President Bush signed new energy legislation into law today that eliminates the federal government’s subsidy for solar installation.

As we reported today, the federal incentive — along with a state rebate — has played a significant role in lowering the overall cost of installing solar panels. The feds give a maximum $2,000 tax credit to homeowners installing solar. Businesses installing solar get a 30 percent credit with no ceiling.

The federal tax credit “makes a huge difference,” said Scott Anders, director of the Energy Policy Initiatives Center at University of San Diego. “Particularly for the commercial system, where businesses have a big tax liability.”

But it is on its way out.

The Washington Post says:

To secure passage for the bill, congressional leaders dropped a tax package that would have reduced breaks for the biggest oil and gas companies and extended breaks for wind and solar projects.

“We’re pretty disappointed,” said Rhone A. Resch, president of the Solar Energy Industries Association, which sought an extension of the investment tax credit that expires at the end of next year. “Clearly the most important provisions for us were left on the cutting-room floor.” Resch said that because of long lead times for big solar projects, “we will see the U.S. market for solar start to shrink rapidly by the second quarter of next year.”


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