Incentives Available
For commercial, industrial or institutional energy users, solar energy is an increasingly attractive way to reduce an organization’s environmental footprint, while reducing operating expenses at the same time. There are several factors to consider when determining if solar energy is a good way to fulfill some of your electricity needs.
Innovation and volume manufacturing are reducing the cost of solar energy systems. Despite this trend, solar energy– before incentives – usually remains more expensive than other sources of grid electricity. However, when incentives are included solar energy is now cost competitive in many jurisdictions.
Within any particular jurisdiction incentives vary greatly and change frequently.CarbonFree will work with you to identify the incentives your project can qualify for, and to structure the project accordingly.
Some of the most common types of incentives are:
Utility Rebates
Some utilities or government agencies offer cash rebates for solar equipment purchases, usually calculated based on a dollars per potential Watt, either DC (based on module specifications) or AC (including assumed system and inverter losses).
Investment Tax Credits
A 30% U.S. federal tax credit is currently available for most investments in solar energy systems in the United States, and some states offer additional tax credits. These credits are normally based on the cost of the system, including installation.
Production Tax Credits
Some jurisdictions offer tax credits for energy produced from renewable sources. For solar electric systems this is measured using the number of kilowatt hours (kWh) generated per year.
Feed-In Tariffs
Some governments or utilities commit to purchase solar power at pre-determined prices over long periods of time, using contracts called Feed-In Tariffs. This is a common approach in Europe, and is also used in Ontario and Vermont.
Production-Based Incentives
Some governments or utilities pay an incentive for solar power when it is generated. These incentives differ from feed-in tariffs in that the generator is normally still free to sell the power separately. This approach has historically been offered for solar electric systems, but in some places, it now also extends to solar thermal systems and the use of heat in CHP (combined heat and power) systems.
Some of the most common types of incentives are:
Utility Rebates
Some utilities or government agencies offer cash rebates for solar equipment purchases, usually calculated based on a dollars per potential Watt, either DC (based on module specifications) or AC (including assumed system and inverter losses).
Investment Tax Credits
A 30% U.S. federal tax credit is currently available for most investments in solar energy systems in the United States, and some states offer additional tax credits. These credits are normally based on the cost of the system, including installation.
Production Tax Credits
Some jurisdictions offer tax credits for energy produced from renewable sources. For solar electric systems this is measured using the number of kilowatt hours (kWh) generated per year.
Feed-In Tariffs
Some governments or utilities commit to purchase solar power at pre-determined prices over long periods of time, using contracts called Feed-In Tariffs. This is a common approach in Europe, and is also used in Ontario and Vermont.
Production-Based Incentives
Some governments or utilities pay an incentive for solar power when it is generated. These incentives differ from feed-in tariffs in that the generator is normally still free to sell the power separately. This approach has historically been offered for solar electric systems, but in some places, it now also extends to solar thermal systems and the use of heat in CHP (combined heat and power) systems.
Renewable Energy Credits (RECs)
Many jurisdictions have introduced Renewable Portfolio Standards, requiring all generators to create a certain percentage of their output from renewable sources. In these areas, renewable energy is recorded as a credit for the generator. Generators who have a surplus of credits can sell them to generators who fall short. Markets for trading these RECs are now emerging, and REC values can have a big impact on the profitability of solar projects.
Accelerated Depreciation
Many federal and state tax systems offer accelerated MACRS depreciation for solar power assets, reducing taxes or even providing tax refunds based on the value of equipment purchased.
Net Metering
In many jurisdictions, customers can earn a credit on their utility bills for electricity fed into the grid when onsite solar generation exceeds their own demand.
Many jurisdictions have introduced Renewable Portfolio Standards, requiring all generators to create a certain percentage of their output from renewable sources. In these areas, renewable energy is recorded as a credit for the generator. Generators who have a surplus of credits can sell them to generators who fall short. Markets for trading these RECs are now emerging, and REC values can have a big impact on the profitability of solar projects.
Accelerated Depreciation
Many federal and state tax systems offer accelerated MACRS depreciation for solar power assets, reducing taxes or even providing tax refunds based on the value of equipment purchased.
Net Metering
In many jurisdictions, customers can earn a credit on their utility bills for electricity fed into the grid when onsite solar generation exceeds their own demand.
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