3 2010.

A carry-over from last year’s late rush to get projects underway contributed to the impressive numbers posted in Q1 2011. Though the grant program was extended through 2011, there is yet again a rising fear that the grant’s expiration is imminent. The US Congressional Join Select Committee (JSC), which was created to cut at least $1.2 trillion in federal spending, will likely eliminate the grant program upon its scheduled expiration at the end of the year. Though the program has been successful, awarding $8.5 billion overall (three times the projected amount of $3 billion), continuing the government-funded program is simply counter to JSC’s goal of reducing the current budget deficit.

A repeat of last year’s late surge is expected going into the last few months of 2011. In order to qualify for a grant, a system must begin construction by the end of the year. Similar to last year, a project is deemed to have begun construction based on the program’s “5% safe harbor” rule, which requires at least 5% of the total cost of the property or system to be paid by December 31, 2011. Projects only then need to be completed by the end of 2016 to qualify for the grant.

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One Response to “PV Installations Rise amid 1603 Grant Concerns”

  1. […] surge in installed capacity is partially due to the anticipated expiration of the federal 1603 grant, an upfront cash payment for commercial projects of up to 30% of system costs, at the end of the […]