Solar Investment Tax Credit
Nothing beats the calm that comes from having a solar rooftop. The control and power it gives the homeowner over her energy need always make every penny spent on its acquisition worth it. Admittedly, the initial costs of acquisition are high, but, you get isolated from failed grids or vandalized electricity equipment and enjoy power when and how you like it. A technician I work with constantly says — ‘only God fit commot your light’. While that is partially true, the advantages a solar rooftop has over the traditional grid are unquestionable. Today, I will briefly introduce you to one of them — the Tax Cuts.
In the United States today, homeowners with solar rooftops enjoy a fixed percentage in tax cuts. It is called the Solar Investment Tax Credit (TIC). Considering how difficult it can be to obtain a solar home unit, the US government launched this initiative to allow house owners, tenants, or commercial buildings with a solar energy system to get a one-time tax deduction on their federal return. Launched in 2006 and set to be terminated in 2024, the initiative was birthed to accelerate the green energy transition efforts in the US. The move to keep this within this stipulated deadline allows the government to provide a sense of urgency and at the same time prepare for the temporal losses it will incur.
The TIC is available to only owners of the building or tenants who contribute to the payment of the solar-energy unit and is given only once. The rate of deduction largely depends on the year of installation and the unit must be supplying energy to a home in the United States. It allows a deduction of over 30–24% of the cost of the solar-energy unit from your remittance to the IRS. This deduction can be rolled over if the tax remittance does not meet the deduction, but it is only done one time. The deduction/ incentive is not only done at the federal level in the US but also in some other states where cuts are also reflected in other areas like sales tax.
The benefits of this to the US economy and environment are huge. According to Forbes, “The US Solar industry has grown by more than 10,000% with an average annual growth of 50% over the last 10 years. The industry has created hundreds of thousands of jobs and invested billions of dollars in the U.S. economy”. No doubt, this has also greatly impacted in reducing her carbon footprint and also allowed her to explore other energy options.
In Africa, the scarcity of policies and incentives like this cannot be excused. Although many countries in the continent suffer a struggling economy that is still in the process of providing basic infrastructure for their massive population, similar or even lesser initiatives should be put in place to provide a safer net for homeowners who want to go green. Doing this helps both citizen and country while also assisting in the fight against climate change.
Admittedly, Nigeria as a country has tried in many ways to join the global transition movement. Her government has been actively involved in drafting policies and programs to aid this campaign but they do not have a significant impact that can be felt by the economy or citizens they are meant for. This lack of impactful policies is appalling and a cue can be taken from the United States. The incentive does not last forever, but its benefits do last a lifetime. It will encourage citizens to purchase these home units and allow them to enjoy the numerous benefits.
Corporations can be incentivized to make these installations and receive tax cuts or any other bonus. It will not only help accelerate the country’s Renewable Energy transition journey but will go a long way to reduce her carbon footprint and set her amongst nations with effective clean energy policies. Nigeria is already suffering from its oil dependency both economically, environmentally, and otherwise. Giving a slight nudge to an energy transition through tax cuts will be an incredible achievement for her. Putting it within a time limit will allow her to suffer the temporal losses for only a defined period.
A major challenge to this initiative in Nigeria will be its implementation, this concern is in consideration of her struggling tax agency. Nigeria already recorded a devastating $178b loss to Tax evasion in the last 10 years. In truth, the implementation of a tax cut for solar rooftops might drive her into even more losses as it can create another avenue to evade taxes. The tax system in Nigeria is begging to be ridiculed and this might make matters worse. Regardless, it does not remove the obvious fact that an incentive like this is necessary for this growing population. Even if they do not come as tax cuts, they are needed urgently and they need to make an impact.
We have a choice to make as a nation and continent. The future we dream of will come to us in the same shape and manner we have prepared it. As a nation and a continent, we are headed for a polluted future and we can only save ourselves if we realize that the time to act is NOW.