Commercial Financial Incentives
COMMERCIAL SOLAR FEDERAL INVESTMENT TAX CREDIT
Any purchase of a solar power system before December 31, 2032 results in a 30% 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 26% in 2033 and permanently to 22% in 2034.
The Investment Tax Credit (ITC)
- The ITC for businesses and homeowners increased to 30% and is available for solar installations and stand-alone battery storage systems commissioned anytime in 2023.
- The ITC can be increased an additional 10% or 20%, depending on the location of the project and domestic content of components.
- The 30% ITC will be effective through 2032 and then steps down to 26% in 2033 and 22% in 2034.
- In 2023 and beyond, commercial customers can transfer (sell!) these credits to another commercial entity. This ability to transfer credits means that more businesses can monetize the tax benefit and you no longer are required to have a tax bill that exceeds the cost of the ITC!
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 USDA’s REAP Grant has been boosted to 40% of the project cost. This program is only eligible for businesses in rural locations and does require an application.
Combining the REAP Grant with the ITC and other tax benefits such as accelerated depreciation can significantly reduce the cost of cutting your carbon footprint. We encourage you to consult a tax professional to ultimately determine how impactful these tax incentives can be for your solar investment.
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 & 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 $4,000.
- Commercial/Industrial: 50 cents per watt, up to $50,000.
- Nonprofit: 75 cents per watt, up to $75,000.
The Duke Energy Solar Rebate
For Duke Energy Progress and Duke Energy Carolinas customers, there is a one-time rebate for each utility meter to be connected with solar. This program officially ends in 2022, and customers can reserve the rebate any time in 2022, but there is one last lottery period in January 2023.
The Duke Energy Nonprofit Solar Rebate
Duke Energy offers a rebate up to $75,000 for solar installations based on the installation size. It is the most generous of the Duke Energy solar rebates and can be utilized any time in 2022. The Rebate expires at the end of 2022, so nonprofits must reserve their rebate amount by the end of the year. We will assist customers with the Duke Energy Interconnection and Rebate applications.
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.
The state of South Carolina offers three main solar energy installation tax credits related to businesses, residents and contaminated sites, which are discussed below. For a full listing of South Carolina solar assistance opportunities, which includes funds for technical assessment of solar, South Carolina’s REAP Grant coordinator and community solar options related to Palmetto Electric Cooperative, please visit this site and click “Tax Incentives.” You can also search for incentives by your utility provider, including Electric Cooperatives.
SC Solar, Small Hydropower, and Geothermal Tax Credit for Businesses and Residential Properties
This is a 25% tax credit, up to $35,000 of the total system cost, which must be taken over multiple years with limitations. You can learn more here: South Carolina Solar Energy System Machinery and Equipment Credit
Solar Energy Property Tax Credit (Contaminated Sites)
South Carolina offers a Solar Energy Property Tax Credit, which is an income tax credit equal to 25% of the cost of a solar installation for installations on contaminated lands that are identified by the following agencies:
- the Environmental Protection Agency’s (EPA) National Priority List
- the EPA’s list of Equivalent Sites
- Sites identified by the Department of Health and Environmental Control
- Pinewood Site Custodial Trust lands
You can learn more here: South Carolina Solar Energy Property Credit
This credit applies to purchases and leases. Note that Eagle Solar & Light works in partnership with Sunwealth to create innovative leasing opportunities and we are prepared to explore solar installation on contaminated sites.