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Government incentives can cover 30% or more of solar costs.
Federal income tax credits and grants will immediately account for 30% of each system’s cost, with state and local incentives providing even further reductions depending on your location. The time to buy will never be better, especially for businesses that can utilize the 50% bonus depreciation allowance available in 2009 and 2010 thanks to the Economic Stimulus Bill. Solar equipment also qualifies for a five-year MACRS depreciation schedule on all installed equipment and a Section 179 deduction.
Detailed information on rebates, incentives and tax credits for all solar and energy efficiency technologies are available at the Database of State Incentives for Renewable Energy (DSIRE) web site. Click on your state to get local information and on “Federal Incentives” to understand the tax credits and grants offered by the federal government.
In many states generators of solar electricity are eligible to certify their system with the state utility commission and earn Solar Renewable Energy Certificates (SRECs). One SREC represents 1000 kilowatt-hours of electricity which can be sold to regional utility companies that are required to fulfill annual quotas for clean energy generation. The values of SRECs vary by state, year, and market demand, the value of which can be substantial over time. SunWire Energy will help you sell your SRECs and use the proceeds to pay down the cost of each system.
In addition to SRECs, many states also offer cash rebates, property tax credits, income tax credits, and exempt system purchases from sales tax. You can find out more information about your local incentives by going to the following websites:
 Maryland: www.energy.state.md.us
Maryland’s Solar Grant program offers a cash rebate to residential and commercial installations up to 10 kW (DC) as follows:
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- $1250 for each of the first 4 kW
- $1000 for each of the next 4 kW
- $500 for each of the next 2 kW
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MD SRECs have a ceiling value of $400 through 2010. MD solar installations are also exempt from property tax assessments and sales taxes.
Maryland counties with property tax credits:
Anne Arundel: up to $2500
Harford: up to $2500
Howard: up to $5000
Prince George’s: up to $5000
Montgomery: up to $5000
 District of Columbia: www.green.dc.gov/green/site/default.asp
The District of Columbia’s GreenEnergyDC incentive program offers a cash rebate to residential and commercial installations up to 20 kW DC as follows:
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- $3000 for each of the first 3 kW
- $2000 for each of the next 7 kW
- $1000 for each of the next 10 kW
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DC SRECs have a ceiling value of $500 through 2014.
 New Jersey: www.njcleanenergy.com/
New Jersey’s Clean Energy incentive program offers a cash rebate to residential installations up to 10 kW and commercial installations up to 50 kW as follows:
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- Residential: $1750 per kW up to 10 kW
- Commercial: $1000 per kW up to 50 kW for systems 50 kW or less in size
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NJ SRECs are among the highest in the country with a 2009-2010 ceiling value of $693. NJ solar installations are also exempt from property tax assessments and sales taxes.
 Pennsylvania: www.depweb.state.pa.us/energindependent/
Pennsylvania’s Sunshine incentive program offers cash rebates to residential installations up to $22,500, and commercial installations up to $377,500, to a maximum of 35% of total project costs.
PA SREC values fluctuate annually and are currently valued on the spot market at $300. PA solar installations do pay sales taxes although all systems are eligible for an income tax credit of 15% of the incentive-adjusted system cost up to $1 million.
 Delaware:
http://www.dnrec.delaware.gov/energy/services/Pages/GreenEnergyProgram.aspx
Delaware’s Green Energy Fund incentive program offers cash rebates to residential installations up to $31,500, and commercial installations up to $250,000, typically to a maximum of 25% of total project costs.
DE SREC values are fairly stable with a ceiling value of $250 through 2019. Delaware has no sales tax.
2009 Federal Government Incentives
The American Recovery and Reinvestment Act of 2009 (ARRA, aka the “federal stimulus” bill) signed into law by President Obama February 17, 2009 creates a program through the Department of Treasury that provides cash grants to commercial projects equal to 30 percent of the cost of solar property placed in service during 2009 and 2010.
Solar property placed in service after 2010 and before 2017 qualifies for the grant program as long as construction begins prior to year-end 2011. Take note: applications must be filed by October 1, 2011.
Accelerated Depreciation
There are valuable incentives that go beyond these, including accelerated depreciation. ARRA included a 50% bonus depreciation provision for eligible solar and other renewable-energy systems acquired and placed in service in 2008 and 2009. To qualify for bonus depreciation, a project must satisfy these criteria:
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- Property must have a recovery period of 20 years or less under normal federal tax depreciation rules;
- Original use of the property must commence with the taxpayer claiming the deduction;
- Property generally must have been acquired during 2008 or 2009; and
- Property must have been placed in service during 2008 or 2009 (or, in certain limited cases, in 2010)
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If property meets these requirements, the owner is entitled to deduct 50% of the adjusted basis of the property in 2008 and 2009. The remaining 50% of the adjusted basis of the property is depreciated over the ordinary depreciation schedule.
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