COMMERSIAL SOLAR ENERGY INCENTIVES

Federal, state and utility solar energy incentives help you bring down the cost of a large solar installation and to greatly increase the return on your solar investment. Failure to include such solar rebates and incentives into your purchasing decision can overstate the true price of any solar project that you may be exploring. For example, the Federal Solar Investment Tax Credit /ITC/ can offset up to 30 % of a commercial solar project. Even for organizations that cannot directly use the ITC, it is so often possible to incorporate incentives through third-party financing arrangements such as a solar Power Purchase Agreement /PPA/.

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      The federal government extends a corporate tax credit to businesses that  invest in renewable power. The types of eligible solar technologies include:

• solar water heat systems,
• solar space heat,
• solar thermal electric,
• solar thermal electric processes and photovoltaics /PV/.

The Solar Investment Tax Credit is one of the most important federal policy mechanisms to support the deployment of solar energy in the United States. The credit is fixed at 30 %. Note that the credit for businesses is not constrained by a dollar-value cap. So regardless of  how much costs your solar power system your company is permitted to take a 30 percent credit. In October 2008 Congress voted to extend the ITC for eight years, through 2016.

            There are two main commercial solar incentive programs available at the federal level:

1. Renewable Energy Grants. This project started in 2011.
2. Accelerated depreciation + bonus depreciation. A 100% bonus is available for 2011. In 2011, the bonus portion of the accelerates depreciation schedule goes to 50%.

Dozens of states and over 200 utilities provide direct financial incentives for new solar systems. After all, you’re adding additional capacity to the utility’s grid and thus reducing the need for new power plants, transmission lines, and other infrastructure. Many states offer direct cash rebates to offset the initial cost of a solar system. Such rebates are generally only provided to smaller solar systems, and are calculated based on system capacity or expected performance. In addition to federal  ITC, a number of states offer corresponding state-level income tax credits for both residential and commercial solar.

            Some states specifically offer attractive incentives for larger commercial solar installations.

• Arizona
• California
• Connecticut
• Hawaii
• New Jersey
• New York
• Puerto Rico.

Additional states that have strong solar energy incentives include:

• Colorado
• Maryland
• Massachusetts
• North Carolina
• Ohio
• Oregon
• Pennsylvania
• Texas

If your company is going to take federal credit in conjunction with other programs, you should be aware of some important considerations. Most incentives represent income on which federal income taxes are paid. As a result, most incentives don’t decrease the basis on which the federal ITC is calculated. For example, say your business receives rebate money from the state government. Because your business will pay federal income tax on this amount, it doesn’t affect the cost basis used to determine the 30 %  ITC. State rebates, grants and other taxable incentives fall into this category.

On May 21, 2013   /   Uncategorized   /   Leave a comment