With increasing public pressure and increasing grid maintenance and energy costs, governments all over the world are taking renewable energy more seriously. One of the best ways to incentivize cleaner power sources – like solar – is by reducing upfront investment costs.
In the United States, these cost reductions come in the form of solar incentives that allow businesses to affordably install solar photovoltaic (PV) panels on their properties. After going solar, these businesses save money on their operating expenses through lower utility bills and boost the sustainability of their businesses. Federal, state and local governments are essentially giving solar PV system owners funding to help them invest in alternate energy sources.
Some of these incentives are set to decrease over time, so you need to take advantage of them now to get the most benefit to your business. Consider leveraging these programs now to go solar at a lower cost, decrease your operating expenses by powering your facility with onsite solar energy, and even generate additional revenue for your business.
Below is a breakdown of the most popular solar incentives in the U.S.:
The ITC is a federal tax credit for 26% of your solar PV system cost that is claimed against your business’s tax liability. It is a dollar-for-dollar reduction in the income taxes that a company claiming the credit would otherwise pay the federal government. If you don’t have enough tax liability to claim the entire credit in one year, you can roll over the remaining credits into future years for as long as the tax credit is in effect.
The ITC is one of the most lucrative ways to reduce the upfront cost of your solar PV installation, allowing you to speed up the payback period of your investment.
The ITC has proven to be one of the most important federal incentives directly responsible for the growth of solar energy adoption in the U.S. – according to the SEIA, there has been 52% average annual growth in the U.S. solar industry since the ITC was enacted in 2006. But the ITC is set to decrease in 2023 from 26% to 22% – so the sooner you act, the more you can save on your solar PV system with this incentive. In the next installment of this series, learn how to maximize your energy budget by leveraging the ITC.
During the day, many solar customers produce more electricity than they can consume in a day. This excess energy can be stored in an onsite battery to reduce energy costs during peak price times – or fed back into the grid to reduce future utility bills, as is the case with net metering.
Net metering is an incentive available in many states, allowing businesses to monetize their solar energy by feeding solar electricity they do not use onsite back into the grid. With this incentive, you are credited for the solar electricity you add to the grid – lowering your future utility bills and therefore your business’s operating expenses.
Similar to the ITC, net metering helps to speed up the payback period of your solar PV system – this particular incentive generates a revenue stream for your business.
Some states offer an incentive similar to net metering. Known as a feed-in tariff, it also allows you to monetize your solar electricity, but in a slightly different fashion than net metering.
Under this incentive, you can be financially compensated for the clean power that your solar PV panels generate (not just credits, like net metering). You sell 100% of your generated solar energy to the grid at a higher rate that is typically fixed for 20 years. You then purchase your power directly from your utility via your regular bill, but because with the feed-in tariff you are getting paid at a higher rate for your generated solar power, your solar PV system is in essence covering the cost of the electricity you consume from your utility company plus the additional premium the utility is paying you for that power.
You can generate additional revenue from your solar PV system through SRECs. When your solar PV panels generate electricity, they also produce SRECs, which are credits that represent the environmental benefits associated with producing 1 MWh (or 1,000 kwh) of solar electricity. You can sell your credits back to utility companies in an open market and generate an additional revenue stream from going solar, further maximizing your investment.
Centrica Business Solutions can help you navigate the available SREC program in your state and offer you the best value for the SRECs generated by your solar PV system. We have various offerings that help you maximize your earnings and allow you to choose the timing of your earnings.
In addition to the above programs, there also exist other solar incentives and rebates by state and region. To learn more about local solar incentives in your state, visit the Database of State Incentives for Renewables & Efficiency®, or contact Centrica Business Solutions directly so our team can walk you through available options in your area and help you navigate these opportunities for your business.
Receiving funding from the government in order to go solar makes good business sense. But these solar energy incentives are constantly changing and will not be around forever. Solar incentives are designed to “incentivize” early adoption. As more businesses go solar, the benefits get scaled back progressively:
In other words, now is the time to act. It’s important to include solar as part of your planning now if you are looking for lower upfront solar costs, decreased energy savings, and reduced operating expenses for your business. The sooner you take advantage of these incentives, the greater your chances of enjoying:
To take advantage of these opportunities before they expire, be sure to talk to Centrica Business Solutions to learn what solar incentives may be available to you.