SOLAR INCENTIVES

SOLAR DEPRECIATION TAX BONUS

Solar Depreciation Tax Bonus

To explain the solar depreciation bonus, we first need to explain tax depreciation. Basically, depreciation is a way to spread the cost of an asset over its lifespan. For example, if you purchase a new car for $20,000, you can elect to depreciate the vehicle over five years. This means that each year, you can deduct $4,000 from your taxable income.

Depreciation can be a valuable tax deduction for businesses, as it allows them to write off the cost of big-ticket items like equipment and machinery. However, there are some important rules to be aware of. First, you can only start depreciating an asset once it has been placed in service. Second, the size of the deduction will depend on the depreciation method that you choose. There are several different methods available, so it’s important to work with a tax professional to determine which one will work best for your business.

How does solar depreciation work for businesses?

Businesses can leverage the current policy for depreciating solar systems to improve ROI and ultimately lower costs for the consumer. The US tax code allows for a tax deduction for the recovery of the cost of tangible property over what it qualifies as the useful life of the system. The Modified Accelerated Cost Recovery System (MARCS) is the current method for most property.

What is the basis of depreciation for solar?

Businesses can take advantage of deprecation to accelerate their ROI on a solar system. The Tax Cut and Jobs Act of 2017 provides an option for 100% bonus depreciation. Solar has a scheduled depreciation recovery period of 5 years – so you can spread it over 5 years or take it all in year 1.

A business cannot depreciate 100% of the project cost. The Investment Tax Credit (ITC) reduces the basis of depreciation by one-half of the tax credit amount allowed. With the current ITC at 26%, it will reduce the depreciable basis to 87% of the total cost. Therefore, if your system costs $100,000 you will be able to depreciate $87,000 of the cost. To calculate the value, you will multiply the basis by your federal income tax rate.

What is the bonus depreciation?

Through the Tax Cuts and Jobs Act of 2017, businesses can now claim 100% of bonus depreciation on qualifying capital equipment that is placed in service by January 1, 2023. This bonus makes the commercial solar incentive very attractive.

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.

Case Studies

  • Commercial Solar Case Study Property Management Company
    Wiley Property Management Case Study

    The installation of the solar array on the roof of storage facility is leveraging a limited regulation called “Group Hosting”. Group hosting is a method where a group of businesses or individuals share the installation and use of a larger solar array on a single property.

  • Bake Crafters Commercial Solar Case Study
    Bake Crafters Food Company

    Bake Crafters’ commercial solar array is a remarkable example of sustainability in action. With an output capacity of 800 kW and predictions of offsetting 770 metric tons of CO2 emissions.

  • Integra Commercial Solar Case Study
    Integra Biosciences

    Integra Biosciences’ Commercial Solar project achieves 22% IRR and aligns with the company’s global sustainability goals and commitments. The two installations total 572-kW and generate enough power to offset 844,000 kWh.

  • Commercial Solar Case Study - Kraft Power
    Commercial Solar Case Study – Kraft Power Power

    Kraft Power utilized American made solar panels to install a 57.5 kW system on their roof. The new rooftop solar system, will help Kraft Power offset 100% of the electricity usage every year.

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Testimonials

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