But by the end of next year, a federal initiative that gives residents and businesses a 30% tax credit for installing renewable energy systems is set to expire and be replaced by a 10% credit.
At Fortune’s Brainstorm E conference on Monday in Austin, Texas, a group of renewable energy experts and investors discussed the current state of investment in the technology as well as the implications of the tax credit ending. They remained mostly optimistic about the industry and future adoption.
According to Kyung-Ah Park, a Goldman Sachs managing director and head of the environmental markets group, the renewable energy sector has “reached an inflection point” with more renewable energy systems installed this year than conventional systems. However, she said we might see “a pretty steep decline in 2017” in U.S.-based renewable energy investments if the tax credit doesn’t get extended.
That being said, “it is not all gloom and doom,” Park said, because regardless of U.S. policy, worldwide interest in renewable energy projects is still big. Investors, therefore, still have many opportunities overseas.
Tom Werner, president and CEO of the solar energy company SunPower (SPWR), agreed with the idea that worldwide demand for renewable energy is high. He pointed to China as leading the market.
Renewable energy companies “need to be in China,” Werner said. SunPower has set up joint ventures in China to do business in the country. In April, it announced a partnership with Apple to build two solar power projects in China.
Michael Eckhart, Citigroup’s managing director and global head of environmental finance, shared his opinion about the expiration of the U.S. federal tax credit with a view from Wall Street. He said that when the tax credits end, investors would be less inclined to invest because they won’t get any tax benefits for doing so.
“The source of capital to the market,” Eckhart explained, will be “severely jolted.”
This move to new energy technologies is still in the “early innings of an economy wide transition,” Park said.
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