Solar might Pay for those loans—In 2042

As long as they avoid bankruptcy

A new study conducted by the U.S. Partnership for Renewable Energy Finance estimates that tax credits for solar energy companies will pay for themselves, but only if those companies survive for 30 years.

The Foundry reports:

Over a 30-year period, the study claims, the tax credit will "deliver a nominal 10% internal rate of return (IRR) to the federal government on the federal investment tax credit (ITC) for residential and commercial solar projects." In other words, according to the study, the tax credit will pay for itself, and provide an additional 10% return for taxpayers, through the selling of Power Purchase Agreements and other means.

One need only look at a few recent solar energy bankruptcies to understand why the study falls short. Abound Solar, which filed for Chapter 7 last month, got an $11.85 million tax credit under the provision in question. Despite that support, the company will fire its 125 employees and suspend operations.

Neither is Abound an isolated example. First Solar, which laid off 30% of its workforce earlier this year, also benefitted from the tax credit in question. Though it hasn’t fully ceased operations, whether the company can survive the 30 years necessary to produce the returns US PREF projects given recent turmoil is no sure thing.