Q1 of 2019 is the Ideal Time to Invest in Solar and Energy Storage for Your Business
There is no better time to invest in a Solar Energy System and Energy Storage for your business than Q1 of 2019. The reasons are very simple:
- The 30% Federal Tax Credit rates are dropping 4 points next year to 26%. If you want to qualify for the full 30% Federal Tax Credit, your project must begin significant construction in 2019. It typically takes 4-6 months to begin construction. For a large or complicated project, it can be 7-8 months before construction begins.
- The California energy storage rebate (SGIP) is still in Step 3 (Step 2 for PG&E), but won't last for long.
- The cost for solar equipment has hit an all-time low but is expected to be impacted by tariffs in the coming months.
For more detailed information continue reading below, or call SolarMax Technology at (866) 285-2388 and ask for Philip Small.
Solar Investment Tax Credit for Businesses
We are not accountants and cannot provide tax advice. This section is purely an overview of the tax credit, and you should consult a tax attorney or CPA for advice and/or clarification. The ITC (investment tax credit) is a 30 percent tax credit (under Section 48) for solar energy systems installed at or on commercial properties. The tax credit is equal to 30 percent of the basis invested in eligible property which began significant construction, or meets the "5 percent safe harbor test" by incurring 5 percent or more of the total cost of the facility before January 1st, 2020. The tax credit then reduces to 26 percent for eligible projects that begin significant construction in 2020, and is further reduced to 20 percent for eligible projects that begin significant construction in 2021. The tax credit drops to 10 percent for eligible projects beginning significant construction after 2021.
The California Energy Storage Rebate: SGIP (Self-Generation Incentive Program)
Battery Energy Storage Systems are an increasingly popular investment for businesses in California. Large battery storage applications can reduce utility charges related to demand and can offer emergency battery backup to protect against power loss. When charged by solar panels, battery energy storage systems qualify for the 30% solar ITC tax credit as well. In addition to tax savings, the biggest subsidy for energy storage in California is the SGIP program. SGIP currently incentivizes $0.35/Wh (Step 3) of installed storage. If you install a 1MWh battery at your business, the SGIP rebate amount is $350,000 as of 1/8/2019.
Why Timing is Important in 2019
A typical solar energy system takes 6-8 months from the date the contract is executed to be installed. That means you should start your solar energy project in Q1 this year so that you don't miss out on the full 30% tax credit as well as get in on the time sensitive SGIP rebate and low solar equipment prices before tariffs change them.
According to the Solar Energy Industries Association, a company can realize the ITC (investment tax credit) based on the date significant construction begins. To get an idea of the steps involved in a typical solar energy project, below is an outline of project milestones that you can expect from SolarMax:
- Contract is executed
- Finance documents are drafted and executed
- Property is measured and inspected
- Solar energy system is designed
- Structural calculations are obtained
- Plans are submitted for required permits
- Plans may be returned with red lines
- Plans are re-submitted for required permits
- Permit is obtained
- Specified equipment is ordered
- Installation date is coordinated with property owner
- Roofing repairs are made (if needed)
- Solar installation is started
- Solar installation is completed
- Installation is inspected by AHJ (authority having jurisdiction)
- Solar installation is signed off by inspector
- PTO (permission to operate) is applied for with local utility company
- PTO is granted by utility company
- System is activated
You can see why a solar energy project can take so much time to complete for your business. If you've been considering reducing energy costs by going solar, consider doing it in Q1 to get the maximum value.Commercial Solar