Energy consumption is one of the largest expenses for any commercial property, representing approximately one-third of typical operating budgets and accounting for almost 20 percent of the nation’s annual greenhouse gas emissions. With this in mind, commercial solar installations are not only an effective means to reduce operating costs, but also an opportunity to increase property value, enhance the comfort of tenants and create a new source of revenue (leading to a boost in ROI)!
Whether building from scratch or making energy efficiency renovations, one of the first places savvy property owners turn to is solar. And rightly so!
Savvy Property Owners Invest in Commercial Solar
Commercial properties, such as office buildings, industrial, multifamily or retail, offer some of the most ideal space for modern solar installations. And the opportunities for commercial property owners to invest in solar continues to grow thanks to a decrease in costs for solar installation over the past few years as well as the solar investment tax credit extension.
For more great information about the financial benefits of solar power, visit our blog, “Financial Benefits of Solar Power for Businesses [INFOGRAPHIC].”
Commercial Solar Investment Tax Credit Extension
The commercial solar investment tax credit (ITC) is a tax credit that can be claimed on federal corporate income taxes for 30% of the cost of a solar photovoltaic (PV) system that is placed in service during the tax year.
According to the U.S. Department of Energy, to be eligible for the 30% business ITC, the solar PV system must be:
• ‘Placed in service’ between January 1, 2006, and December 31, 2016 (i.e., construction and installation is complete, the taxpayer gains legal title and control of the system, all required licenses and permits for operating the system are obtained, and pre-operational tests show that the equipment works
• Used by someone subject to U.S. income taxes (i.e., cannot be used by a tax-exempt entity like a charity)
• Located in the U.S. (but not U.S. territories unless owned by a U.S. corporation or citizen)
• New and not previously used equipment
• Not used to generate energy for heating a swimming pool
The full 30 percent tax credit is available through 2019; then it drops to 26 percent in 2020, 22 percent in 2021, and 10 percent in 2022 and beyond.
According to GTM Research, the ITC extension is projected to spur nearly 100 cumulative gigawatts of solar installations in the U.S. by 2020 (resulting in $130 billion of investment). By 2020, more solar will be installed each year in the U.S. than was added to the grid cumulatively through 2014.
For current information on incentives, including incentive-specific contact information, visit the Database of State Incentives for Renewables and Efficiency (DSIRE).
To claim the ITC, a taxpayer must fill out and attach IRS Form 3468 to their tax return. Instructions for filling out the form are available online.
KMB Commercial Solar Engineering
KMB is a leading facility engineering firm providing commercial photovoltaic design & energy engineering services. Our philosophy is first to understand, then provide appropriate solutions and designs, not born out of our personal preferences, but incorporating experience from previous successful projects, that align with our clients desires. Contact us today to find out how to put energy into your projects today!