Commercial Solar Federal Investment Tax Credit
Any purchase of a solar power system before December 31, 2020 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 2021, and permanently to 10% in 2022.
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 percent to 100 percent.
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
Georgia Commercial Solar Financial Incentives
Georgia has been one of the fastest growing solar markets in the country. There are many programs, loans, and incentives in place for commercial businesses that want to convert to solar.
Commercial Financial Incentives for North Carolina
In 2018, North Carolina Utilities Commission with Duke Energy Progress and Duke Energy Carolinas Launched the Solar Rebate Program, that Program is Available Today.
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 Non-Profit. 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.
- Non-Profit: 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.