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Solar Bonus Depreciation Ending – What That Means For Business Going Solar

March 24, 2022 By Dan Seitz In News No Comments

Many businesses use MARCS depreciation, or the Modified Accelerated Cost Recovery System, to model how an asset will depreciate. Solar has a 5-year cost recovery period. Bonus depreciation allows an investor to recognize 100% of the depreciation in the same tax year the system is placed in service. Currently, in 2022, the basis of depreciation of qualifying solar equipment is 87% – there is 13% deducted from the overall project costs to account for half of the ITC.

As of January 1, 2023 the bonus depreciation will again drop – this time to 80% to be depreciated in year 1.

Bonus Depreciation
Year	Amount in Year 1
2022	100%
2023	80%
2024	60%
2026	40%
2027	20%

History

Bonus depreciation was a response to the economic downturn of 2008, when Congress wanted to incentivize capital investment by accelerating the depreciation schedule economywide. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 allowed companies to claim 100% bonus depreciation on qualifying capital equipment – if placed in service by December 21, 2011. It then dropped to 50%. In 2017, The Tax Cuts and Jobs Act of 2017 increased the bonus deprecation percentage to 100% for qualified property that is placed in service before Jan 1, 2023.

MARCS Depreciation Schedule
Year After Competition	% Depreciated
Year 1	20%
Year 2	32%
Year 3	19.2%
Year 4	11.50%
Year 5	11.50%
Year 6	5.80%

For businesses considering going solar, they must act quickly to capture 100% bonus depreciation. Projects must be 100% complete and placed in service to capture the 100% bonus depreciation. With longer than normal interconnection timelines and supply chain disruptions, projects should start in April to ensure they are completed in time.

What Makes Land a Good Fit for a Solar Farm?

Interested what qualifies land for a solar farm project? Check out our blog with to learn the top 4 things our team looks for when qualifying land.

Is your land a good fit for a solar land lease?

Genie Energy Ltd., (NYSE: GNE, GNEPRA) is a global energy solutions company. We supply customers in the US and Europe with electricity, including electricity generated from renewable resources and with natural gas. Through Genie Solar Energy and Prism Solar, we design, construct and install commercial solar energy solutions. We provide commercial and industrial clients with energy brokerage and consultative services through our Diversegy brand.

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Convinced to go solar by the New Jersey incentives, PCS Wireless looked at several solar companies to provide the best overall value. Genie Solar was able to design a unique system to offset the largest portion of their electricity usage. Additionally, we combine it with an exclusive financial product which minimized the cash out of pocket and maximized the return on investment. The 494 kW system was constructed in minimal time, with no impact on the businesses operations.

PCS Wireless

A provider of engine-generator systems, Kraft Power was a pioneer of “Total Energy” (Combined Heat and Power). After seeing the financial and green benefits of solar at their headquarters in Massachusetts, Kraft wanted to capitalize on the lucrative state incentives in New Jersey at a distribution center. By installing a 57.5 kW system on the roof they were able to offset 100% of their electricity usage, take advantage of the Investment Tax Credit, accelerated depreciation, and collect revenue from the New Jersey SREC program. Genie Solar made it a smooth process and limited the need for internal resources to manage the project.

Kraft Power

A premier provider of water treatment in the New York and New Jersey area, Tower wanted to go solar to save money and generate clean energy. Upon reviewing the financial benefits available in New Jersey with the SREC program and the federal Investment Tax Credit, they wanted to safe harbor the project in 2019 and construct in 2020. Buying American Made panels was an important component of the project, and by utilizing their white roof, Genie Solar was able to leverage Prism Solar’s bifacial panels to minimize the square footage needed and maximize the electricity generated. Genie Solar helped them achieve all of their goals in an efficient manner with a 44.6 kW system.

Tower Water

Cardoza had both a showroom and a distribution center with exorbitant electricity costs in New Hampshire. As a legacy business, it was important to reduce costs and protect the business from increasing expenses prior to passing it on to the owner’s children. The show room’s roof and location made it a less than ideal location for solar; but the vast roof and direct sunlight on the distribution center could generate enough solar to power both facilities, plus the owner’s house. Leveraging New Hampshire’s group host program, Genie Solar built one 99.7 kW solar array to power all three locations. The owner is now considering converting more equipment to solar and building a second array.

Cardoza Flooring

A destination nursery in rural New Hampshire, HBTSR was a long standing customer of Genie Solar’s sister company, Diversegy. After helping the business reduce electricity expenses for the past number of years, HBTSR turned to Genie Solar to reduce their rising electricity expenses over the long run. “Between the federal and NH state incentives, I was paid $8,000 to install my solar array. On top of getting money back, I am going to realize over $300,000 in savings during the 25 year warranty period of the solar array.”

House By The Side of the Road