Correction: A previous version of the story mistakenly said the federal government extended a production tax credit forsolar The government extended a solar investment tax credit.
Most people think of the renewable-energy tax credits that the U.S. Congress passed earlier this month as a big win for solar – and it is.
The $18 billion package includes an eight-year investment tax credit for solar power. It lifts the previous $2,000 cap for residential solar installations, making residents eligible for tax breaks of up to 30 percent of the price of their projects, and allows utilities to take advantage of the incentives as well.
But some installers say it's also had the somewhat counterintuitive effect of temporarily slowing residential solar installations.
That's because earlier this year, a number of industry insiders expected that the credits might not be extended and anticipated a rush to get projects completed by the end of the year.
Now, with residents becoming eligible for much larger incentives starting Jan. 1, some customers have decided to wait, said Jim Jenal, CEO of solar installer Run on Sun.
"The [tax credit] has completely switched this around," he said.
After all, the removal of the cap can "substantially" change the economics for larger residential projects, he said.
"We're telling folks we're working with to hold off until the new year, because it's too much to leave on the table," he said. "Savvy customers for whom the credit matters [are holding off]. We're telling residential customers that it wouldn't make sense to pull the trigger now. We think the residential side is going to be quiet for the next few months with a pickup in January."
If the average system costs $30,000, a $2,000 tax break was "insignificant" compared to a 30 percent credit of $9,000, said Julia Hamm, executive director of the Solar Electric Power Association.
Assuming the homeowner pays enough in taxes to take advantage of the increased tax break, they would be able to get a smaller loan to pay for the installation, she said. And that would make it easier and less costly to buy a solar-power system.
Not all installers are experiencing a slowdown, however.
Akeena Solar, for example, said people are waiting to interconnect their systems, but are still moving forward to install them. In fact, the phones have been ringing more in the last week and a half, said Gary Mull, vice president of marketing at Akeena.
"People aren't waiting; they are jumping on this now," Mull said.
With the holiday season coming, which tends to slow installations, the delay in switching systems on really comes down to only a 30- or 40-day window, he said.
Ron French, who was the president of Solar Works before it merged with SolarWrights this month and is now the president of the newly formed, yet-unnamed company, said the northeast part of the United States has also seen little impact from the tax credits.
"Even if we were to take an order today, particularly in the northeast – with weather and holidays – we aren't likely to turn it on [until after the new year anyway.]"
One option for companies with customers that want to take advantage of the larger incentives after Jan. 1 is to go ahead and install the projects now and then put the paperwork through next year, said Jenny Chase, a senior associate at New Energy Finance.
"If you don't plug it in, nobody knows it's there," she said.
Still, waiting nearly a quarter for revenues could prove difficult for some.
"Installers will operate on a fairly tight budgeting cycle, so they want the money in before they disperse it," she said.
-- Reporter Ucilia Wang contributed to this story.