There are a variety of compelling reasons for installing solar panels and storage systems, but input costs can put some people on the fence about making the switch. Renewable energy system tax incentives outlined within the Inflation Reduction Act of 2022, along with other local and regional programming from the state and city level, or even your utility company, can lead to making solar and energy storage even more affordable for your property.
IRA Solar Rebates at a Glance
In August 2022 President Biden signed the Inflation Reduction Act (IRA) into law, and within the bill one big focus area has been renewables like solar energy and energy storage. With this new legislation, businesses and residential property owners can receive a tax credit equivalent to at least 30 percent of total solar and storage projects, with additional incentives also outlined for meeting other specific requirements. The IRA was passed with goals of creating more access to renewable energy for American property owners, boosting the economy and striving to meet increasing goals of cleaner energy across our country.
Beyond the increased Federal Tax Credit to 30 percent, there is a 10 percent bonus tax credit opportunity for certain solar projects that use U.S.-manufactured and sourced components. To receive this incentive, a project must include U.S.-manufactured iron and steel, electrical parts, solar panels, and inverters. More formal guidance from the IRS on ways to meet this additional requirement going forward are expected in the coming months.
Yet another 10 percent bonus percent tax credit opportunity can be earned if a project is cited in former fossil fuel energy communities or areas where energy will serve low-income neighborhoods and districts. In certain cases, if all such bonus tax credits are earned, one single project could earn up to a 60 percent tax credit!
Not only will the IRA increase the accessibility of purchasing solar from these increased incentives, but it will also lead to a more switch clean energy transition, create more jobs and allow the US to be more independent from fossil fuels.
Minnesotans have even more benefits
In addition to the nationwide IRA incentives, many Minnesota communities have their own solar incentives. For example, the Minneapolis green cost share incentive gives credit based on the estimated kWh of production of the first year. Other cities have their own incentives such as Brooklyn Center, St. Louis Park, Richfield, and multiple other communities. It’s anticipated that even more government incentives are to come for the state as greater efforts are being put toward cleaner energy.
Some utility companies are making the switch to solar more accessible and more affordable too! Dakota Electric Association and Rochester Public Utilities offer a $500 rebate for users who install solar panels and are serviced by them. While the state’s largest energy provider, Xcel Energy, offers performance incentives of $0.04/kWh and $0.03/kWh for residential systems and commercial systems, respectively.
Minnesotan’s love their solar energy, and both community and utility incentives are great options to fund your solar project but incentives are not guaranteed. While some incentives are here to stay, others are temporary or limited and have a first come first serve basis. It’s best to act as early as possible if you want to get the most financial benefits.
IRA and solar storage
The IRA applies to more than just solar panels, it also applies to solar energy storage. The previous incentive only applied to energy storage that was purchased and installed in conjunction with a solar project. Now, the rebate can be used for even more, and will have greater benefits.
The IRA still applies to simultaneous installations with solar panels, but now the incentive applies to those who already have solar panels installed and now want energy storage, or people who don’t have solar at all but want the security of a battery backup that can be charged by the grid. The best part, all of these options get the same 30 percent tax credit. This gives consumers even more choice in what is the best energy storage option for them.
Additional Incentives for Businesses
Having solar energy can be a great business decision on many levels, offering long-term energy savings, increases in property value and a clear demonstration of a company’s commitment to improving our environment. In combination with the IRA, commercial solar properties can use a robust package of tax credits to bring rapid project returns back to qualifying businesses. In certain cases, using U.S.-produced materials such as steel, iron, or other solar hardware offer even more benefits through the updated tax incentive package.
Many solar installations supporting for-profit businesses can also earn significant Depreciation credits via a five-year cost recovery through the Modified Accelerated Cost Recovery System (MACRS). This, combined with the 30 percent+ solar tax credit, can deliver over 60 percent of the total project cost back to the books for property owners, allowing them to feel great about their clean energy commitments, but also free up other areas to invest in their facilities and business.
Businesses are financing solar in all kinds of ways today, and one such opportunity is through property assessed clean energy (PACE) financing. Commercial PACE, including MinnPACE, offers financing options for property owners that switch to clean energy via bank-competitive loans which allow for deferred installment payments to be made when the property pays their semi annual property taxes. PACE is just one option of many when it comes to evaluating the best financing mechanism to help bring a commercial solar project to life for any non-cash transactions.
With all these incentives currently in place, there has never been a better time to go solar. The national push toward more clean energy solutions is clear, helping more Americans switch to solar for less. It’s a great time to evaluate all of your options!
A trusted name in solar energy
As a top-rated solar power provider in Minnesota, All Energy Solar makes switching to solar energy easy for property owners of all kinds — residential, commercial, agricultural, municipal, and more. Our solar professionals have the knowledge and experience to reveal the programs accessible in your area and every other aspect of your project, from initial property and energy analysis through design, construction, and beyond.
Stop renting your energy and let the sun be your provider for energy you can rely on. Get started today by requesting a FREE virtual solar consultation from All Energy Solar!