Energy & Solar Tax Credits Incentives

Detailed information on rebates, incentives and tax credits for all solar technologies and energy efficiency is available at the Database of State Incentives for Renewable Energy (DSIRE) web site. Click on your state to get local information. And don’t forget to click on the small map labeled “ Federal Incentives rdquo; to understand the tax credit offered by the federal government.

California Solar Initiative  -

The California Solar Initiative builds on 10 years of state solar rebates offered to customers in California's investor-owned utility territories: Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E.) The California Solar Initiative is overseen by the California Public Utilities Commission.

The California Solar Initiative pays solar consumers their incentive either all-at-once for smaller systems, or over the course of five years, for larger systems. The program's two incentive payment types are:

• Expected Performance-Based Buy-Down, or EPBB:
  In 2009, systems smaller than 50kW in capacity can receive a one-time, up-front incentive based on expected performance, and calculated by equipment ratings and installation factors (geographic location, tilt and shading). EPBB payments are provided on a $ per watt basis. EPBB is available for systems under 30 KW after 2010. Systems eligible for EPBB can choose to opt-in to the PBI system described below.

 

• Performance Based Incentive, or PBI:
  As of January 1, 2008, all systems over 50 kW must take the PBI, and by 2010 all system over 30 kW must be on PBI. Any sized system can elect to take PBI. The PBI pays out an incentive, based on actual kWh production, over a period of five years. PBI payments are provided on a $ per kilowatt-hour basis.

 

30% Federal Tax Credit for Residential -

In general, credits are available for eligible systems placed in service on or before December 31, 2016: The credit is equal to 30% of expenditures, 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. Hybrid solar lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are not eligible. (Note that the Solar Energy Industries Association has published a three-page document that provides answers to frequently asked questions regarding the federal tax credits for solar energy.) 

 

30% Department of Energy Tax Grant for Commercial Photovoltaics -

For a limited time, the US Department of Energy and the US Treasury will pay 30% of the cost of new solar power installations started and/or completed in 2009 or 2010.   The American Recovery and Reinvestment Act of 2009 [1] signed into law by President Obama earlier this year authorizes the DOE to accept and evaluate applications for stimulus funds that, when approved, will be distributed by the Treasury.

 Renewable energy has relied on tax subsidies to offset part of the initial capital investment.  Since 2005, individuals, businesses, solar developers, and investors were granted a tax credit based on 30% of the cost of a solar power system.  However, in a declining economy, few had the tax liability to fully use the tax credit.The stimulus package offers short term relief by allowing tax payers to employ a cash grant in place of a tax credit. 

 Owners of a “solar property” are eligible to apply.  The term solar property refers to a solar power system or solar power facility. An owner may be an individual, household, partnership, and/or business entity  that holds title or ownership of the solar power system or facility.

Who is not eligible? Government, counties and municipalities, and publicly funded special districts (fire, water, waste) are not eligible. Public schools, 501 (c) non-profits and other tax-exempt entities are not eligible. Real Estate Investment Trust, (with some exceptions) and cooperatives organized under 1381 (a) of the IRC are not eligible.

 

Accelerated Depreciation -

Section 168 of the Internal Revenue Code contains a Modified Accelerated Cost Recovery System (MARCS) which is a Federal government tax program that offers a 5 year accelerated depreciation for certain solar equipment. Equipment that qualifies for these tax provisions are: Photovoltaic Solar Thermal, and "Dual-Use equipment" (equipment that uses both solar and non-solar energy, such as pipes and hot water tanks)

 

California Property Tax Exemption for Solar Systems -

Active solar energy systems (including photovoltaic systems) are not subject to property taxes, even though they immediately add value to your home!