Historically, federal and state governments have used income-tax credits as one of the predominant tools to stimulate the deployment of renewable energy technologies. Investment-tax credits are a direct reduction in a person’s federal or state liability for some amount of system costs, thereby enhancing after-tax cash flows and promoting investment. These investment-tax credits (ITCs) are simple to administer and enforce compared with other financial incentives. ITCs have been used extensively by states and may be more politically viable than cash payments because they do not require an annual appropriation. If tax credits are successful in expanding markets, they.
