Commercial Solar Incentive Environment

There are a number of incentives which improve commercial solar viability:

Federal Investment Tax Credit (FITC):

  • A 30% deduction of the eligible equipment cost; now available as a cash rebate following the recent stimulus bill.

Depreciation - Modified Accelerated Cost Recovery System (MACRS):

  • Solar businesses also eligible for Modified Accelerated Cost Recovery System (MACRS) 5-Year accelerated depreciation  

Performance Based Programs:

  • Performance based programs are designed to provide payments based on the size and electrical output of the solar system  
    • In August 2006, the California Public Utilities Commission (CPUC) issued the Performance Based Incentive (PBI) decision regarding incentives for solar energy systems. 
    • The size of the facility determines whether the Expected Performance Based Buydown (EPBB) or the Performance Based Incentive (PBI) is applied.  
      • The Expected Performance Based Buydown (EPBB) applies to systems less than 100 kW and generally covers approximately 25%-30% system costs it is determined by a number of factors including size, location and orientation.  
      • Performance Based Incentive Program (PBI) is for systems greater than 100 kilowatts in size.  The PBI provides monthly payments over time based on the actual, measured energy production of the system and covers approximately 25%-30% system cost.  The maximum payment period is 5 years.  The Market demand will ultimately lead to staged reductions in PBI payments as determined by CPUC.  

Renewable Energy Credits (RECs):

  • The Solar REC market is early-stage.  Efforts are underway in Congress to extend Solar RECs for 10 years.