Commercial Solar Federal Investment Tax Credit
Any purchase of a solar power system before December 31, 2022 results in a 26% federal tax credit making The Investment Tax Credit (ITC) the most important financial incentive for potential solar energy customers, and one of the most lucrative tax incentives across all categories. The ITC for commercial businesses steps down to 22% in 2023 and permanently to 10% in 2024.
The Investment Tax Credit (ITC)
The Investment Tax Credit (ITC) is based upon the amount of investment in solar property and can be carried back 1 year and forward 20 years. It is a dollar for dollar reduction in income taxes for those claiming the credit. Any structural roof work or tree trimming that prevents the system from being shaded can also be included in your overall credit. Check with your accountant and reference IRS form 3468 and Section 48 of the Internal Revenue Code.
Energy storage systems such as the Tesla Powerwall or Fortress E-vault battery can also use the ITC if it is tied into your solar array.
Tax Incentive Depreciation
The federal tax credit isn’t the only incentive available to businesses. The Modified Accelerated Cost Recovery System (MACRS) allows businesses to deduct the depreciable basis of property over five years reducing tax liability and rapidly increasing the rate of return on solar investments. Businesses that utilize both the ITC and MACRS save an average of 60% of the overall cost of their solar power system through tax benefits.
The MACRS system is designed to allow businesses to recover capital costs over the property’s lifetime. The Tax Cuts and Jobs Act in 2017 includes additional incentives including an increase in the Year 1 bonus depreciation from 50% to 100%.
Rural Energy for America Program (REAP) Grants & Loans
The Rural Energy for America Program (REAP) provides grants and loans to agricultural producers and rural small businesses in America to purchase, install, and construct renewable energy systems, including solar energy systems. Businesses must be in an area OTHER THAN a city or town with a population of greater than 50,000 inhabitants and the urbanized area of that city or town. Check eligible business addresses. Agricultural producers may be in rural or non-rural areas. Applications for Grants of $20,000 or Less and Loan/Grant of $20,000 or Less Combo Applications due by November 2, 2020, or March 31, 2021. Contact Eagle Solar and Light and refer to the USDA website for more information.
Commercial Financial Incentives for Alabama & Georgia
Alabama Commercial Solar Financial Incentives
The AlabamaSAVES™ program participates in third-party lending, to commercial, industrial and non-profit businesses in Alabama for solar photovoltaic systems. It is a participating loan program where the Program will acquire a participating interest in a qualifying loan from a third-party banking partner and subordinate this acquired interest to the bank's interest, so that the bank can afford to extend more credit to the borrower on its project. The Participating Interest can be for the lesser of either 100% of the cost of the Eligible Project; or 50% of Participating Loan. The Program's interest rate on its Participating Interest is 2% below the rate on the Participating Loan, thus reducing the overall cost of the financing by 1%. For more information, please go to www.alabamasaves.com. AS OF MAY 1, 2020, THIS PROGRAM HAS BEEN ELIMINATED. Information on possible future grants will be added as soon as more information is available.
Georgia Commercial Solar Financial Incentives
Georgia has been one of the fastest growing solar markets in the country.
The Solar Power Free-Market Financing Act of 2015, also known as House Bill 57, was signed and passed on May 12, 2015. This Act enables solar energy procurement agreements (SEPAs) which lessen the impact of solar panel costs for businesses across Georgia. The bill allows businesses to finance the cost of construction of solar panels while paying back the investment over time through their energy savings from using solar. Contact Eagle Solar and Light to see how SEPAs can lower your utility costs.
Commercial Financial Incentives for North Carolina
Commercial & Non-Profit Solar Financial Incentives for North Carolina
The Solar Rebate Program is helping accelerate the clean energy economy in North Carolina by providing a rebate on power produced by solar power producers. This has helped make going solar more affordable in North Carolina and will continue to influence the solar industry.
The solar rebate is divided per customer type: Residential, Commercial/Industrial, and Nonprofit. The rebate rate is different for each class and also contains a cap of revenue per customer. The rebate amount is based on watts produced by each customer.
The rate classes and rebate amounts/caps are as follows:
- Residential: 60 cents per watt, up to $6,000.
- Commercial/Industrial: 50 cents per watt, up to $50,000.
- Nonprofit: 75 cents per watt, up to $75,000.
The Solar Rebate Program is a first come, first serve basis. Our solar representatives can help walk you through and handle the application process for the solar rebate program. You can also find out more information about the rebate program on the Duke Energy Website here.
Want more information on incentives?
Check out DSIRE (Database of State Incentives for Renewables and Efficiency).
*Please discuss with your business’s accountant or personal accountant to confirm that your business qualifies for the MACRS system, to identify your business’s tax rates, and to fully understand your tax liability.