Federal Tax credit
In 2019, you will receive a 30% tax credit for investing in solar energy. A tax credit is a dollar for dollar reduction of the income tax you owe and can be spread over a period of time. $1 credit = $1 less you pay in taxes.Let’s say you have a $20,000 system. This gives you a $6,000 tax credit. This is different than a tax refund, because you have to owe taxes in order to claim the incentive. The good news is that if you don’t have the full tax liability, you can roll it over into coming years.
Take advantage in 2019 because the percentage is going down. Next year, in 2020, the rate drops to 26%, then 22% in 2021, and down to 10% in 2022.
You claim the credit the same year your installation is completed. So don’t wait until the last quarter to start the process!
A lot of the associated expenses can be claimed with your solar installation. Here are some of those expenses which are typically built into your quote:
• Solar equipment
• Freight shipping costs
• Solar consulting fees
• Professional installer fees
• Electrician fees
• Engineer fees
• Tools bought or rented
• Wiring, screws, bolts, nails, etc.
• Equipment purchased or rented (scaffolding or a man-lift, for example)
• Permitting fees
• Permitting service costs
Renewable Energy Credits (REC)
Xcel Energy has a Solar* Rewards® program that comes into play when you have solar panels installed on your business. When you produce more energy than you need, Xcel purchases the extra energy and renewable energy credits that you generate.
Think of it as a solar bank. Extra energy you produce is added to the grid, and any excess energy is held in your solar account to use later. Let’s say you produce more in the summer months than you need. You can then draw those reserves in the winter months.
In the first quarter of 2019 the Solar Rewards program* is offering REC pricing at $0.0375/kWh for systems between 25kW and 500kW in size. See their website for current offer.
This can amount to thousands over the life of your system offsetting a large portion of the system cost!!!
Depreciation of system & Property Equity Increase
We recommend you speak to your accountant about how much depreciation you can claim and for how many years.
Having solar on your building brings many benefits, including adding equity to your property. We are also seeing trends of homes and businesses selling faster when they are powered by solar. It really depends on your location and type of business, but it is worth a discussion with your accountant to see what the added benefits might be.
More and more people are choosing to work with environmentally conscious businesses. This also extends to employees, especially Gen X recruits. Many government contracts are giving preference to businesses that have environmental policies in place, including renewable energy and minimized waste streams.