In the nearly 20 years that I have been immersed in the world of sustainable energy, I have continued to see the cost of purchasing and maintaining a solar rig drop year after year. In fact, according to a recent Bloomberg report, PV system operations and maintenance costs have shrunk in half over the last four years alone.
While this is great news for business owners who want to utilize solar to lower their overhead and add resiliency to their operations, cost still remains a top concern for nearly everyone I speak with. Many are surprised to learn that between federal tax credits, corporate depreciation, and the IL SREC cash-back system, up to 90% of the cost of their system can be covered.
First implemented in 2006, the federal solar Investment Tax Credit (ITC) is a 30% (through 2019 then goes down 4%) tax credit that applies to solar installations on both residential and commercial properties. Since then, the ITC has helped annual solar installation grow by over 1600%. In 2015, the Omnibus Appropriations Act was passed, which extends the credit for all installations completed by the end of 2022. Despite the new tax code created in 2017 by the Tax Cuts and Jobs Act, the ITC is still in effect, so businesses and homeowners can still take advantage of it.
Most tax software these days will ask if you installed a solar power system during the tax period in question and take it from there. If it doesn’t, or if you do your taxes by hand, you will want to make sure to fill out IRS Form 5695. Be sure to keep the receipts for any and all expenses, including the solar equipment, installation fees, permit costs, and even shipping costs, as they can all earn the tax credit.
Once your installation is completed, it can go to work earning money for you thanks to the Illinois Solar Renewable Energy Credit program. It sounds complicated at first, but there really isn’t much to it. For every megawatt hour of electricity that your system produces, you earn a credit. These credits can then be sold to utilities on the marketplace, putting money back in your pocket. Depending on the market, SRECs can earn back around 30% of the cost of the system across its lifespan. Visit illinoissolar.org for up-to-date info on SREC prices and how to sell them.
While the previous two rebate programs apply to both residential and commercial solar, there are some benefits that only businesses can apply for. One of the best is the Modified Accelerated Cost-Recovery System, also known as Corporate Depreciation. Basically, you are able to recover the cost of tangible property, in this case solar equipment, over its lifespan through annual deductions. These deductions start on the high end (hence “Accelerated”) and gradually lower and level out. By the end of your equipment’s life-cycle, you will be able to recoup another 30% of your solar power system costs through deductions using IRS Form 4562.
Gaining energy independence through solar power has never been cheaper, and the programs I’ve mentioned so far are just the tip of the iceberg. Check out the Database of State Incentives for Renewables and Efficiency at dsireusa.org for a full list, or feel free to pay me a visit at our educational showroom at 1804 Supply Rd in Carterville. I’d love to go over all the ways we can help you get empowered, and save tons of money while you do it!