Solar incentives and tax credits can help reduce the cost of installing solar for commercial energy users. Please be sure to consult with a tax expert and review all the guidelines and rules carefully.
State Commercial Investment Renewable Energy Systems Tax Credit
A state rooftop solar tax credit is available for larger commercial projects! The commercial Investment Renewable Energy Systems Tax Credit, for solar photovoltaic systems, is refundable and covers up to 10% of the eligible system cost or $50,000, whichever is less. The Commercial incentive can only be claimed on the same year’s taxes as when the solar system was installed.
Sales Tax Exemption
Utah exempts the purchase or lease of equipment used to generate electricity from alternative resources from the state sales tax. Eligible purchases or leases must be made for or by an alternative energy production facility on or after July 1, 2004, and before June 30, 2027. All leases must be made for at least seven years.
Federal Tax Credits for Business (ITC and PTC)
The investment tax credit (ITC, Section 48) is a tax credit that reduces the federal income tax liability for a percentage of the cost of a renewable energy and/or storage system that is installed during the tax year.
The production tax credit (PTC, Section 45) 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. Per the Inflation Reduction Act, the amount covered by the ITC and PTC varies based on several conditions (see the below chart).
Things to consider if you sign a Power Purchase Agreement (PPA)
As long as you own your solar energy system, you are likely eligible for some or all of the solar tax credit. Again, contact your tax consultant. But, it is important to note that if you opt to sign a lease or PPA with a solar installer, you are not the owner of the system, and thus you cannot receive the tax credit.
There are no utility incentives for commercial
Alas, Utah’s utilities no longer provide rooftop solar incentives. But if you decide not to own your solar but want to invest in cleaner energy, you can sign up for Rocky Mountain Power’s Subscriber Solar program, available to Logan, St. George, and Rocky Mountain Power customers.
Commercial Property Assessed Clean Energy (C-PACE) Financing:
C-PACE is a low-cost, long-term financing option for energy efficiency, renewable energy, and water conservation projects on commercial buildings. C-PACE financing allows commercial buildings to finance building improvements through the placement of a tax assessment on the property. Benefits of C-PACE include:
- No money down
- A lien term up to 30 years that is secured by the real property (if the current owner sells, the lien is transfered with the property)
- No debt on the business’ balance sheet
To learn more, visit Utah’s C-PACE home page.
Qualified Energy Conservation Bonds (QECBs):
These tax credit qualified bonds (which can be issued by local, state, and tribal governments) are for use in funding energy efficiency and renewable energy projects. The types of energy projects that fall under this program is broad, ranging from mass transit programs, to community outreach programs, to building retrofits. Learn more about this program and how communities can use it to go solar.
USDA REAP Loan Guarantee:
The Rural Energy for America Program (REAP) gives agricultural producers and small businesses grants and loan guarantees for energy efficiency upgrades, renewable energy projects, and energy audits. The program also provides renewable energy development assistance. Learn more about the program and how it can help you go solar.