Installing solar energy system at your business can enable you to lower your overhead, streamline your business and become more profitable by reducing the cost of electricity. It also demonstrates a positive step toward sustainability and a smaller carbon footprint that can make your business more attractive to investors and customers.
In addition to the above, businesses in Ohio may be able to take advantage of a number of incentives for solar projects.
Modified Accelerated Cost-Recovery System (MACRS)
Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in solar electric installations through depreciation deductions. MACRS establishes a set of class lives for various types of property, ranging from 3 to 50 years, over which the property may be depreciated. Solar electric is classified as five-year property eligible for accelerated depreciation. Under this federal tax incentive, the business owner is entitled to deduct a significant portion of the adjusted basis of the property during the tax year the property is first placed in service.
Federal Tax Credits
A business may claim a credit of 30% of qualified expenditures for a solar electric system that is owned and used by the tax-paying business. Expenditures with respect to the equipment are treated as made when the installation is completed. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the business. A number of changes to this credit are scheduled to take effect for systems placed in service after December 31, 2016.
Rural Energy for America Program (REAP)
The USDA REAP grant promotes energy efficiency and renewable energy for agricultural producers and rural small businesses through the use of (1) grants and loan guarantees for energy efficiency improvements and renewable energy systems, and (2) grants for energy audits and renewable energy development assistance. The grant cannot exceed 25% of the total eligible project costs. The loan funds must be used to purchase a renewable energy system or make an energy efficiency improvement to an existing facility.
Solar Renewable Energy Credits (SRECs)
SRECs are another type of incentive that can be sold on the market as a commodity. Income is then generated over time, based on the production of the solar system. While RECs are not actually a measure of power, each REC represents one megawatt hour (MWh) of renewable-generated energy that offsets conventional energy use.
Our staff follow the latest developments in the incentive landscape and can guide you to the ones that make the most sense for your business. Contact us to begin the conversation.