Netmetering is a great incentive that your electric utility may offer.  The purpose of the netmeter is to measure power “delivered” (DEL) to your house or “received” (REC) by the utility from your solar array.  At the end of the month, excess kWh credits are used to offset power delivered to your house.  The “net” power delivered to your house forms the basis for calculating your electric bill for that month.

At the end of the month, if you generated more power than you consumed, excess kWh credits carryover to the next month.  The monthly carryover then continues month after month.  Depending on your utility, excess credits expire at the end of each quarter, bi-annually, or annually.  Some utilities may pay for any end of term excess, but many have a “use-it or lose-it” policy and no value is provided.

A tax credit is a dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise pay the federal government.  The Inflation Reduction Act of 2022 extended the ITC at 30% for residential solar projects until 2033. Commercial solar projects are extended at 30% until 2025. Thereafter, the Department of Treasury will determine the commercial ITC based on if the carbon reduction goals have been met. 

This is a fantastic solar tax incentive for taxpaying entities to take advantage of—while it remains available!

In Illinois and other select states, SRECs provide an outstanding solar incentive that helps an owner recoup a solar system’s investment.  SRECs have been created to help States meet Renewable Portfolio Standards (RPS) which set goals for generating a percentage of that state’s overall electricity from renewable energy. In Illinois, for example, an SREC can potentially cover 20% to 40% of the total solar investment.

Typically, one SREC equals 1,000 kilowatt-hours (kWh) of solar energy generated. SRECs accrue as solar electricity is generated and are typically paid out quarterly or other interval defined by each State.

If your state does not have an SREC program, your project may still be eligible to sell the SRECs that your solar system generates into another State’s market. For example, all states surrounding Illinois such as Missouri, Indiana, Kentucky, Wisconsin, and Iowa can potentially sell their system’s SRECs into the Illinois market.

ComEd offers a Distributed Generation (DG) Rebate program to help you offset the out-of-pocket costs of installing a qualified renewable energy generating system. The DG Rebate is available to ComEd commercial and industrial (C&I) customers that take net metering service or customers taking community supply service and that meet program requirements. This incentive totals $250 per kW installed; not to exceed 2,000 kW.

The Modified Accelerated Cost Recovery System (MACRS), established in 1986, is a method of depreciation in which a business’ investments in certain property are recovered, for tax purposes, over a specified time period through annual deductions.

The IRS has classified solar PV equipment as 5-year property, allowing a commercial taxpaying entity the ability to expense or write-off a solar investment quickly. The added tax deduction can help further boost a solar project’s return on investment (ROI).  NOTE:  your project might qualify for even faster write-off using Section 179 depreciation allowances.  Congress frequently tampers with the Section 179 limits and your tax professional should guide you accordingly.

For small rural businesses, a USDA REAP grant can potentially provide grant funding for renewable energy projects (wind or solar) or energy-efficiency retrofits.  These grants also provide loan guarantees used to finance energy projects.

If a business is located in a rural area with a population size under 50,000—and also meets the definition of “small business”—the USDA REAP grant can provide up to 25% in grant funding. Even businesses with several hundred employees can potentially meet the definition of “small business.”  This grant is highly competitive, but can provide financial assistance if awarded.  Stateline Solar provides grant-writing services and helps our clients land grant-funding. Keep in mind grant funding is also considered taxable income.