My guest for this episode of Clean Power Planet is Nate Greenberg. He’s a business development manager with WGL Energy Systems. I had the opportunity to talk to him about the solar investment tax credit step down at the Solar Power Finance and Investment Summit this spring.

The solar investment tax credit (or ITC)  is a 30% tax credit that was originally supposed to run from January 1st, 2006 through the end of 2007. It was extended to 2008 and then again through 2016. There are actually two different parts to the ITC. The commercial part covers utility-scale and commercial projects and residential projects that are owned by the installer rather than the homeowner. The residential part is for systems that are purchased outright by the homeowner.

The ITC has been very successful. It has played a big part in growing the solar industry. Here are a few stats to illustrate how much solar has grown since the ITC started in 2006.

* More than 170,000 American solar jobs have been created

* $66 billion has been invested in solar installations nationwide.

* The U.S. now has more than 21 GW of solar capacity, 97% of which has been installed since the ITC.

* And we are now installing a new solar project every 2-½ minutes.

But here is where the real momentum comes in. The growing demand for solar has allowed manufacturers and installers to find ways to reduce costs. In 2010, the average residential installed system cost was around $6.50 per watt. By the end of 2014 it was 45% to about $3.48/watt.

That all sounds great but that growth could slow way down at the end of 2016. That’s when the commercial investment tax credit will step down from 30 to 10% and the residential tax credit will drop to 0%. When I attended the Solar Power Investment and Finance Summit this spring the fate of the ITC was a major topic. There was a lot of discussion about what will happen to the industry in 2017 and beyond. It’s a big question. But if you are one of the many people planning, financing or building solar systems you want to know exactly what will happen on midnight, December 31st, 2016. As it stands right now any project not completed and running by then stands to lose a lot of money.

I talked to Nate Greenberg about this. He spoke on a panel at the summit. His job puts him right in the middle of this issue.

NG: I’m Nate Greenberg, a business development manager with WGL Energy Systems. We are a wholly owned subsidiary of WGL Holdings which also holds the natural gas distribution utility in the Washington, D.C. area. We’ve been investing and owning and operating commercial PV assets for almost six years now. And my role within the organization is to, we have an amount of funds each year that we want to get placed and get financed and my role is to acquire deals to place those funds.

In theory with the stepdown of the ITC from 30% to 10% any project that hasn’t hit that deadline and is, you know, under construction and is gonna be delivered late is going to take what I would consider to be a much bigger hit than a typical liquidated damages situation. Cause now you’re eliminating that 20% right off the top. And there’s a real… You know liquidated damages have been a part of our industry for a while and EPCs and others have gotten used to taking on that risk.

DB: EPC stands for engineering, procurement and construction. So the EPC is basically the contractor that designs the system, purchases the equipment and materials and performs the installation.

NG: We’re really talking about a whole, almost unprecedented level of risk that could be associated with losing 20% of the ITC up front. So, it’s become a very difficult negotiation point,