The growth curve for solar power continues its upward trajectory, thanks to ever-evolving technologies to complement solar energy. New inverters and racking solutions are making solar installations more efficient, helping extract more energy from the sun’s rays. Staten Solar is here to help your business in the transition to clean energy, which is not limited to suggesting you the right panel, inverter, wire, or racking but also includes making the most of your federal investment tax credit (ITC). So, get in touch with us today to talk about your options.
Although for commercial solar projects, 26% ITC is available till December 2022, but choosing the right product for your custom need and designing as well as the construction of the same takes a reasonable amount of time.
Staten sets high standards for itself in all the verticals where it competes. We are transparently obsessive and compulsive about every little stuff. Every project is subjected to a comprehensive site survey which becomes the foundation upon which we build the best design and financing strategies.
No work proceeds on site until the foreman has reviewed its history and made sure nothing will interfere with the quality defined by the engineering design. Adjustments to plans are made on-site before work begins.
But if you are planning a project for your commercial building and plan to own the equipment rather than use a PPA, C-PACE or other third-party finance, it is the right time to make some decisions so that you can take advantage of the 26% federal solar investment tax credit (ITC) before it steps down. Besides, as early you choose solar energy for your commercial /industrial purpose, the more you save on your utility bills.
What is the ITC?
The ITC is a 26% federal tax credit for solar installations on both residential and commercial properties, reducing the tax liability for individuals or businesses that purchase qualifying solar energy technologies. ITC has been one of the most effective pieces of climate legislation in effect since its inception. It has not only created hundreds of thousands of jobs but due to ITC, the solar industry has grown by more than 10,000% since 2006, according to SEIA.
But unfortunately, the ITC was never meant to be a long-term policy, unlike oil and gas subsidies. It has been extended several times, most recently in December 2020 when congress passed a multi-year extension of the solar tax credit with a provision to step down from the 26% rate after 2022.
Solar ITC step-down:
The federal Solar Investment Tax Credit (ITC) declines according to the following schedule:
January 1, 2021-December 31, 2022 – 26% for both Commercial & Residential Project
January 1, 2023-December 31, 2023 – 22% for both Commercial & Residential Project
January 1, 2024-Onwards – 10% only for Commercial projects.
What is Safe Harbor?
This yearly reduction in the tax credit creates an urgency to make the most of the credit, and for commercial customers, this can be done through “Safe Harbor.” Unlike residential solar, which must be fully operational by December 31st 2022 in order to be eligible for that year’s rate, safe harbour means that commercial customers must only have begun construction.
Whereas, in 2018, the IRS released specific guidance for commercial customers about what “beginning construction” means in order for customers to be eligible for the tax credit by December 31st.
To qualify, the IRS requires you to reach one of two benchmarks to establish that a project has begun construction, and you must also be able to prove that work is continuing on the project. Specifically, the regulations stipulate that by December 31st, a project must have either invested 5% of the total cost of the project or started “physical work of a significant nature.”
Reach out to talk about your project
Our goal is for all stakeholders to enjoy an exceptional solar project experience, and we want to ensure that all clients are informed and understand safe harbour requirements so that their projects receive the full tax benefits.
Staten’s solar experts are here to walk you through the possibilities and put together a plan that helps you use the tax credit to your advantage. Get in touch today to talk about how solar can help your business meet this moment with a stable, low rate for your energy and a solid investment in your property. Call us at (408) 780-2889 or click here!