For better or worse, the U.S. has historically relied on federal tax incentives to foster renewable energy deployment. For solar energy, the 30% Investment Tax Credit and beneficial MACRs depreciation treatment have allowed solar projects to compete with the massively subsidized (and politically entrenched) forms of traditional electricity generation in the U.S., namely coal, natural gas and nuclear.
The solar industry saw rapid growth with the advent of the Power Purchase Agreement (PPA), a method of financing a solar photovoltaic (PV) system. A PPA is an agreement in which a solar developer manages and executes the design, permitting, finance, installation, maintenance and monitoring of a PV system on a customer's property or roof at little to no upfront cost. The solar developer or another third party is the system owner that sells the power generated directly to the host customer at a fixed rate—usually lower than the local utility’s retail rate. With annual price hikes by local utilities and energy price volatility, customers find a predictable energy cost attractive.