Solar Investment Tax Credit

Solar Investment Tax Credit


30% of the costs of a solar or battery storage system are paid for with the Solar Investment Tax credit. The Solar Investment Tax Credit (ITC) is the biggest renewable energy incentive in the country, and helps make solar affordable for just about every business or homeowner in the U.S. with a sunny rooftop. The solar ITC has been around for almost ten years – but 2019 is the last year that it is in full effect.

The solar ITC steps down to 26% in 2020, 22% in 2021 and zero for residential systems in 2022. As in year’s past, there will be a big rush to get systems installed before the end of the year – and even a bigger rush at the end of this year since systems will effectively be 4% more expensive on January 1, 2020.

Moreover, California’s public utilities have put their foot on the solar + battery storage accelerator with upcoming Public Safety Power Shutoff announcements. The 30% tax credit fully applies to battery storage systems used for backup power as long as the battery is charged by solar at least 75% of the time. Businesses and homeowners are realizing that a clean, renewable, and quiet solar + battery backup system is more reliable and cost effective than traditional built-in gas and diesel generating systems.

The solar ITC is a straightforward credit (not deduction) on your business or personal tax return, and is not affected by the alternative minimum tax. Other incentives, such as business equipment depreciation, can also be combined with the solar ITC – in many cases cutting the total cost by 50% or more. To learn more about how your home or business can leverage the Solar Investment Tax Credit for both energy and backup power, tune in to this week’s Energy Show.

The Commercial Solar Opportunity

The Commercial Solar Opportunity

There are there are three market segment for solar in the U.S.: residential, utility and commercial. Based on some rough math, in 2018 we expect to install 5 to 7 million solar panels on homes in the U.S. In areas with high residential electric rates, paybacks are usually in the range of 4-8 years. But the utility solar segment is much larger: about 20 million solar panels will be installed by utilities in 2018. Utilities realize that it is cheaper to generate power with solar compared to coal or nuclear generation. Moreover, the combination of solar and batteries is projected to be even cheaper than natural gas in a few years. (more…)

Tax Reform – What Does It Mean For Solar?

Tax Reform – What Does It Mean For Solar?

This week’s show is about TAXES. Please try to contain your excitement.

It’s been 32 years since President Reagan pushed through the last comprehensive tax reform bill. The Tax Cuts and Jobs Act of 2017 makes similar huge changes in the ways that individuals and businesses pay their taxes. Every sector of the economy will be affected, as will everyone’s personal returns. (more…)

Getting your Solar Investment Tax Credit

It’s that time of the year…tax time, that is. Every year we get questions from customers about filling out their solar investment tax credit (ITC) form. Now, we are not tax experts (so check with your accountant), but the rules are pretty straightforward for the solar ITC.

Basically, every homeowner who installs a solar electric system or solar hot water system (not a pool heating system) gets a 30% tax credit on the total cost of their system. This tax credit only applies to the owner of the system, not if you have a solar lease or solar PPA. There is no need to file for the ITC if you have a lease or PPA since the corporate entity that owns your system has already collected the tax credit and depreciation benefits – reducing your monthly payments accordingly.

It only takes a few minutes to fill out the IRS “Residential Energy Credits” Form 5695. For documentation, all you need are copies of all the invoices that apply to the installation of your home solar system. For more about getting your 2016 solar investment tax credit, Listen Up to the Energy Show on Renewable Energy World.

Rooftop Solar is a Low Risk, High Return Investment

Traditional finance theory characterizes investments by their risk and their return. High risk investments, such as junk bonds, have to offer high interest rates to compensate for the fact that some of these investments will fail. Low risk investments, such as government bonds or bank accounts, offer low interest rates because there is almost no chance of these investments failing. There is a complete spectrum of investments in between. It is very unusual for low risk and high return investments to exist for long — simply because when these unusually good investments become available, investors flock to these investments, pushing the rate of return down.

But rooftop solar is an outlier to this traditional financial theory — especially from the perspective of an individual homeowner. Paybacks for rooftop solar are in the range of five to ten years — the equivalent to a 10% to 20% rate of return. And risks are very low — rooftop solar will keep working as long as the sun comes up (most systems are guaranteed for 12-25 years).

When my finance friends run the numbers for their own home, they are often amazed that more people don’t install rooftop solar. These friends are happy to take cash out of their investment accounts — where they may have been earning 2% after tax — and install a rooftop solar system where they will earn an equivalent 15% after tax return. For more about the financial risks and rewards of a rooftop solar system, please Listen Up to the Energy Show on Renewable Energy World.

Utilities Substituting Solar for Nuclear

Some nuclear power news: PG&E is shutting down the Diablo Canyon nuclear power plant, the last plant in California. Their decision is not for safety or reliability reasons, it’s simply because other energy sources — such as solar, wind and natural gas — are cheaper. And other utilities around the country are coming to the same conclusion.

Utilities have three primary goals: generate profits for their stockholders, keep the lights on, and keep people safe. Although nuclear plants were at one time thought to be the cheapest and most reliable way to generate safe electricity, rapid cost declines in renewables (wind and solar) and natural gas have made these generation technologies much cheaper on a lifecycle basis.

The decision by PG&E was partially motivated by California’s goals of 50% renewable power by 2030. A compromise was reached among PG&E, California’s Public Utility Commission, environmental groups and unions representing nuclear workers to shut down Diablo Canyon earlier than scheduled — while at the same time shifting more towards renewable power generation instead of natural gas. For more about the $3.8 billion early shutdown of Diablo Canyon, Listen Up to the Energy Show on Renewable Energy World.