Did you know that last year solar energy accounted for 5% of the nation’s renewable energy? Commercial producers are a rapidly growing segment of that production. That’s due to the overwhelming benefits of investing in a solar energy project.
Don’t get sticker shock when you see the cost estimate for your solar panel array. The US has been taking steps to end our collective dependency on fossil fuels. The reasons include both geopolitical and environmental concerns. Understanding how incentives will benefit your business is due diligence.
Most states have goals for renewable energy production, and base incentives on getting to those goals. The individual programs vary by state and by type of energy produced. In some cases, the state requires you to apply for a rebate through your local public utility company. Other programs offer a break on your state tax burden. It’s easy to search for green energy incentives by state.
Federal incentives are similar in that they vary by the type of energy. For solar energy, there is a 30% tax credit. It’s desirable over geothermal energy, for which the credit is only 10%. In either case, business owners can claim the improvement over three years. The program was set to expire at the end of 2015; however, it was extended via the Consolidated Appropriations Act. Now, the renewal is a second chance for business owners who didn’t take action. The full 30% credit is extended through 2019, with an incremental decrease each year beginning 2020. By 2022 the tax credit will be 10%.
Additionally, businesses that depreciate assets qualify for Modified Accelerated Cost Recovery System (MACRS) depreciation, which creates even more tax savings for solar projects.
For grid-tied systems, which is the typical system type, the advantages of “net metering” are significant. Unused energy is fed back into the grid causing the meter to run backwards. During times when your solar array is not producing energy (at night, for example), you draw electricity from the grid. At the end of the month your local utility company only charges you for the “net” electricity drawn. In some scenarios, companies may even receive cash back. As if that wasn’t incentive enough to break away from the monthly light bill, your business will also receive credit for every kilowatt-hour of clean energy produced, called SRECs (Solar Renewable Energy Certificates). SRECs accumulate over time and work like airline miles. You have options for how you want to sell your SRECs – at energy auctions, open markets, or annual contracts, and your solar provider can make those arrangements for you. It is simple and valuable!
Combined with competitive financing, SRECs, and government incentives, getting on board with free electricity is a win-win-win situation.