Commercial Solar Incentives

There are several solar incentives available for commercial projects in the United States. These incentives can help to reduce the cost of solar system installation and make it more affordable for businesses to invest in clean energy.

Here are some of the most important solar tax incentives for commercial projects:

Federal Investment Tax Credit (ITC)

The federal ITC is a 30% tax credit on the cost of a solar system. This credit is available to businesses of all sizes, and it can be applied to both new and existing systems. The ITC is scheduled to expire in 2032, but it is possible that it will be extended.

Federal Production Tax Credit (PTC)

The federal PTC is a per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operation. It reduces the federal income tax liability and is adjusted annually for inflation.

Federal ITC & PTC Bonus Credits

The federal Investment Tax Credit (ITC) and Production Tax Credit (PTC) bonus credits are additional incentives offered by the United States government to encourage the adoption of clean energy technologies, particularly solar and wind power. These bonus credits are available to projects that meet certain labor requirements or are located in designated areas.

Transfer Of Credits

Businesses who are not eligible for direct payment may sell all, or a portion, of the tax credits for a given year to an unrelated eligible taxpayer. Credits from a single property can be sold to multiple buyers in the same tax year.

Modified Accelerated Cost Recovery System (MACRS)

MACRS is a depreciation system that allows businesses to deduct the cost of certain assets, including solar systems, over a period of time. Businesses can choose to depreciate a solar panel system over a period of 5, 7, or 10 years.

State & Local Incentives

Many states and localities offer their own solar incentives in addition to the federal ITC. These incentives can take the form of tax credits, rebates, or other financial assistance.

Third-Party Power Purchase Agreements (PPAs)

PPAs are a way for businesses to finance solar systems without having to make a large upfront investment. Under a PPA, a third-party company owns and maintains the solar panel system, and the business agrees to purchase the electricity generated by the system at a fixed rate.

Energy Efficiency Tax Deduction

Businesses can also claim a tax deduction of up to $1.80 per square foot for buildings that meet certain energy efficiency standards. This deduction can be applied to the cost of energy-efficient upgrades, including solar systems.

Net Metering

Net metering is a program that allows businesses to sell excess electricity generated by their solar systems back to the grid. This can help to offset the cost of electricity from the grid.

In addition to these tax incentives, there are a number of other benefits to businesses that install solar systems. These benefits include:

• Reduced energy costs: Solar systems can generate significant savings on energy bills.
• Increased property value: Solar systems can increase the value of a commercial property.
• Improved environmental impact: Solar systems are a clean and renewable energy source that can help to reduce greenhouse gas emissions.
• Enhanced brand image: Solar systems can help to enhance a business’s brand image and reputation as a leader in sustainability.

Overall, there are a number of solar tax incentives and other benefits available to businesses. By taking advantage of these incentives, businesses can significantly reduce the cost of solar energy adoption and reap the long-term benefits of clean energy, including reduced energy bills, increased property value, and a positive environmental impact.

Non-Profit Organization Incentives

Non-profits can benefit from several solar tax credits and incentives. Here are some of the key solar tax credits available to non-profit organizations in the United States:

• Federal Investment Tax Credit (ITC): Non-profit are eligible for the same 30% federal ITC as commercial businesses. This credit can be applied to the cost of a solar panel system, including installation and other related expenses.
• Federal Production Tax Credit (PTC): Non-profits are eligible for the same federal PTC as commercial businesses. This credit is a per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operation. It reduces the federal income tax liability and is adjusted annually for inflation.
• Federal ITC & PTC Credits: Non-profits are eligible for the same tax credits and incentives as commercial businesses, including the prevailing wage and apprenticeship requirements and domestic content requirements for bonus credits.
• Direct Pay Option: Non-profits can also choose the Direct Pay option, which allows them to receive a direct payment from the IRS in lieu of the tax credit. This option is particularly beneficial for non-profits that don’t have significant tax liability.
• Transfer Of Credits: Non-profits who are not eligible for direct payment may sell all, or a portion, of the tax credits for a given year to an unrelated eligible taxpayer. Taxpayers may not transfer just the bonus credit amount of a tax credit. Credits from a single property can be sold to multiple buyers in the same tax year.
• State & Local Incentives: Some states and localities offer additional solar incentives for non-profit organizations. These incentives can take various forms, such as tax credits, rebates, or grants. It’s essential to check with local and state authorities to determine the specific incentives available in your area.
• Department of Energy Grants: The Department of Energy (DOE) periodically offers grants and funding opportunities for non-profits that implement renewable energy projects, including solar installations. These grants can help non-profits offset the upfront costs of solar systems.
• Property Tax Exemptions: Some states and localities offer property tax exemptions for non-profits that install solar systems. This can further reduce the overall cost of solar energy adoption.
• Utility Company Incentives: Utility companies may offer additional incentives for non-profits, such as reduced connection fees or net metering programs. These programs allow non-profits to sell excess electricity generated by their solar systems back to the grid.
• Donor-Funded Solar Projects: Non-profit organizations can explore donor-funded solar projects, where they seek funding from individuals or foundations to cover the cost of solar installation. This can be an effective way to finance solar projects without relying solely on grants or tax incentives.
• Group Purchasing Programs: Non-profits can participate in group purchasing programs to negotiate reduced prices for solar systems and installation services. This can lead to significant cost savings, especially for larger projects.
• Energy Efficiency Tax Deduction: Non-profits can also claim a tax deduction of up to $1.80 per square foot for buildings that meet certain energy efficiency standards. This deduction can be applied to the cost of energy-efficient upgrades, including solar panel systems.
• Net Metering: Net metering is also available to non-profits where they can sell excess electricity generated by their solar systems back to the grid.

Department Of Energy (DOE) Article

Here is an article written by the DOE which provides a lot of great information regarding this topic: https://www.energy.gov/eere/solar/federal-solar-tax-credits-businesses

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