Getting solar power for your commercial business provides a great return on investment. Power bills are one of the largest expenses and a solar installation can decrease them.
The main reason why solar saves money is the incentives for renewable energy. There are, however, a couple of things the go into getting commercial solar that some solar installers don’t make clear.
Important Details Most Commercial Solar Installers Forget to Mention
When you purchase solar, there are a couple of things you will want to be aware of.
Commercial solar makes sense for almost all businesses, but it makes the most sense for businesses that:
- Own their building
- Have a steady cash flow
Once You Have Decided to Look Into Commercial Solar the Installer Needs this information:
- Address of the area you want to install solar on.
- A copy of your power bill and 12 months of usage.
Once the solar company has a copy of the bill, they can ask Rocky Mountain Power for your rate schedule. Your specific rate schedule gives the company the information they need to give you an accurate quote and savings estimate.
Tax Credits for Utah Solar
- Prospect must own the building to qualify
- You can’t rent the space and qualify for the credit.
- Businesses that tend to be able to qualify based solely on building ownership are chiropractors, dentists, orthodontists, medical businesses, law practices
- Non-profits like schools and churches aren’t always the best options for commercial solar in Utah as they don’t have tax liability.
Your Inverter Matters for Your Utah Commercial Solar Installation
- If you’re trying to reduce your bills, we use a HiQ inverter 5kw inverter, which is the size of a laptop and positioned beneath the solar panels.
If you fit the conditions above, a solar panel installation for your Utah business building may be worth considering. There is a long list of commercial incentives that make not installing solar ludicrous. There are both state and federal incentives that businesses should be aware of.
Utah State Investment and Production Tax Credits
There are two different state solar tax credit options for Utah businesses. These include the investment tax credit ( ITC) and the production tax credit (PTC).
State Investment Tax Credit
Utah’s state ITC for commercial installations is 10 percent of the cost of solar. If 10 percent of your project is more than $50,000, however, you will recieve $50,000 instead of 10 percent.
Option Number 2 for Utah: Production Tax Credit
Utah Photovoltaic systems that are between 660 KW to 2 MW can choose to use the PTC or the ITC. The PTC pays $.0035 (.35¢) per kilowatt of power produced in the first 4 years after install.
For the minimum system size that would equal about $2.31 per day of optimal production. Over 4 years the max amount you could receive would be $843.15 per year which would equal $3,372.60.
In either case, these are both tax credits. If you do not owe the amount that is being credited, you will not receive cash for the excess. Instead, this credit will carry over to the next tax year as a credit toward that year’s tax liability.
Alternative Energy Development Incentives
One of the great benefits of getting solar for your Utah business is the incentives. There is a slew of incentives available for commercial solar projects across the United States.
If you are getting a system that is under 2 MW, you may qualify for a PACE loan. These are no money down 30-year loans, which don’t show up as a debt.
Federal Business Energy Investment Tax Credit
The Federal ITC will cover 30 percent of your system if construction starts before 2020. In 2020 this credit will drop to 26 percent and continue to drop each year until it reaches 10 percent.
1603 Treasury Program Grant
The 1603 grant allows project developers to receive a direct federal grant in place of the ITC. This program gives direct federal grants that are equal to 30 percent of the system.
Modified Accelerated Cost Recovery System: MACRS
Through MACRS you can get a 5-year income tax deduction. This allows you to obtain even more from your investment. The total amount deducted from your taxes is the amount you paid minus its salvage value at the end of the array’s life.
You may also qualify for 100 percent bonus depreciation. Bonus depreciation is an accelerated depreciation that adds an additional deduction in the first year. Your array might qualify for 100 percent bonus depreciation if you placed your system into service between Set 27, 2017 and Jan 1, 2023.
If you also claim the ITC or the 1603 Treasury Program grant, your tax deduction will decrease by half the value of the 30 percent ITC.
What the Utah Solar Energy Association Has to Say
35,000+ homes and businesses have installed solar so far. The USEA reported in their 2018 solar rates graphic that the main reason why Utahans get solar is to save money.
USEA has also reported that solar systems pay for themselves in less than 15 years. This calculation is with the transitional program Rocky Mountain Power has implemented.
The average homeowner saves $1,200 a year. This means that for your business, which uses quite a bit more than the average home, you can expect to save even more.
If you would like a no-obligation estimate for your business, you can contact Go Solar Group. Our team will get you set up with a free customized quote.