Today, more than ever, businesses have the ability — and the interest — to invest in clean energy. Across America, consumers increasingly have a choice when they buy electricity. With that choice comes the ability to generate Green Power.
There has never been a better time to go solar. Electric rates are skyrocketing. With California’s tiered electric rates, the more electricity you use, the higher your electric rates are. Rates will continue to escalate as California struggles with its energy supply and the effects of deregulation.
The Graphs above illustrate the historical increases in California’s electric rates from the years 2000 – 2011 for all consumers.
Fortunately, there are major financial incentives available from the state and federal governments to encourage investment in solar energy: a rebate, property tax exemption and Net Energy Metering law from the state of California; and an investment tax credit and accelerated depreciation schedule from the federal government
2011 Financial Incentives Summary for California Solar Installations
California State Rebate
California a solar rebate program has been created from small tax on every ratepayer’s electric bill. The rebates programs administered through the SCE, PG&E and SG&E and other local municipal utilities. These rebates are designed to gradually decrease over time, and the Federal Tax Credit is scheduled to end by Dec 2016. Therefore, we encourage all consumers to take advantage of these incentives while they are being offered.California Solar Property Tax Exemption
Solar system adds to the appraised value of the property on which it is installed, but not to the assessed value, so the increased value cannot be taxed in California. This tax exemption extends for the life of the solar system. This provision can be found in the California Revenue and Taxation Code, section 73. The National Appraisal Institute notes that the value added to a home by a solar PV system is 20 times the value of the electricity costs saved in the first year. A solar installation is one of the few ways that you can increase the value of your home or building without increasing your property taxes.California Net Energy Metering
California’s Net Energy Metering law allows solar PV system owners to sell excess electricity back to the utility company at retail rates, and receive credit to owners’ accounts. This is literally saving for a rainy day: When a solar system makes more electricity than is used, the extra electricity goes onto the utility grid, and the utility company credits the system owner. On rainy days when the system isn’t producing enough to keep up with demand, the utility grid supplies the electricity, and the credit is drawn down.
Federal Incentives
Federal Investment Tax Credit
For solar systems installed, the federal government offers an Investment Tax Credit (ITC) of 30% of the net system cost for commercial and residential systems.
5-Year Accelerated Depreciation Schedule
The federal Internal Revenue Code (IRC) has special depreciation provisions for solar systems. They can be depreciated on a 5-year accelerated schedule, or on the regular depreciation schedule. The depreciable basis is calculated as the system cost minus one-half of any federal tax credit, or 85% of the system cost. These provisions are found in IRC section 179.
Return on Investment
With California’s abundant sunshine, high electricity rates, generous rebates and tax incentives. The return on investment in a solar system for your business is extremely strong and has very little risk. For many customers, the return on investment is between 20% and 25% on pre tax bases. With payback in less than 5 years! (Assumes $.16 kwh with 7% annual rate of inflation.)
Residential Example (5.0 kWp System)
Commercial Example (30.0 kWp System)
For more information on incentives in California and other states, please visit the following website: www.dsireusa.org.
* Market average system costs and incentive programs vary based on customer location and are not guaranteed by Advanced Solar Integration Technologies, LLC
** The information contained in the website is being provided for informational purposes only. It was neither written nor intended to be used and cannot be used as tax advice and may not be relied upon in the preparation of a tax return or for the purpose of avoiding tax penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. You should seek professional tax advice tailored to your specific circumstances.
