Shrinking Solar Incentives
This winter’s brutal cold temperatures, snow and ice have been challenging for many parts of the country, and rising energy costs have become a hot topic. Many commercial organizations have looked at renewable sources of power—particularly with regard to tax incentives. But there’s growing concern that the downward trend of tax credits for solar photovoltaic (PV) power systems may eventually go away altogether. So how can you lock in stable energy costs for years and years to come, generate a large percentage of renewable electricity on-site, and benefit from tax credits despite being a not-for-profit entity? SolarWalk.
First: The Federal Solar Tax Credit
What is it? Initially offered via the Energy Policy Act of 2005 and fully enacted in 2006, the Solar Investment Tax Credit (ITC) was a major federal initiative to support solar power growth across the country. Its original expiration date was to be 2007, but it has been extended multiple times.
Initially the ITC was a one-time 30% credit based on the total cost of solar PV system installations (benefitting both residential and commercial projects); in 2020 the credit dropped to 26%. Former President Donald Trump signed the Consolidated Appropriations Act in December 2020, which extended the credit of 26% through 2022. And recently Congress passed a delay in the tax credit phase down, so the tax credit remains at 26%, but falls to 22% for PV systems installed in 2023 and may completely disappear by 2024.
How Nonprofits Can Benefit
While EarthWalk’s SolarWalk division provides the project development and oversight, a third-party entity utilizes a Power Purchase Agreement (PPA)—they finance the installation, operation and maintenance of the solar PV system. They benefit from the ITCs, and pass along the savings in the form of lower electricity rates to nonprofits.
Spring may be on the horizon, with continued electricity rate increases. There’s no better time than now to explore a solar power project and secure your tax credit for 2022 and generate significant energy savings.
Find out more today and see if your project qualifies.