Attention Business Owners - 30% Solar Grant Now Available

The Department of the Treasury has recently made available the instructions to apply for the Renewable Energy Grant. This grant is part of the Section 1603 of the American Recovery and Reinvestment Tax Act of 2009. It authorizes the US Department of the Treasury to make payments in the form of a cash grant to commercial, agricultural, and industrial properties that install a qualified renewable energy system such as a solar photovoltaic system.

Where previously the 30% Investment Tax Credit (ITC) allowed solar investors to reduce their tax liability by the amount of the tax credit, Section 1603 now allows investors the option to access a cash grant instead. This is advantageous to those who are looking to invest in solar but do not have the tax liability to take advantage of the 30% tax credit. Although the tax credit can be carried forward into the subsequent tax year, the full benefit of the 30% tax credit cannot be realized until taxes are filed. The grant provides a great alternative to the ITC. The solar grant allows investors to receive a cash grant within 60 days or less of the grant application or the date the solar system is placed in service, whichever is later.

If you are interested in taking advantage of the 30% grant, below is a list of eligibility and provisions for Section 1603:

o Only tax-paying entities are eligible for this grant.
o Applicable Sectors: Commercial, Industrial, Agricultural
o Grants are available to “eligible property* placed in service in 2009 or 2010
o Eligible solar-energy property includes equipment that uses solar energy to generate electricity (photovoltaics), to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Passive solar systems and solar pool-heating systems are not eligible. Hybrid solar-lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible.
o Grant applications must be submitted by October 1, 2011
o The Treasury will make Section 1603 payments to qualified applicants equal to 30% of the basis of the solar photovoltaic property - this includes solar equipment, installation, and freight.

Contact us to learn more about this grant and other incentives for your solar installation at info@djhconstruction.com.

What Business Owners Should Consider Before Investing In Solar

Commercial buildings use approximately 40 percent of energy consumed in the United States today, so increasing the efficiency of buildings is one of the most effective ways to lower energy consumption, save money, and reduce carbon emissions. The last blog entry focused on the financial incentives for a residential solar system with the implementation of the Renewable Energy Grants (REG). We decided to provide a similar comparison for a 50kW commercial system to show business owners how they can capitalize on the REG. The assumptions of this comparison are:

1. PV System located in Laguna Niguel, CA 92677
2. Type: Commercial
3. Size: 50 kW
4. Utility: Southern California Edison (SCE)
5. Federal Corporate Tax Rate = 34%
6. State Corporate Tax Rate = 8%
7. Note: Calculations do not take into consideration time and value of money

Below is a table summarizing the results:



The difference in the ITC versus the REG is still greater on commercial systems as it is on residential. In our hypothetical analysis it is almost a $5,000 cost difference. The estimated cost per watt including utility rebates, grants, and depreciation bring the net cost of the system down to less than $3.00/watt.

Please note: Interested businesses should consult the federal tax code and/or a certified public accountant or tax attorney to determine exact eligibility and provisions of the incentives described above.

What Homeowners Should Know When Investing In Solar

How does the Investment Tax Credit (ITC) stack up to the Renewable Energy Grant (REG) for homeowners? We did a hypothetical cost comparison between the two based on the following assumptions:

- Type: Residential
- Utility: Southern California Edison
- Rebate: Step 3, $2.20/Watt
- California state tax on rebate (this is still to be determined)

Here is what we found:



According to the results, the incentive for the REG is greater than the ITC by more than $3,400.00. This amount is even larger if the 30% tax credit is not taxed at the state level. Below is a table summarizing this scenario. The incentive increases by $0.23/watt, adding almost another $2,300 to the difference in the ITC vs. REG. Either way you look at it, the REG offers a great way for homeowners to offset the initial capital outlay of a solar system.