Tax Benefits of Solar – Caldus Energy

Unlocking Opportunity with the REAP Grant: Empowering Rural Energy Solutions

Posted on 03/12/202403/18/2024 by D.Smith

The Rural Energy for America Program (REAP) grant, administered by the United States Department of Agriculture (USDA), offers a transformative opportunity for agricultural producers and rural small businesses to invest in energy efficiency improvements and renewable energy projects. By leveraging the REAP grant, businesses can achieve significant cost savings, reduce environmental impact, and contribute to the sustainability of rural communities.

Benefits:

1. Financial Support: The REAP grant provides funding to cover up to 25% to 75% of the total project costs, enabling businesses to implement energy-efficient technologies and renewable energy systems with reduced financial burden.

1. Cost Savings and Efficiency: By investing in energy-efficient equipment and renewable energy systems, businesses can realize long-term cost savings through reduced energy consumption and operational expenses.

1. Environmental Impact: Embracing renewable energy solutions supported by the REAP grant contributes to environmental sustainability, reducing carbon footprint and promoting a cleaner, greener future for rural communities.

1. Business Growth and Competitiveness: Implementing energy-efficient technologies can enhance the competitiveness of businesses, attract environmentally conscious consumers, and position them as leaders in sustainable practices.

Requirements:

1. Eligibility Criteria: To qualify for the REAP grant, businesses must meet specific eligibility criteria, including being located in a rural area, demonstrating financial need, and complying with program regulations.

1. Project Feasibility: Applicants are required to submit a comprehensive project proposal outlining the scope, budget, and expected outcomes of the energy efficiency or renewable energy project.

1. Compliance and Reporting: Successful applicants must adhere to program guidelines, comply with reporting requirements, and ensure that funded projects align with the objectives of the REAP program.

The REAP grant presents a compelling opportunity for businesses to embrace sustainable energy solutions, drive operational efficiency, and contribute to the vitality of rural communities. By leveraging the financial support and guidance offered by the REAP program, businesses can embark on a journey towards energy sustainability, cost savings, and environmental stewardship.

Department of Agriculture Press release

We have specialized REAP loan officers and grant writers to help our customers through this process.

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How Local Governments Can Use Direct Pay on Clean Energy Projects

Posted on 02/14/202403/15/2024 by D.Smith

The Inflation Reduction Act (IRA) provides a variety of incentives for clean energy. Many of these tax credits and rebates are aimed at individuals and households to transform their energy use and consumption – from home energy efficiency improvements to rooftop solar and electric vehicles. Local leaders have an important role to play in helping their residents understand and take advantage of these opportunities.

For the first time, however, local governments are positioned to take advantage of these tax credits directly. The IRA includes a provision that provides non-taxable entities investing in and producing clean energy with a direct payment option in lieu of tax credits. This provision is applicable for tax years starting after December 31, 2022 and ending before January 1, 2033. A project that is under construction now could potentially qualify.

What is Direct Pay?

Under the IRA, direct pay applies to states, cities and local municipalities, tribes and other tax-exempt entities, such as municipal water or power utilities and school districts. For city leaders, direct pay is an option for funding city-owned clean energy projects that will make projects more affordable for local governments and level the playing field between local governments and the private sector, which has traditionally benefited from tax credits.

Of particular note for local governments, in order to claim the full direct pay amount, projects must meet the prevailing wage and apprenticeship requirements. The U.S. Department of the Treasury recently released guidance on these key labor provisions under the IRA.

Additionally, there are specific criteria that when met will boost the value of the direct payment. For example, this includes projects with sufficient domestic content, projects that are located in “energy communities” (which include sites with brownfield properties, high unemployment or a closed coal mine or coal plant), projects in low-income communities, and rooftop solar projects on affordable housing. These opportunities can provide a 10-30% increase in the value of the direct payment depending on the criteria.

Importantly, as cities, towns and villages look to take advantage of the grant funding provided under the Bipartisan Infrastructure Law and IRA, there is no prohibition on using direct pay and federal or state grant money for the same project.

What Programs are Eligible for Direct Pay?

Tax exempt entities, including state and local governments, can take advantage of the direct pay option under a variety of tax credits for both the production of and investment in clean energy. The Production Tax Credit (PTC) provides an ongoing tax credit for the first ten years of a project based on the amount of renewable energy produced in each year and sold to an unrelated person. The Investment Tax Credit (ITC) are one-time tax credits based on a percentage of the qualifying costs of a project. 

The IRA includes the following new and expanded tax credits that are eligible for the direct pay option:

Production Tax Credits	Investment Tax Credits
Renewable Electricity Production Tax Credit (Section 45)	Energy Investment Tax Credit (Section 48)
Carbon Capture and Sequestration Tax Credit (45Q)	Advanced Energy Project Credit (48C)
Nuclear Power Production Tax Credit (45U) – New	Clean Electricity Investment Tax Credit (48E) – New
Clean Hydrogen Production Tax Credit (45V) – New	Commercial Clean Vehicle Credit (45W) – New
Advanced Manufacturing Production Tax Credit (45X) – New	Alternative Fuel Refueling Property Credit (30C)
Clean Electricity Production Tax Credit (45Y) – New
Clean Fuel Production Credit (45Z) – New

This blog provides more details on each of these tax credits. The U.S. Department of the Treasury is currently developing guidance for implementing each of these tax credits and the process for local governments to receive the direct payment in lieu of tax credit. The guidance is expected to be finalized over the next year.

Clean Energy Projects for Local Governments

The climate and clean energy provisions in the IRA will incentivize a large shift toward clean energy and reducing greenhouse gas emissions. Here are three local examples from municipal water and power utilities undertaking clean energy projects that are likely eligible for tax exempt entities to take advantage of the direct pay option.

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The Cost of Commercial Solar

Posted on 02/14/202403/18/2024 by D.Smith

Costs of commercial solar

In comparison to residential solar systems, commercial solar projects usually cost more than most residential systems due to their size. There is no one size fits all, and while some small businesses may find great value in a $60,000 commercial system, large industrial facilities or solar farms can cost over $1 million to set up.

There are still several tax credits, rebates, and incentives available for commercial solar panel systems just as they do for residential solar panel systems.

COMMERCIAL SOLAR PANEL INCENTIVE

Federal solar tax credit

The federal solar investment tax credit (ITC) allows a deduction of 30% of the cost of a commercial solar installation.

Bonus depreciation through MACRS

Under MACRS, businesses can take advantage of bonus depreciation to claim tax deductions for the depreciation of eligible solar equipment. This incentive applies to commercial solar installations completed before January 1st 2027, allowing companies to recover their investment within five years. Since 2008, bonus depreciation has been incorporated into MACRS, enabling businesses to allocate the full depreciable value in just one year. Essentially, MACRS provides a means for businesses to expedite their return on investment by utilizing tax deductions.

Net metering

Net metering, or NEM, is a benefit available to businesses that produce their own energy through solar panels. Similar to residential customers, these commercial properties can sell excess energy back to the grid and receive credits from their utility company. These credits can then be used to offset energy costs during times when solar production may be lower, such as at night or on cloudy days. However, net metering is becoming less common nationwide, which could affect the amount of savings for those currently utilizing this perk in the future.

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Unleash the Power of Commercial Solar Panel Systems: A Game-changer for your Business

Posted on 02/14/202403/15/2024 by D.Smith

Imagine a world where you are at the helm of a successful, sustainable business and save millions by producing your own electricity. Welcome to the world of commercial solar panel systems. With businesses getting smarter about their investments, many are turning to solar energy as a solution. But, why are they making the switch?

Let’s explore.

Understanding Commercial Solar Power

Commercial solar systems are not limited to large-scale utility. It can also include smaller setups like rooftop or ground-mounted installations for businesses, also called “distributed generation.” These setups generate power at or near the point of usage, reducing transmission losses. Any excess energy is fed back into the grid, earning you valuable bill credits under net metering policies.

Why Businesses are Going Solar

Affordability and Financial Incentives

Deterred by the upfront costs? Don’t be. Numerous financial incentives substantially reduce the initial cost of solar panel systems. Federal Investment Tax Credit (ITC), Production Tax Credit (PTC), Modified Accelerated Cost Recovery System (MACRS) Bonus depreciation, and Net metering are a few favorable policies that can bring down your system’s cost by nearly 70%!

Return on Investment (ROI)

With companies spending thousands on electricity each year, businesses can save up to $101,259 over 20 years with a solar panel system that offsets 90% of their energy consumption. Beyond savings, solar provides a hedge against volatile energy prices, making budgeting easier.

Attract More Customers

In a world increasingly valuing sustainability, solar panel systems can enhance your brand image. According to PwC’s 2021 survey, 83% of consumers believe companies should endorse Environmental, Social, and Governance (ESG) best practices. Having a solar-powered business aligns you with consumer values, potentially increasing your customer base.

Employee Satisfaction

Just as customers are drawn to sustainable companies, so are employees. A PwC 2021 survey found that 86% of employees preferred to work for companies that care about the same issues they do. Showcasing your commitment to solar power could improve employee retention and productivity.

Support for the Local Economy

Going solar means supporting your local economy. With an increase in solar projects, job availability in the solar sector also rises. As of 2023, there are over 350,000 solar jobs nationwide, a 9% increase YoY. By installing a solar energy system, you could contribute to job creation and potentially gain new customers from the industry.

Conclusion

Commercial solar panel systems are not just about generating clean energy. They offer potential cost savings, customer and employee satisfaction, and provide a substantial contribution to the local economy. Isn’t it time for your business to step into the future and go solar?

For a free Energy Audit to see if solar is a good fit for your business.

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Solar Power is Good for Business

Posted on 01/04/202403/10/2024 by D.Smith

Solar power is an increasingly popular energy source that can benefit businesses in a variety of ways. By investing in commercial solar installation, companies are able to save money, reduce their environmental impact, and increase the reliability of their energy supply. In this blog post, we’ll discuss the many advantages of solar power for businesses and why investing in a commercial solar installation is a wise decision.

Solar power is an excellent way for businesses to reduce their energy costs while also reducing their environmental footprint. Commercial solar installation provides businesses with lower operating costs due to reduced electricity bills, as well as the potential for tax incentives and accelerated depreciation. With commercial solar power, businesses can benefit from reliable electricity supply and potentially receive credits for excess energy generated. Lower energy costs over time add up to significant savings for businesses, making solar power an attractive option for many companies. With solar panels, businesses can enjoy clean energy that is both renewable and affordable.

Business-owned solar power systems are eligible for two nationwide incentives in the US: the Investment Tax Credit (ITC) and the Modified Accelerated Cost Recovery System (MACRS). You can combine the ITC and MACRS, but you must subtract half of the ITC from the solar asset value. If you’re considering solar power for a commercial or industrial building, you have most likely heard about the Investment Tax Credit (ITC). Thanks to the ITC, you can claim 30% of your solar PV system costs as a federal tax credit on your next tax payment as well as 80% accelerated depreciation in 2023. The ITC and MACRS are just two of the many benefits of solar power for businesses, and the financial incentives are a great way to ensure that your solar system pays for itself in no time.

The benefits of solar power don’t end there. Solar power is also an environmentally friendly solution to your business’s energy needs. By utilizing solar energy, you can significantly reduce your carbon footprint and help make the world a cleaner, healthier place. What’s more, you can save a great deal of money on energy bills in the long run. Going solar has never been easier, and with these incentives in place, it’s an even more attractive option for businesses looking to get the most out of their energy sources. With all the benefits of solar power readily available, why would any company not want to invest in this clean renewable energy?

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The Inflation Reduction Act Good news for Nonprofits Going Solar

Posted on 12/21/202303/10/2024 by D.Smith

The Inflation Reduction Act, was recently passed. One of the major points in this legislations is that it will make it easier for nonprofit organizations to go solar. This legislation allows nonprofit organizations to take advantage of the same solar tax credits that are available to businesses, making it more financially viable for them to switch to clean, renewable energy.

One of the main barriers that has prevented many nonprofits from going solar in the past is the upfront cost of installation. Solar panel systems can be expensive to install, and many nonprofit organizations simply don’t have the budget for it. The Solar for Nonprofits Act addresses this issue by allowing nonprofits to claim the solar investment tax credit (ITC), which can significantly reduce the cost of going solar.

The ITC allows organizations to claim a credit worth up to 26% of the cost of their solar panel system. This can make a significant difference in the affordability of going solar, and it’s a game changer for many nonprofit organizations that may have previously been unable to afford the upfront cost.

In addition to the ITC, the Inflation Reduction Act also includes other provisions that will help make it easier for nonprofits to go solar. For example, it allows organizations to claim the credit even if they don’t have a tax liability, which is a common issue for nonprofit organizations. This means that they can still claim the credit and use it to offset the cost of their solar panel system, even if they don’t owe any taxes.

Renewable energy is becoming a key priority for many lenders. To support the UN’s Sustainable Development Goals of affordable and clean energy, sustainable cities and communities, climate action and partnerships, many banks are developing specialized commercial loan products designed to encourage the use of solar energy. These loan products include loans for rooftop solar systems, loans for energy efficiency improvements, sustainably certified commercial real estate financing, and sustainably certified construction loans.

Banks focused on accelerating the transition to clean energy are best positioned to help nonprofits secure advantageous funding for their solar installations. There are specialist lenders that have the institutional knowledge and technical know-how to develop innovative funding structures with favorable rates and terms designed to help nonprofits finance these installations.

There is no doubt that the IRA coupled with financing tools that provide funding support for clean energy projects will catalyze nonprofit organizations to deploy solar energy and speed their transition to a net-zero emissions future. Going solar will offer these organizations long-term cost savings while providing the benefits of combatting climate change, creating jobs and bringing new investment into their communities.

Summing up the bottom-line benefits of the IRA, a blog post by Candace Vahlsing, associate director for climate, energy, environment, and science with the White Houses’ Office of Management and Budget, said “the Inflation Reduction Act will help ease the burden that climate change imposes on the American public, strengthen our economy, and reduce future financial risks to the Federal Government and to taxpayers.”

Overall, the Inflation Reduction Act is a major win for nonprofit organizations that are looking to switch to clean, renewable energy. It removes many of the financial barriers that have previously made it difficult for these organizations to go solar, and it makes it more financially viable for them to make the switch. As a result, we can expect to see more and more nonprofit organizations going solar in the coming years, which is great news for the environment and for the future of renewable energy.

A Comprehensive Guide to Net Metering for Commercial Solar Systems

Posted on 07/23/202303/15/2024 by D.Smith

Net metering is a valuable tool for businesses looking to reduce energy costs and embrace sustainable practices. By allowing commercial solar system owners to receive credits for surplus electricity they generate, net metering enables them to offset energy consumption and even spin the utility meter backward. In addition to reducing costs, net metering promotes sustainable energy practices.

In this article, we will explore the workings of net metering, highlight its benefits, and provide insights on how businesses can maximize its advantages. Whether you’re new to the concept or seeking ways to optimize your commercial solar system, this comprehensive guide will give you the knowledge you need to navigate the world of net metering successfully.

Understanding Net Metering
Net metering is a regulatory policy and incentive program that allows commercial solar system owners to receive credits for excess electricity they generate and feed back into the grid. These credits offset their energy consumption and effectively spin the utility meter backward. This encourages companies to invest in renewable energy sources like solar power and generate their own energy.

How Does Net Metering Work?
When a solar system generates more energy than the building requires, the excess electricity flows back into the grid. A bi-directional meter measures the net difference between energy consumed and energy generated. The facility is then credited for any surplus energy generated, which are called solar credits.

Companies can still pull electricity from the grid when needed, such as at night when solar systems generate less energy. The credits from the net amount consumed are subtracted, and the facility is billed only for its net energy consumption.

How is Net Metering Different from Gross Metering?
It’s important to understand the difference between net metering and gross metering. Gross metering is an arrangement where commercial solar system owners are billed separately for their total energy consumption and compensated for their total energy generation based on a predetermined feed-in tariff rate.

Net metering provides credits and allows for a simplified, single bill. Gross metering, on the other hand, requires separate billing and compensation systems.

Benefits of Net Metering for Commercial Solar Systems
Net metering offers numerous benefits for commercial solar systems, including:

Reduced Energy Bills: Net metering can significantly reduce energy bills, depending on the facility’s energy consumption and the solar system’s size and output.

Environmental Sustainability: By promoting the adoption of renewable energy sources, net metering encourages companies to reduce their reliance on fossil fuels and decrease greenhouse gas emissions.

Energy Independence: Commercial solar system owners can achieve energy independence by generating their own energy and being less affected by energy price fluctuations, outages, and grid failures.

Revenue Stream: Net metering can create a revenue stream for companies with excess energy production. Credits for surplus energy can offset initial investment costs, contribute to ongoing expenses, and generate additional income.

Maximizing the Benefits of Net Metering
To maximize the benefits of net metering for your commercial solar system, consider the following strategies:

Proper Sizing and Design of Solar Systems: Before investing in a solar system, conduct an energy audit to understand your facility’s energy needs. Consider factors such as available space, shading issues, and local climate conditions. Plan for future growth to avoid costly upgrades or additions.

Optimizing Solar System Performance: Choose high-quality solar panels and equipment from reputable brands. Regularly maintain and clean the panels, inspect electrical connections, and ensure that all equipment functions properly. Install solar panels at the optimal tilt and azimuth angle to receive maximum sunlight.

Understanding Utility Policies and Regulations: Research net metering policies in your area, as they vary by state, region, and utility company. Familiarize yourself with interconnection requirements and agreements that outline the technical and contractual aspects of connecting your solar power system to the grid.

Efficient Energy Management and Consumption: Implement energy-saving measures and technologies such as energy-efficient lighting and HVAC systems. Analyze your energy usage to align energy use with peak solar production times.

Explore Additional Incentives and Financing Options: Take advantage of federal and state incentives, rebates, and tax credits to offset installation costs. Consider alternative options like a Solar Purchase Power Agreement (PPA) or leasing agreements if managing a solar system is not feasible.

Interested in net metering for solar? Caldus Energy can assist you in designing, building, and financing commercial solar panels tailored to your needs. Specializing in energy projects for commercial and industrial entities, we offer expertise in complex installations and comprehensive project financing. Partner with our experts for every stage of your energy project.

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Green Facts for your Business

Posted on 12/06/202203/15/2024 by D.Smith

A growing number of businesses are choosing to go green. Taking steps to make their workplaces environmentally friendly by introducing materials and operational methods that are less harmful to the environment than traditional methods and materials.

Some of the reasons for the switch:

Costs

Going green for businesses used to be costly in the initial stages. Installing new equipment that produces less waste or buying new appliances that cut down on energy use can be expensive. However, with new tax incentives, accelerated depreciation and savings over time on the monthly energy bill all add up to significant savings.

Reducing & Recycling Materials

Strategies — like utilizing email instead of using paper to fax, purchasing reusable ink cartridges and recycling plastic and glass in the workplace — significantly lower waste. Printing on both sides of a sheet of paper before throwing it away reduces paper use by up to 50 percent. For businesses spanning a large office space, consolidating networks and setting up wireless networks save on power and cabling requirements.

Priorities

Some priorities of manufacturers in going green are sustainable packaging, water and environment stewardship, and climate and energy protection. Some large companies have been continuously involved in sustainability-focused agendas, while others have answered computer waste disposal issues by setting up large recycling plants.

Customer Relations

Going green can draw more customers to your business. Businesses that promote environmentalism as part of their mission statement can gain loyal customers and protect the environment.

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Solar Incentives for Commercial Installations

Posted on 10/09/202203/12/2024 by D.Smith

Solar incentives come in many different forms. Here are a few common programs:

Tax credits

A portion of your project costs can be deducted from your tax obligation, reducing the amount of taxes you pay when you file. In addition to the federal ITC available to all Americans, some states have their own state solar tax credit in place.

Business-owned solar power systems are eligible for two nationwide incentives in the US: the Investment Tax Credit (ITC) and the Modified Accelerated Cost Recovery System (MACRS).

MACRS, allows the business to write off the asset value of a solar PV system in only five years. This depreciation counts as a tax deductible expense, and the cash flow of your solar investment improves.

You can combine the ITC and MACRS, but you must subtract half of the ITC from the solar asset value. For example, if your solar installation gets the 26% tax credit available in 2022, you can depreciate 87% of its value over five years (after subtracting 13%).

Rebates

A partial refund is returned to the owner after they buy their system. Typically, this involves buying from a solar vendor, then filing for a rebate with the utility company, local government, or other organization running the rebate program.

Property Tax Relief

In some states, solar systems are exempt from property taxes. The building is assessed as if it did not have a solar power system installed, reducing the property owners tax burden.

Category: Tax Benefits of Solar