« One Year Later - the Unexpected Gift of Laurel HamiltonPower, Energy, & kiloWhat?? Solar Terminology 103 »

Preparing for the End - of the Solar Tax Credit

10/27/15

  03:16:00 pm, by Jim Jenal - Founder & CEO   , 583 words  
Categories: Solar Tax Incentives, Commercial Solar, Residential Solar, Ranting

Preparing for the End - of the Solar Tax Credit

One of the chief economic benefits of going solar is the 30% Investment Tax Credit (the “ITC"), but it is scheduled to go away at the end of next year.  Here is what you need to know now if you hope to save yourself some serious coin on your solar system.

There are three economic benefits from going solar: rebates from the utility, savings on your utility bill, and the ITC.  For clients in the Run on Sun service area, only PWP and LADWP are presently offering rebates (sorry SCE folks) but at 40¢ and 30¢ per AC Watt installed, these rebates top out at roughly 10% of your cost.  Monthly savings from solar will vary depending on how big a user you are and what rate structure you are under.  Typically, SCE customers save more with solar because their rates are that much higher.

Don't leave ITC money on the table!But the one dominant factor that has helped to make solar more affordable, particularly as rebates have gone away, is the ITC.  A true tax credit (as opposed to an income deduction), the ITC is valued at 30% of the total cost of the system (less any rebate that might have been available).  For example, a 5 kW solar system in SCE territory that costs $4.00/Watt will see $1.20/Watt coming back as a credit on the system owner’s taxes.  (Oh, yeah, you have to own the system to capture the ITC - part of our #1 Reason to avoid a Solar Lease!)  That’s a $6,000 credit - pretty sweet!  And commercial clients not only get the ITC, they also get accelerated depreciation, making the tax advantages of solar even more attractive.

And yet, unless Congress acts (and really, does anyone have confidence in the ability of this Congress to do much of anything?), this will all end come December 31, 2016. (Ok, small caveat - commercial projects will continue to get 10%, but for residential clients it will be nada, nothing, zilch.)

I can hear you already saying, come on, that’s over a year away - why are you raising this issue now?  Well aside from the old warning: “Caution - dates on the calendar are closer than they appear!” – it is important to understand what is likely to happen next year.  Every solar company out there will start advertising about the need to “act now” only this time they will be right.  As more and more people realize that they are about to leave a whole bunch of money on the table, the crush to get projects in the pipeline and completed before the deadline will mean more demands on already understaffed city building departments (many of whom routinely take six weeks or more now to approve even the simplest solar project), inspectors, and utility staff to process an unprecedented flood of applications.

As we move through next Spring, many solar companies will already be booked so completely that homeowners who are just waking up to the problem, might find themselves in a pipeline with no guarantee that their project will be completed in time to qualify for the ITC.

So what to do?

Well, for the good of the solar industry as a whole you should contact your Member of Congress and urge him/her to support the extension of the ITC.  If you have friends and family who live in more conservative areas, be sure to urge them to do the same.

But as for your own solar project, the time to get started is now!   Don’t be the sad-sack who gets shut out of affordable solar because they waited too long.

 Permalink

No feedback yet


Form is loading...

Search

Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

Ready to Save?

Let’s Get Started!

Give Us a Call!

626.793.6025 or
310.584.7755

Click to Learn More About Commercial Solar Power!

We're Social!



Follow Run on Sun on Twitter Like Run on Sun on Facebook
Run on Sun helps fight Climate Change
Run your own website!