SOLAR INCENTIVES FOR BUSINESSES

There are many solar incentives available for businesses to help finance your solar system. Below are four programs that may be available to you. In the process of working with you to create your unique solar system design and meet your specific needs, we will also walk with you to look at these and are always available for any questions that you may have.
Federal Solar Tax Credit for Solar Photovoltaics (Commercial)
Full Information Here: Energy.gov
What Is It?
  • There are two tax credits available for businesses and other entities like nonprofits and local governments that purchase solar energy systems:
    • The investment tax credit (ITC) is a tax credit that reduces federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year. 
    • The production tax credit (PTC) is a per kilowatt-hour (kWh) tax credit for electricity generated by solar (and other qualifying technologies) for the first 10 years of a system's operation. It reduces the federal income tax liability and is adjusted annually for inflation. 
  • Generally, project owners cannot claim both the ITC and the PTC for the same property, although they could claim different credits for co-located systems, like solar and storage, depending on what further guidance is issued by the IRS.
  • Solar systems that are placed in service in 2022 or later, and begin construction before 2033 are eligible for a 30% ITC or a $0.0275 kWh PTC if they meet labor requirements issued by the Treasury Department and are under 1 megawatt (MW) in size. 

Who Is Eligible?
  • Your solar PV system is located in the United States or U.S. territories. 
  • Your solar PV system uses new and limited previously used equipment
  • Your solar PV system is not leased to a tax-exempt entity (school, etc), though tax-exempt entities are eligible to receive the ITC themselves in the form of a direct payment. ​​
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​Click the questions boxes for answers to commonly asked questions. Click the minus icon to close each box.
Should I do the ITC or PTC?
ITC
  • Up front tax credit that does not vary by system performance
  • Smaller-scale PV projects and CSP projects generally receive more value utilizing the ITC, particularly if they can utilize a low-income bonus (not available with a PTC)
  • Projects in less sunny areas, that incur high installation costs, or that qualify for bonus tax credits are more likely to benefit from ITC
PTC
  • Can provide a more attractive cash flow, as the tax credits are earned over time
  • Large-scale PV projects will receive more value if they opt for the PTC in sunny places
  • As installed PV and CSP system costs reduce over time (or, generate more electricity), the PTC may become more attractive for all sectors
What expenses are eligible?
  • Solar PV panels or PV cells, inverters, racking, balance-of-system equipment, and sales and use taxes on equipment
  • CSP equipment necessary to generate electricity, heat or cool a structure, or to provide solar process heat
  • Installation costs and certain prorated indirect costs
  • Step-up transformers, circuit breakers, and surge arrestors
  • Energy storage devices that have a capacity rating of 5 kWh or greater (even if not charged with solar)
  • For projects 5 MW or less, the tax basis can include the interconnection property costs spent by the project owner to enable distribution and transmission of the electricity produced or stored by the system. 
  • **The cost of a roof installation is generally NOT eligible, except for incremental costs, or the amount over what you would have spent if the roof was not used for solar. (these costs could include solar shingle/tiles, or reflective roof membrane)
  • Structures holding the solar PV system may be eligible for the ITC if the system was designed with the primary goal of electricity generation and other uses of the structure are merely incidental.
How do you claim it?
To claim the ITC: 
​A taxpayer must complete and attach IRS Form 3468 to their tax return. Instructions here. 

To claim the PTC:
A taxpayer must complete and attach IRS Form 8962 to their tax return. Instructions here. ​
USDA - Renewable Energy for America Program (REAP)
Full Information Here: USDA.gov ​
What Is It?
  • The program provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements. 

Who Is Eligible?
  • Agricultural Producers
    • An entity directly engaged in production of agricultural products where at least 50% of the gross income comes from agricultural operations.
  • Rural Small Businesses
    • Must be located in eligible rural areas, and one of the following:
      • Private, for-profit entity (sole proprietorship, partnership, or corporation)
      • A cooperative
      • An electric utility that provides service to rural consumers and operates independent of direct govt control
    • Must meet the Small Business Administration size standards in accordance with 13 CFR 121.
  • Must have no outstanding delinquent federal taxes, debt, judgment, or debarment.
  • Must be in an eligible area: projects must be located in rural areas with populations of 50,000 residents or less.
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​Click the questions boxes for answers to commonly asked questions. Click the minus icon to close each box.
What funding is available?
  • ​Loan guarantees on loans up to 75% of total eligible project costs
  • Grants for up to 50% of total eligible project costs
  • Combined grant and loan guarantee funding up to 75% of total eligible project costs
    • Loan guarantee percentages are published annually in a Federal Register notice, and REAP loans approved in Fiscal Year 2024 will receive an 80% guarantee.
How may the funds be used?
  • Funds may be used for the purchase and installation of renewable energy systems, such as:
    • Biomass
    • Geothermal for electric generation or direct use
    • Hydropower below 30 MW
    • Hydrogen
    • Small and large wind generation
    • Small and large solar generation
    • Ocean (tidal, current, thermal) generation
  • Funds may also be used for the purchase, installation, and construction of energy efficiency improvements, such as:
    • High efficiency HVAC
    • Insulation
    • Lighting
    • Cooling and refrigeration units
    • Doors and windows
    • Electric, solar, or gravity pumps for sprinkler pivots
    • Switching from a diesel to electric irrigation motor
    • Replacement of energy-inefficient equipment
  • Energy Efficiency Improvement applications must contain an Energy Audit or Energy Assessment (depending on total project costs).
How do you get started?
  • ​Applications for this program are accepted year-round at your local office.
  • We are located in Area 3, and the office is in Harrisonburg at 1934 Deyerle Ave. Our Area Director is Steven Davis. 
  • Additionally, questions can be directed to our Rural Development person:
More FAQ
What are the interest rates for the loan guarantee?
Interest rates are negotiated between the lender and borrower, may be fixed or variable, and may not be adjusted more often than quarterly.

Are there fees of the loan guarantee?
There is an initial guarantee fee, currently 1% of the guaranteed amount. There is also a guarantee retention fee, currently 0.25% of the outstanding principal balance, paid annually. 

What are the grant terms?
Renewable Energy System Grants:
  • $2,500 minimum
  • $1 million maximum
Energy Efficiency Grants:
  • $1,500 minimum
  • $500,000 maximum

Are there additional requirements?
  • Applicants must provide matching funds if applying for a grant only. More information at the USDA page linked at the top.
  • Applicants must provide at least 25%  of the project cost if applying for a loan.
  • All projects must have technical merit and utilize commercially available technology.
  • All projects require an environmental review prior to award or construction.

Why does USDA Rural Development do this?
This program helps increase American energy independence by increasing the private sector supply of renewable energy and decreasing the demand for energy through energy efficiency improvements. Over time, these investments can also help lower the cost of energy for small businesses and agricultural producers.
SRECS - Solar Renewable Energy Certificates
More Info Here: epa.gov and dominionenergy.co
What Is It?
  • A renewable energy certificate (REC) is a market-based instrument that represents that property rights to the non-power attributes of renewable electricity generation.
  • Solar RECs (SRECs) are created for every 1,000 kilo-watt hours of electricity generated by a solar energy system. 
  • The owner of the SREC is the person or entity that owns the solar system, or ability to generate electricity from solar. 
  • Many states (including VA) have created SREC markets to spur the development of solar by requiring electricity suppliers (like Dominion) to purchase SRECs produced by in-state solar systems as part of their obligation under the state's Renewable Portfolio Standard (RPS). Virginia's RPS.
  • Through the purchase of SRECs, electricity suppliers are ensuring that their products meet the RPS-mandated amount of solar power. 
  • The monetary value of an SREC in these state markets is determined by supply and demand, with demand largely driven by electricity suppliers. 
  • As of 2024, in Virginia, the current going rate for one SREC sold is around $45.00. However, similar to the stock market, the SREC rates will go up and down year to year, due to supply and demand.

Who Is Eligible?
  • Anyone who owns a solar system in a state that participates in SRECS - like Virginia.
  • This applies to homeowners and business owners.
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​Click the questions boxes for answers to commonly asked questions. Click the minus icon to close each box.
How do I get started?
  • When we are getting you set up with a new solar system, we will have a conversation with you about SRECs, and if you are interested, we will initiate the process for you and do most of the paperwork involved. There is one form that will need your signature, but otherwise it is a relatively simple process for you as we take care of the rest. 
  • If you have a system that is older and are not set up with SRECs, and you are interested, contact us today to get started.
More FAQ
How often do I get paid?
  • Many people think that since they generate solar energy on a monthly basis, they will get paid for SRECs monthly - however this is not accurate. 
  • SRECs are purchased, by Dominion, whenever they need to purchase them, and this is not regularly, though it is often annually at least. 
  • So you can likely make some money from this annually, but it's best not to depend on this as a regular monthly income source. 

Can I do this myself? 
  • You can technically hold on to your SRECs and try to sell them yourself, however this is not recommended, for two reasons. 
  • First, Dominion is extremely unlikely to seek out individual solar system owners to purchase SRECs from, preferring to purchase in bulk, or from larger producers whenever possible. 
  • Second, working with an SRECs aggregator (who can bundle many SCRECs together and sell them for a better price, and ensure they are sold because there is large volume, offers you a better chance to ensure you sell yours regularly. 
  • For this reason, Green Hill Solar partners with an industry SREC aggregator that we are able to sign clients up with who are interested. 

Does this in any way affect my monthly electric bill? 
No, this is separate from your electric bill and is available to anyone, whether they are a Dominion customer or not - so long as you own a solar system. 


If the going SREC rate is $45.00, do I get $45.00 for every SREC I sell? 
There are some fees associated with selling your SRECS through an aggregator (which we use), so your payback will be a bit lower than the going market rate.
Modified Accelerated Cost Recovery System (MACRS)
Full Information Here: IRS.gov
What Is It?
  • This is a system that allows you to recover the cost of business or income-producing property through deductions for depreciation using special depreciation allowances and deductions. The MACRS puts fixed assets into classes that have set depreciation periods.
    • Depreciation is an annual income tax deduction that allows you to recover the cost or other basis of certain property over the time you use the property. It is an allowance for the wear and tear, deterioration, or obsolescence of the property.
  • MACRS is the proper depreciation method for most assets as it allows for greater accelerated depreciation over longer time periods. This is beneficial since faster acceleration allows businesses to deduct greater amounts during the first few years of an asset's life, and relatively less later.

What Property Can Be Depreciated?
  • Must be property you own
  • Must be used in your business or income-producing activity
  • Must have a determinable useful life
  • Must be expected to last more than 1 year

​This is less of an "incentive" and more of something available for business accountants to utilize when adding property such as solar systems into the business mix. There is a LOT to this, some linked below, but be sure to use a tax professional or CPA to help you sort through this option properly.

Other helpful links:
Green Hill Solar provides solar panel installation for new or existing homes, businesses, and farms, providing energy savings ​in Harrisonburg and the Shenandoah Valley of Virginia.  Contact: 540-383-3623 or [email protected] 
Offices located at 1157 S High St, Harrisonburg, VA 22801 
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