We often hear about the benefits of solar for residential customers, but commercial PV projects have even more upside and federal incentives. Let’s take a look:

As per the Inflation Reduction Act (IRA), businesses that invest in solar are eligible for very significant tax credits. Business owners can claim a tax credit up to 50% of the cost of the solar investment if they capitalize on all the available bonuses:

• Investment Tax Credit (ITC): 30%
  • In order to be eligible for the ITC and the subsequent bonuses, a business must be located in the United States and the building may not be leased to a tax-exempt entity
  • Expenses that are eligible for ITC: Solar panels, inverters, installation costs, energy storage, etc
• Domestic Content Bonus: 10%
  • For projects beginning in 2024, 40% of the total costs of manufactured products involved in the project must be produced or manufactured in the United States.
  • In 2025, 45% of the project materials must be manufactured domestically. In 2026, the domestic content requirement goes up to 50%
• Low-Income Economic Benefit Project Bonus: 10%-20%

Another very attractive incentive for commercial solar project is Accelerated Depreciation. Under the accelerated depreciation rule, companies that use the ITC can depreciate the full tax basis of the renewable energy investment minus half the ITC over a five-year schedule. This rule gives taxpayers the benefit of significantly greater reduction in federal tax liability.

Solar Renewable Energy Certificate (SRECs) are a great way for business owners to earn cash from their investment, especially because commercial solar projects are large scale-meaning the SREC income is also large scale. SRECs are a non-tangible commodity that business owners earn by producing power from renewable sources, such as solar. For every 1,000 kWh produced from solar, the taxpayer earns 1 SREC. At the time of this writing, an SREC is worth approximately $50. Therefore, if a business produces 500,000 kWh of solar energy each year, they would earn 500 SRECs annually. Financially, this would be an extra $25,000 in yearly income from the solar investment. This incentive is completely separate from and in addition to the energy savings associated with solar PV.

Go to the Office of Energy Efficiency & Renewable Energy to find more information on the ITC and the subsequent bonuses.

Lastly, get in touch so we can start planning your commercial solar project!