Since 2006, commercial solar projects in the U.S. have been eligible for a federal solar incentive known as the Section 48 Investment Tax Credit (“ITC”) which provides a 30% federal tax credit. This tax credit delivers system owners a dollar-for-dollar reduction in cash income taxes that would otherwise be paid to the federal government, in an amount equal to 30% of a solar project’s cost basis.
The 30% ITC has been the primary tool used to promote solar in the U.S., and has been wildly successful, with total annual US solar installations increasing from only 106 megawatts (“MW”) in 2006 when the ITC was introduced to 6,201 MW in 2014, according to data from GTM Research’s U.S. Solar Market Insight.
Despite its success, under current law, the 30% ITC will step-down to only 10% at the end of 2016. For businesses considering the economic feasibility of solar (which any business interested in saving money and reducing risk should be), the clock is ticking; there are only 20 months left before the ITC is significantly curtailed, so companies need to act now or risk leaving substantial solar savings on the table.
Whether your company is considering going solar with one of the numerous “no-capex” alternatives that are currently available – such as Solar Operating Leases or Solar PPA’s which provide immediate cash savings and long term pricing certainty with no investment required – or through direct system ownership options, time is of the essence, with maximum benefits accruing to solar systems that are placed into service no later than the end of 2016.
For many of our clients, the due diligence and decision-making process can be quite long, with corporate approval time frames frequently exceeding six months. And once approved, large-scale commercial solar projects can take anywhere from 6 months to over 18 months, depending on the type of installation (ground mount systems require more time than rooftop systems) and the specific jurisdiction.
The key takeaway is that prudent corporations considering major commercial solar projects should move expeditiously in order to fully capitalize on the attractive but fleeting 30% federal ITC.
Curious how you can leverage these Federal incentives? Contact us today at Info@EnterSolar.com or 1-888-225-0270.