Federal Incentives

There are currently many Federal financial incentives available for commercial solar thermal installations. The American Recovery and Reinvestment Act of 2009 (ARRA) has made some of these incentives even more attractive.

Business Energy Investment Tax Credit (ITC)

The Business Energy Investment Tax Credit (ITC) is now available for eligible commercial solar thermal systems placed in service on or before December 31, 2016.

• The solar ITC credit is equal to 30% of expenditures, including solar design, installation labor, and components.
• Eligible solar energy properties include equipment that uses solar energy to generate electricity or to heat or cool water for use in a structure, or to provide solar process heat.
• At this time, passive solar systems and solar pool-heating systems are not eligible.
• That the Solar Energy Industries Association (SEIA) has published a three-page document that provides answers to frequently asked questions regarding the federal tax credits for solar energy.

U.S. Department of Treasury - Renewable Energy Grants

Renewable Energy Grants are now available to eligible property placed in service in 2010, or placed in service by the specified credit termination date, if construction began in 2010. The guidelines include a “safe harbor” provision that sets the beginning of construction at the point where the applicant has incurred or paid at least 5% of the total cost of the property, excluding land and certain preliminary planning activities. Below is a list of important program details as they apply to each different eligible technology.

• The solar grant is equal to 30% of the basis of the property for solar energy.
• Eligible solar-energy property includes equipment that uses solar energy to generate electricity, to heat or cool water for use in a structure, or to provide solar process heat.
• As above, passive solar systems and solar pool-heating systems are currently not eligible.
• Hybrid solar-lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible.
• Only tax-paying entities are eligible for this grant. Therefore, federal, state and local government bodies, non-profits, qualified energy tax credit bond lenders, and cooperative electric companies are not eligible to receive this grant. Similarly, partnerships or “pass-thru” entities for the above organizations are also not eligible to receive this grant, except in cases where the ineligible party only owns an indirect interest in the applicant through a taxable C corporation.
• Grant applications must be submitted by October 1, 2011.
• The U.S. Treasury Department will make payment of the grant within 60 days of the grant application date or the date the property is placed in service, whichever is later.

Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-2009)

Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated.

Currently under the MACRS, solar electric and solar thermal technologies, including solar hot water systems, are classified as having a 5 year life, allowing the recovery to be captured over a 5 year schedule.

• Tribal Energy Program Grant

• USDA - Rural Energy for America Program (REAP) Grants

Federal Loan Programs

• U.S. Department of Energy - Loan Guarantee Program
• USDA - Rural Energy for America Program (REAP) Loan Guarantees

IRS 30% Investment Tax Credit (ITC) Information and Claim Form

• American Recovery and Reinvestment Act of 2009 (ARRA) Guidance
• The Solar Investment Tax Credit Frequently Asked Questions
• 2009 Claim Form 3468 for Federal 30% Solar Thermal Tax Credit