inflation reduction act – 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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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.

How does the MACRS Incentive for Commercial Solar Power Work?

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

In this article we will discuss how the MACRS works for commercial solar power systems in the US. We are not tax experts, and this is not intended as professional tax advice. If you plan to depreciate a business-owned solar array according to the MACRS, the best recommendation we can give is contacting a Certified Public Accountant (CPA).

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).

Thanks to the MACRS, you can 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%).

The Tax Cuts and Jobs Act of 2017 (TCJA) provides a 100% depreciation bonus for solar power systems placed in service before 2023. Businesses have a major incentive to go solar before the end of 2022, since the federal tax credit also drops from 26% to 22%.

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 26% of your solar PV system costs as a federal tax credit on your next declaration. Being a federal incentive, the ITC is available for solar panel systems everywhere in the US.

The ITC can be claimed for residential and commercial solar power systems, but there is an additional incentive for companies: the Modified Accelerated Cost Recovery System (MACRS). Businesses can write off (depreciate) their solar power investments in only five years under the MACRS, even when solar panels and other system components have a much longer service life. This accelerated depreciation is a tax-deductible expense, which improves cash flow during the first five years after going solar.

Which Solar Power Systems Qualify for the MACRS?

The Modified Accelerated Cost Recovery System is a business incentive, which means it doesn’t apply for residential solar systems. The MACRS is available for the commercial, industrial and agricultural sectors, and several energy sources and technologies qualify for the benefit:

Solar Photovoltaic
Solar Water Heat
Solar Space Heat
Geothermal Electric
Solar Thermal Electric
Solar Thermal Process Heat
Wind Power
Biomass
Geothermal Heat Pumps
Municipal Solid Waste
Combined Heat & Power
Fuel Cells using Non-Renewable Fuels
Landfill Gas
Tidal Power
Wave Power
Ocean Thermal
Geothermal Direct-Use
Anaerobic Digestion
Fuel Cells using Renewable Fuels
Microturbines

Solar panel systems and some other renewable technologies are classified as five-year properties under the MACRS, which means their cost can be written off within that time frame. This improves the cash flow projection for renewable energy systems, since accelerated depreciation counts as tax-deductible expense.

Eligible systems placed in service before January 1, 2023, get an even greater benefit: 100% bonus depreciation under the Tax Cuts and Jobs Act of 2018. Solar panels can be installed relatively quickly, compared with other types of renewable generation equipment. If you’re considering solar panels for a commercial or industrial building, you can claim this benefit by acting fast and completing the project before the end of 2022. Your solar installation will also benefit from the federal tax credit before it drops from 26% to 22%.

Can a Company Combine the Solar Federal Tax Credit and MACRS?

The 26% federal tax credit is a nationwide incentive for solar power systems in all market segments. On the other hand, the MACRS is exclusively for projects in the commercial, industrial and agricultural sectors. A commercial solar installation can benefit from both incentives, but there are certain rules you must follow.

Since you get 26% of your solar investment back within a year, the IRS has decided to limit the maximum asset value you can depreciate under the MACRS. In the case of solar power, the asset value you can write off (depreciable basis) is equivalent to its total value minus 50% of the federal tax credit. The ITC will be gradually reduced in 2023 and 2024, which means the depreciable basis under the MACRS will actually increase. The following table summarizes how this works:

Considering a commercial solar system with a project cost of $1,000,000, these percentages would result in the following dollar values:

The MACRS has been available since 1986, and it has been a key incentive for renewable energy investments along with the federal tax credit. Depending on the type of asset, the depreciation period under the MACRS ranges from three to 50 years. Renewable energy systems normally qualify for five-year or seven-year depreciation, depending on the specific technology used in the project.

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.

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