Solar Incentives for Businesses in MA Help Propel the Solar Industry Forward
The current solar incentives for businesses make the prospect of installing a solar power system a very wise business decision as governments strive to promote clean energy and environmental awareness.
Our team will help you identify and utilize all available federal, state and local rebates, grants and tax incentives.
Renewable energy and solar projects often qualify for a number of government incentives. Potential subsidies include: rebates, tax credits, grants, Solar Renewable Energy Credits (SRECs), and 5 year modified accelerated depreciation.
Solar incentive programs can be hard to navigate and application processes leave little room for error. As an additional benefit to you, Clean Energy Design will identify the available funds your solar power system is qualified for, and our rebate specialists will process, manage, and track your applications.
* Clean Energy Design LLC presents financial incentives as accurately as possible. Financial incentives for solar systems are constantly changing at the state and federal level. Receipt of incentives depends on the customers eligibility and final approval for the program, availability of funding and the customers specific tax situation. All financial incentives are presented as estimates and all references to taxes, tax credits, or rebates are presented for general information and are not intended as tax advice. Please consult your tax advisor for professional tax advice.
Solar Renewable Energy Certificates (SRECs)
SRECs, or Solar Renewable Energy Certificates, are tradable certificates that represent the positive environmental attributes of electricity generated from a solar electric system. These certificates provide a steady source of income beyond the utility savings your system will provide.
Commercial PV Systems under 25 kW will be eligible to generate SREC‐II certificates for 10 years (40 quarters), with incentive declining over time through a 10‐year forward schedule. More current information can be found here on the DOER’s website.
Solar Massachusetts Renewable Target “SMART” Incentive
The new SMART incentive program is expected to be implemented by January 2018 and will replace the SREC 2 production based incentive.
This new tariff policy has been developed to incentivize an additional 1.6 GW of solar PV in the state.
The DOER believes that a tariff-based incentive program would be best mechanism to continue supporting solar at the lowest cost to ratepayers. The new policy is based on a declining block grant incentive system, to be paid out on the basis of energy delivered.
Under the final tariff design there will be different rates for projects of different scales up to 5 MW per site. Incentives will be provided for 10-20 years, with varied values depending on ownership, system size and location. The tariff will consist of 8 blocks, with tariff values decreasing 5% in each subsequent block. A certain portion of each block will most likely be set aside for smaller projects as well.
The recovery of costs would be made through a fixed charge to all customers in the network. But unlike many standard offer or feed-in tariff policies the incentive will be paid “net of energy value”, which would allow the program to work in conjunction with net metered systems. There is an additional incentive of $.05 per kWh if plant owners decide to opt out of the net metering program.
For more detailed information on this draft policy please visit the DOER
Federal Investment Tax Credit (ITC)
For several renewable technologies, including solar and small wind energy systems, there is a tax credit currently equal to 30% of the capital expenditure, with no maximum credit. Eligible solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat.
The ITC is based on the amount of investment in solar property. Both the residential and commercial ITC are equal to 30 percent of the basis that is invested in eligible property which have commence construction through 2019. The ITC then steps down to 26 percent in 2020 and 22 percent in 2021. After 2023, the residential credit will drop to zero while the commercial and utility credit will drop to a permanent 10 percent.
Federal Modified Accelerated Cost-Recovery System (MACRS)- 5 years
The Modified Accelerated Cost Recovery System (MACRS), established in 1986, is a method of depreciation in which a business’ investments in certain tangible property are recovered, for tax purposes, over a specified time period through annual deductions.
The MACRS establishes a set of class lives for various types of property which ranges from 3 to 50 years over which the property may be depreciated. A number of renewable energy technologies including solar are classified as five-year property.
If an Investment Tax Credit (ITC) is claimed on equipment, the owner must reduce the project’s depreciable basis by one-half the value of the 30% ITC. This means the owner is able to deduct 85 percent of his or her tax basis.
The Consolidated Appropriations Act, signed in December 2015, extended the “placed in service” deadline for bonus depreciation. Equipment placed in service before January 1, 2018 can qualify for 50% bonus depreciation. Equipment placed in service during 2018 can qualify for 40% bonus depreciation and equipment placed in service during 2019 can qualify for 30% bonus depreciation.
In the first year of service, under 50% bonus depreciation, companies could elect to depreciate 50% of the basis while the remaining 50% is depreciated under the normal MACRS recovery period.
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