The 30% Investment Tax Credit (ITC) for residential and commercial solar systems will expire on December 31, 2016, after which the ITC credit drops to 10% for commercial systems and is eliminated for residential systems. The federal tax policy is credited for dramatically lowering solar costs and accelerating solar adoption in the United States.
Whether or not the ITC will be extended remains an open question. Many analysts believe the current regime of energy tax incentives is coming to an end, and no viable replacement has been proposed. Even in the unlikely event there are last-minute, stopgap extensions or changes to existing energy incentives, these measures would likely only postpone their inevitable expiration for a year or two.
An October 2014 Deutsche Bank analysis predicted that the looming ITC expiration date will cause a rush to complete solar projects while some developers may be discouraged and cancel projects. While the solar industry will continue to grow due to leasing options and the falling price of solar, solar advocates fear that the industry will grow at a much slower rate.