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Find out why commercial solar in Redding, CA may be what you are looking for.
Or visit our Residential Solar page to learn about the basics of Solar Energy.
What do YOU pay for electricity for your business?
“You’re moving along from energy bill to energy bill, hoping that what you are paying is the lowest you can possibly pay”
Ever since you started your business, you’ve paid the electric company whatever they’re charging to ensure that your power is on when you need it most. Until recently, this has been the way the local business has been powered; moving along from energy bill to energy bill, hoping that what you are paying is the lowest you can possibly pay. But is this true?
Solar energy used to be an energy alternative that appealed to the hippie, non-conformist that believed in a greener, cleaner world. While this demographic has not given up on such an endeavor, solar has broadened its reach to the business owner that simply wants a lower electric bill. Through product development and recent incentives, solar now promises the business professional that it’s possible to completely eliminate their energy bill. Sure, there’s an initial investment, but every penny of that investment comes right back to the business owner.
What if, down the road, your answer was, “Nothing”?
“Once the solar system is paid off, the free Redding sunshine becomes your energy provider.”
At the end of the day, your business spends (x) amount of dollars every month on energy. If you haven’t made the switch to solar, then at the end of the year you get nothing back for the price you paid for energy. With solar energy, your business can take the money it spends on energy and put it towards an energy structure that, when paid for, will provide free energy for your business. Once the solar system is paid off, the free Redding sunshine becomes your energy provider.
Solar systems aren’t cheap, they’re just the cheapest they’ve ever been. These systems have been incentivized to create a sustainable energy solution in the US. While a solar system is going to cost your business between $50,000 and $80,000 (depending on the size system you need), 85% of your system’s price is depreciable.
Use the Solar Tax Credit and other incentives to recover 85% on the price of your System
Solar energy has added some recent incentives that make the system affordable and nearly free to the commercial business owner. First, the system comes with a 30% Investment Tax Credit (the Solar ITC), a government-funded plan to bring renewable energy solutions further into the American market. That is how the ITC works. At the end of your first year, you can get a one-time refund on 30% of the price of your system. Additionally, the MACRS (Modified Accelerated Cost Recovery System) assists your business in recovering the upfront costs on big investments.
COST OF INSTALLATION (in 2018) |
$50,000 (30% Tax credit = $15,000) | |
1/2 OF THE SOLAR CREDIT = |
$7,500 | |
DEPRECIABLE BASE FOR (MACRS) |
$42,500* | |
*Not including the bonus depreciation in year 1. |
Once the Solar Tax Credit has been taken, the Depreciation Expense allowed will be on the remaining cost of the installation (which includes both the labor and product costs). The depreciable basis to use for the depreciation expense deduction is the total cost of the solar work performed minus ½ of the solar credit taken. That is, if the total cost of the installation is $100,000 and the work is completed in year 2018, the solar credit allowed will be 30% of the $100,000 which is $30,000. One half of that credit in this example is $15,000. For the Depreciation Expense in this example, the cost basis is reduced by the ½ which is $15,000. So, the depreciable cost basis is $85,000 in this example using the year and dollar amount listed.
When taking the depreciation expense you are allowed to use the MACRS method with a 5-year depreciable life.
Did you catch that? This means that under a depreciation schedule like this one, the business is essentially getting a free solar system. The business owner pays for the system, and recovers 85% of the investment over a five-year period.
Allowed Bonus Depreciation
- Installed pre-2018: 50%
- Installed in 2018: 40%
- Installed in 2019: 30%
- Installed in 2020: 26%
- Installed in 2021: 22%
Is my business qualified for solar?
This checklist will give you a grid for whether your business is ready for solar.
Does your roof or property get enough sunlight?
You should be able to look at your roof or property and have a pretty good idea for how much sun it gets. If your house is surrounded by trees, you may need to consider some tree trimming, or even a ground system. Having plenty of sunlight is your first step to epic solar production.
What kind of shape is your roof in?
You don’t put new panels on an old roof. Asking questions like, “When’s the last time it was replaced?”, is a great start to finding out whether you’ll be ready when the installers come. If you’re not sure, you can always have your roof professional take a look at it.
Do you have Tax Appetite?
Lastly, you’re going to want to get together with your CPA to determine what kind of tax appetite you have as a business. At the end of year one, you’re only going to get the full tax credit if you have taxes you owe that equal the amount of the credit. In other words, if your system cost $100,000, and the credit at 30% is $30,000, then you’ll need to owe $30,000 in taxes to get the full credit. This is tax appetite, and you’ll want to have it come tax season.
Custom Designed Solutions
Our team of design experts can do a free analysis of your property. We’ll gauge your annual energy usage from the previous year, evaluate your property, then make system and panel recommendations based off of our calculations.
We specialize in both grid-tied and battery back-up systems to design the solution that’s the best fit and most efficient for your home.
Want to know More?
We have with your questions in mind. Don’t you want to know “What happens to your power when the sun goes down?”, or “Why nonrenewable energy prices are going up?”, or maybe you want to know how a system works. Check out our residential solar page and our commercial solar blog, where we provide relevant content that will keep you moving toward the energy solution for you. At the end of the day, solar energy exists to power your business in a more sustainable and cost-effective way.