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Solar Tax Credit for Businesses

August 30th, 2022 | By Christopher Butts

solar tax credit for businesses

Solar Tax Credit for Businesses

The federal government has made it even more enticing for owners of commercial or industrial properties to go solar thanks to the expanded, new solar tax credit for businesses.

Part of the recently passed Inflation Reduction Act (IRA), the Investment Tax Credit (ITC) was raised for up to 30% of the cost for businesses to add solar, battery storage, or many other clean energy projects to their premises. The new legislation not only expands the ITC from 26%, but it will also keep the benefit at 30% for the next decade after it was originally set to drop and eventually expire.

Why is it Important?

Experts believe this will be another driver in the adoption of solar for commercial, industrial and municipal properties across the country. Since the original ITC was passed in 2005, the solar industry has grown by leaps and bounds. But according to recent data from the Solar Energy Industries Association (SEIA), there is plenty of room to grow, because only 1% of the nation’s commercial electricity demand is currently being met by onsite solar production.

Large corporations like Walmart, Apple and Amazon are leading the charge in changing that by offsetting significant portions of their energy usage through large solar projects. They may also be eligible for the IRA’s EV tax credit.  Most businesses won’t be able to afford the space, EV’s or the massive arrays those behemoth corporations require to meet their lofty carbon reduction goals. However, that doesn’t mean smaller businesses, or even mom and pop shops, can’t enjoy the same benefits of going solar at a much smaller scale. No matter the size of the business, a credit on your taxes based on 30% of the cost of solar system can be a significant chunk of change.

Tax Credit Adds to Solar Energy’s Value

However, the tax credit is just one of the many benefits adding solar panels to a commercial enterprise can bring. Businesses who go solar can boost their bottom line by potentially reducing overhead electric costs, giving off a positive image to their potential customers and ultimately, reducing their reliance on outside sources of energy. Plus, those who go solar and who are eligible for net metering benefits, or other compensation mechanisms, could earn credits on their electric bill. Some may earn possible SREC (Solar Renewable Energy Credits) benefits for the carbon-free energy they produce.

Think of all the space on top of commercial buildings, outside of industrial warehouses and in parking lots that could be used as locations for commercial solar arrays. Many businesses could benefit from generating their own electricity through solar panels using this space. Most of these projects can be accomplished without sacrificing aesthetics or even green space. Solar and battery technology have become cost effective enough that not utilizing this unused space to offset energy, with the added benefit of a larger tax credit, seems wasteful.

We Can Help!

Pink Energy has extensive experience in helping businesses large and small go solar. Let us customize a plan to use your space so you can operate with more energy independence and possibly take advantage of the larger tax credit. Owning a business can be hard, so make it a little easier by owning your power too.

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