If you’re thinking about starting a solar power project, it’s important to know the government policy and incentives that can help you to accomplish your goal. Fortunately, there are plenty of options, from Production tax credit to Investment tax credit, to Treasury cash grant programs. Learn more about these and other incentives and policies, as well as how you can get started!
The Production Tax Credit (PTC) for solar energy is a federal tax credit that pays owners-operators for delivering electricity to the grid. It is one of the most significant policy mechanisms in support of solar energy in the U.S. As the solar industry has grown, it has helped create hundreds of thousands of jobs and contributed billions of dollars to the American economy.
To qualify for PTC, solar systems must meet several criteria. For example, they must be designed to generate electricity and contain components that are at least 40 percent or more made from U.S. steel and at least 55 percent made from aluminum purified to 99.9%. They must also be constructed by workers who are trained in prevailing wage practices.
If you want to get involved in the solar industry, you can start by using a tax incentive calculator. Solar-Estimate, for example, allows you to input your solar project’s size, capacity, location, and cost, and it gives you an estimate of your tax credit.
Aside from the PTC, solar facilities can also claim a federal Investment Tax Credit, or ITC, for their investment. This ITC can be claimed by either commercial or residential investors.
You may qualify for additional bonus credits if you meet domestic content requirements or meet certain labor standards.
These bonuses are stackable. Depending on the amount of the bonus, you can choose between claiming the PTC or the ITC.
Another option for claiming the PTC for solar is to apply for the new battery storage tax credit. This credit can be used to scale up distributed standalone batteries.
Additionally, solar projects placed in service after 2022 are eligible for a 30 percent ITC. The extension of the ITC provides market certainty and lowers energy costs for consumers. In addition, the extension of the ITC drives long-term investments.
The Investment Tax Credit (ITC) for solar energy is one of the most important policy mechanisms that support clean energy in the United States. Originally scheduled to end in 2022, Congress extended the credit in the 2008 Emergency Economic Stabilization Act. It was later supplemented by the Solar 1603 Grant program.
In general, the ITC is a 30 percent deduction on the cost of a new solar system for residential properties. Commercial systems are also eligible. For commercial taxpayers, it is possible to take a Production Tax Credit (PTC) of at least $25 per megawatt hour of electricity produced. This tax credit can be claimed over 10 years on the output of an electrical power plant.