As emission reduction mandates gain traction in Massachusetts, commercial building owners face growing pressure to adopt sustainable practices. With the implementation of stretch energy codes and net zero opt-in energy codes in communities throughout the state, decarbonization has become mandatory in most places. While a path to compliance may seem daunting and expensive, it also presents an opportunity for proactive businesses to save money. Solect Energy can be your trusted partner for tailored solar and energy storage solutions that drive compliance, unlock incentives, enhance building efficiency, and future-proof your business.

One example of a decarbonation mandate is Boston’s BERDO 2.0 (Building Emissions Reduction and Disclosure) which is being closely watched throughout the state. It is pivotal for decarbonization, requiring emissions reporting and setting standards for existing buildings. Compliance is essential to avoid penalties and achieve the ambitious goal of net zero emissions by 2050. Buildings included in BERDO 2.0 are non-residential buildings larger than 35,000 square feet who must report emissions annually by May 15th and meet emissions performance standards starting in 2025. Non-residential buildings over 20,000 square feet or residential buildings with 15 or more units must report emissions annually by May 15th and meet standards starting in 2030.

Adopting energy reduction strategies is essential for compliance and can be achieved with some of the following – onsite solar and battery storage, LED lighting, efficient HVAC systems, insulation, and smart building technologies. The only emissions reduction strategy that may not require a cost to you is onsite solar and energy storage.

Onsite Solar Can Power Your Compliance

Renewable energy, particularly solar power, is crucial for compliance and offers significant financial advantages. Onsite solar installations, like rooftop or carport systems, reduce grid dependence and result in significant energy bill savings. Additionally, federal and state incentives, such as the Investment Tax Credit (ITC) and the Solar Massachusetts Renewable Target (SMART) program, further enhance financial returns.

The ITC allows businesses to deduct a portion of solar installation costs from federal taxes. Recent legislation increased the ITC to 30% and introduced additional incentives, potentially providing a total tax credit of 40% or more for eligible projects. The SMART program offers fixed monthly cash payments for 20 years to businesses and public entities adopting solar, with greater incentives for early adopters.

The only emissions reduction strategy that may not require a cost to you is onsite solar and energy storage.

Harness the Potential of Energy Storage

Both ITC and SMART incentivize energy storage as well. Combining onsite solar with storage allows you to store excess energy further reducing grid reliance, and minimizing peak demand charges. Plus, energy storage can provide a clean source of power during outages.

Empower Compliance with Solect Energy

Solect Energy is dedicated to empowering your compliance journey with tailored solar and energy storage solutions. As your trusted solar and energy storage provider, we are committed to helping you achieve compliance while unlocking the extensive benefits of sustainability, financial incentives, operational efficiency, and future­-proofing your business. Partnering with Solect Energy means contributing to a more sustainable future while ensuring the long-term success of your business.

Discover how Solect Energy can power your tomorrow.

Visit go.solect.com/mandates or call 508-598-3511.

As organizations in the Northeast look for ways to save on energy costs and reduce their carbon footprint, solar energy is increasingly becoming the go-to solution. Despite the generous federal and state incentives, the initial cost of a solar installation can be a perceived barrier for some. Fortunately, several financing options are available to help organizations transition to solar energy affordably, including two that enable adoption with little or no upfront costs. These options are particularly attractive when interest rates are rising.

Power Purchase Agreement: Immediate Savings and Hassle-Free Solution

A Power Purchase Agreement (PPA) eliminates the barrier of upfront costs, enabling an organization to turn their rooftop into an energy generator and experience immediate energy cost savings. Through a PPA, a third-party investor, like Solect Energy, owns the project – providing the funding, installation, monitoring, and maintenance. In exchange for hosting the system, your business gets electricity at discounted rates, and can invest the savings into your operations.

Advantages of a PPA

• No upfront cost or balance sheet impact
• Low, fixed, all inclusive kWh rate protects against fluctuating energy prices
• Operations and maintenance included

Solar Site Lease: Zero Upfront Costs and Hassle-Free Solution

With a solar site lease, Solect leases your roof for a solar installation, and provides you with a lease payment for the term of the lease. Lease payments can be in regular installments, such as yearly, or can be a combination of regular installments and an upfront payment. An upfront payment allows building owners to pay for maintenance items such as roof improvements before solar is installed. 

Advantages of a Solar Site Lease

• New revenue stream for the term of the lease
• Option to receive an upfront payment to pay for property improvements
• Operations & maintenance included

Overcoming the Cost Barrier

The once-perceived cost barrier to solar adoption is effectively overcome when an organization realizes that they can have a solar array designed and installed with minimal or no upfront costs, allowing them to reap the substantial, long-term financial benefits of solar energy, 

To learn more about solar for your organization or to schedule a no obligation consultation with Solect Energy, you can contact us by email info@solect.com, phone 855.800.4211 (press 1), or click on the button below. 

K-12 schools across the United States are switching to solar power to meet their energy needs and sustainability goals. According to data from Generation180, a nonprofit organization promoting clean energy, nearly one in ten public schools now has solar panels, and Connecticut is ranked 8th in the nation for the number of schools with solar. This year, an increase in the number of solar installations at schools in Connecticut is expected, driven by factors such as rising energy prices, favorable federal and state incentives, the state’s commitment to sustainability, and growing demand for solar carports, electric vehicle charging stations, and energy storage solutions.

Rising Energy Prices

Energy is the second largest expense for public K-12 schools after salaries according to a statement from The White House, and skyrocketing energy rates present a budgetary challenge for schools when it is time to renegotiate energy contracts. Many are turning to solar as a solution. By securing a fixed, low rate for 20-25 years, schools can budget confidently and avoid the unpredictability of energy prices. Reporting by The New York Times shows that some school districts are experiencing higher than expected savings from solar because of these rising rates.   

Favorable Federal and State Incentives

The federal Inflation Reduction Act (IRA) provides organizations with the economic motivation to go solar while helping the nation reach its climate goals. It modifies and extends the solar investment tax credit (ITC) including offering tax-exempt entities, such as public schools, the option to obtain the tax credit in the form of a grant that can be used to fund school resource needs. The potential to stack bonus credits onto the base 30% ITC means potentially lower power purchase agreement rates for schools. 

The Non-Residential Renewable Energy Solutions (NRES) program is a statewide, six-year solar program that supports Connecticut’s goal of carbon-free electricity generation by 2040. Launched in 2022, the program offers generous solar incentives for organizations and property owners to transition to low-cost renewable energy. Program updates for 2023 make participating in NRES easier and more lucrative. 

Solar Carports, EV-Charging stations, and Energy Storage Solutions

Solar carports, EV-charging, and energy storage are predicted to contribute to the growth of solar projects at schools. Solar carports provide protection from the elements, extend the life of the asphalt, improve the appearance of the parking area, and visually demonstrate a commitment to sustainability. The updated NRES program now offers prioritization for solar carport projects. Plus, these carports can be integrated with EV-charging. Energy storage can be added to a solar rooftop or carport installation to maximize renewable energy use, power critical loads during an outage, and reduce costly demand charges. Costs for energy storage projects are included in the ITC as part of the IRA, and NRES offers an incentive for storage-only projects. 

Third-Party Partnerships Provide Widespread Access

Connecticut schools can benefit from the nonprofit PowerOptions Consortium, the largest energy buying consortium for nonprofits and the public sector in New England. PowerOptions offers schools a low-fixed rate, favorable terms, and efficient, confident contracting through their competitive procurement and pre-negotiated PPA for an on-site solar and energy storage project. 

Schools are going solar through third-party partnerships using power purchase agreements (PPAs) that remove the barrier of upfront costs and help schools see immediate energy cost savings. Under these agreements, solar companies pay for solar systems up front, along with installation, monitoring, and maintenance. In return for housing the system, schools buy electricity at reduced rates, and can redirect the savings toward classrooms or facilities upkeep. According to Generation180, these agreements have been used to pay for nearly 90 percent of total solar capacity at schools across the nation. 

School Solar Progress in 2023

With rising energy costs, generous federal and state incentives, state sustainability goals, and popular technologies, it will be interesting to see how many more schools reduce their energy footprint with solar and storage in 2023. 

To learn more about solar for your organization or to schedule a no obligation consultation with Solect Energy, you can contact us by email info@solect.com, phone 855.800.4211 (press 1), or click on the button below. 

Sources

https://portal.ct.gov/GreenerGov/About-GreenerGovCT/Goals
https://www.seia.org/state-solar-policy/connecticut-solar
https://generation180.org/brighter-future-2022/
https://www.nytimes.com/2022/09/15/climate/solar-energy-school-funding.html
https://www.whitehouse.gov/briefing-room/statements-releases/2022/04/04/fact-sheet-the-biden-harris-action-plan-for-building-better-school-infrastructure/
https://www.eesi.org/articles/view/how-the-inflation-reduction-act-and-bipartisan-infrastructure-law-work-together-to-advance-climate-action

For years, savvy businesses in Massachusetts have been transforming their parking areas into assets that reduce costs and generate revenue by installing solar carports. These elevated canopy structures with solar photovoltaic (PV) panels produce clean, renewable energy that can be used on-site or sent back to the grid. Two recent occurrences have made the financial decision of adding a solar carport a no-brainer for business owners. 

1. National Grid and Eversource have announced massive electric rate increases; the impact of these new rates have already started to appear on your electric bills. Low-cost renewable energy from a solar canopy on your property could protect your business’ bottom line from these volatile energy prices by providing power for your operations.
       
2. The Inflation Reduction Act of 2022 increased the federal solar investment tax credit (ITC) to 30% and created bonus incentives including an additional 10% tax credit for using American-made parts. Since Solect Energy is able to source American-made parts for our solar canopy projects, certain projects are eligible for a total federal tax credit of 40%, 50%, or more! Think about it. A 40% tax credit on a $1,000,000 solar project investment translates into a $400,000 tax credit. That’s money that could be invested in other aspects of your business. 

Additional Ways a Solar Carport Creates Real Value for Your Business

In addition to reducing the impact of sky-high utility rates and providing a huge tax credit, there are other ways that a solar carport creates real value for your business. 

• The Solar Massachusetts Renewable Target (SMART) program, which compensates Massachusetts solar system owners through a monthly utility payment at a fixed rate over 20 years for the solar electricity they provide to the grid, offers an increased incentive award (an “adder”) for solar carports because of their efficient use of space. 
• Energy storage could be added to your solar carport installation to maximize renewable energy use, power critical loads during an outage, and reduce costly demand charges. This is an especially beneficial solution for Massachusetts ratepayers who experience some of the highest demand charges in the country. Plus, the SMART program offers an adder for battery storage too! 
• A solar carport can be integrated with an EV-charging solution which provides convenient access to EV charging for employees and customers, and could help your organization comply with the Electric Vehicle (EV) Charging Station Building Standards in Massachusetts general laws and building regulations. 
• A solar carport provides protection from the elements by shading vehicles on hot days, and sheltering employees and customers from rain, sleet, and snow. In addition, it could extend the life of the asphalt by protecting it from the elements. 
• A solar carport improves the appearance of a parking area, and visually demonstrates your organization’s commitment to sustainability since the solar carport produces clean, renewable energy with no greenhouse gas emissions.  Employees and customers value organizations with cultures that emphasize investing in the environment.

Solarize Your Parking Area!

Now is an especially good time to add a solar canopy to an existing parking area at your organization due to the compelling financial upside along with other tangible benefits. To learn more or to schedule a no obligation consultation with Solect Energy, click here or you can contact us by email info@solect.com, phone 855.800.4211 (press 1), or click on the button below. 

Earlier this month, the Public Utilities Regulatory Authority (PURA) approved updates to the Non-Residential Renewable Energy Solutions (NRES) program, a statewide, six-year solar program that supports Connecticut’s goal of carbon-free electricity by 2040. Launched in 2022 and administered by Eversource and The United Illuminating Company (collectively, electric distribution companies or EDCs), NRES offers generous solar incentives for Connecticut businesses and property owners to transition to low cost, renewable energy. In year one, NRES proved to be an effective way for businesses to save money on electric bills, stabilize their electricity rates, and add a new source of revenue. The program updates make participating in NRES easier and even more lucrative.

This article provides an overview of how the program works with the relevant updates. Keep in mind that time is running out to be a part of the next round of incentives. 

How the NRES Program Works

New for 2023, Connecticut businesses that are interested in transitioning to renewable energy submit applications for their solar projects during two annual application periods: one begins in February, the other begins in August. (Previously, there had been only one application period). Approved projects are eligible to sell energy and renewable energy certificates (RECs) to the EDCs for a 20-year term under one of two tariff rate structures: Buy-All or Netting. 

Under the Buy-All tariff, the utility purchases all the electricity from the solar project at a fixed 20-year rate which is approved by PURA. 

• Compensation is made as an on-bill credit, or quarterly or annual cash payment. Clarified for 2023, the beneficiary of the cash payment may be the customer of record or a third party. (Previously, the payment had to be directed to a third party). 
• Any on-bill credits not used to offset the monthly bill can be cashed out at the end of the 20-year term.
• New for 2023, oversizing rooftop systems to utilize the entire roof is allowed with the Buy-All tariff. (Previously, rooftop systems had to be sized to the energy demands of the building). Oversizing of netting projects or hybrid projects is not allowed.  

Under the Netting tariff, the electricity generated from the solar project is used to offset the site’s energy consumption; monthly excess generation from the system is sent to the grid and receives net metering credits on the electric bill at the full kWh retail value, which can offset future energy costs. 

• The project receives a quarterly payment from the utility for RECs at a fixed rate for 20 years. The payment may be to the customer of record or a third party. 
• Net metering credits are carried forward each month, or cashed out when the electric service is stopped.

New for 2023, the project size categories for medium and large projects have been expanded, and the application cycle for small projects has been aligned more closely with the medium and large project categories. Applications for small zero emissions projects (< 200kW AC) are accepted from February to May 1 and from August until October 15, and are processed and awarded incentive agreements on a first come, first served basis. (As a sizing reference, an approximately 30,000 square foot open, flat roof is needed for a 200kW AC solar installation). Medium zero emissions projects (>200kW AC and < 1000kW AC) and large zero emissions projects (>1000kW AC and < 5000kW AC) are awarded incentive agreements through a competitive bid process during two annual, six-week bid periods: the first one opens in February; the second one opens in August. 

Category	Project Size (AC)	Project Selection Process	Applications Accepted
Small Zero Emissions Projects	< 200 kW	First-come, first-served	From February to May 1, and from August until October 15
Medium Zero Emissions Projects	> 200 kW and < 1000 kW	Competitive Solicitation	Two six week periods: the first one opens in February; the second one opens in August.
Large Zero Emissions Projects	> 1000 kW and < 5000 kW	Competitive Solicitation	Two six week periods: the first one opens in February; the second one opens in August.

Multiple Projects on One Site

New for 2023, one bid may be submitted per revenue meter rather than per project site. This change allows multiple tenants at a commercial complex to benefit from NRES. 

Priority Projects

• Prioritization for solar canopy and/or carport projects is new for 2023. Hybrid projects, consisting of rooftop solar and solar canopy/carport projects are eligible for partial prioritization based on the solar canopy/carport capacity relative to the total system capacity. 
• New for 2023, a project is eligible for prioritization if all of the project’s beneficial accounts are located in distressed municipalities. The project itself does not have to be sited in the distressed municipality to be eligible. 
• Projects built on landfills or brownfields are prioritized. 

Applications for three types of projects are prioritized: solar canopy and/or carport, distressed municipalities, and landfills or brownfields. 

Exciting Changes in Federal Incentives

Recent developments in federal incentives make the economics of going solar even better! With the signing of the Inflation Reduction Act (IRA) of 2022, the investment tax credit (ITC) increased to 30%. Plus, the potential to stack bonus credits onto that base rate means certain projects could be eligible for a total federal tax credit of 40%, 50%, or more! Learn more about the changes to the federal incentives by reading Quick look at how the new federal solar incentives can help your business. 

Go Solar!

The updated NRES program presents a compelling financial opportunity for Connecticut businesses and property owners to go solar, especially when combined with the generous federal incentives. 

To learn more about solar for your business or to schedule a no obligation consultation with Solect Energy, click here or you can contact us by email info@solect.com,

Generous federal and state incentives, technological advancements, soaring electricity costs, and ambitious sustainability goals are driving widespread adoption of solar photovoltaic technology, with solar arrays being installed on parking lots, farms, and even lakes. However at Solect Energy, we often encourage our customers to first look up when considering going solar because solar plus rooftops is a match made in heaven for businesses, municipal entities, universities, and nonprofits. 

While roofs serve many essential functions, they contain a lot of developed space that could be used more effectively. Plus, unlike solar canopies and solar ground mounts, it takes less time and money to install a rooftop solar array because no complex construction, land alteration, or environmental impact studies need to be done to prepare the area. Here are some of the unique benefits of a rooftop solar PV installation:

1. Generates revenue or savings as the ideal “rooftop” tenant. By adding solar as a “tenant,” you can turn unused space into a 25 year revenue generator. Some customers describe their solar installation as the tenant that never complains. 
2. Provides cash-on-cash returns. If you prefer to own the solar array, federal tax benefits can pay for up to 50% of the system costs. You also receive state incentives and the ability to sell the electricity generated directly to your local utility, which can result in a cash-on-cash payback of over 25%.
3. Protects against unpredictable energy price changes. Electricity prices are increasing, and it is unlikely that they will slow down anytime soon. In fact, Massachusetts, Rhode Island, and Connecticut are ranked among the top 10 states with the highest electricity rate increases over the past 25 years. With solar, you can accurately forecast the cost of your energy use for more than 25 years. Predictable energy rates mean a more predictable budget.
4. Does not require additional space for installation. Adding solar to a rooftop allows building owners to take advantage of unused space that otherwise would just increase operating expenses for your business.
5. Reduces carbon footprint and makes progress toward carbon reduction goals. Almost every state in the Northeast has committed to a goal of carbon neutrality by 2050. Solar energy is clean, renewable, and abundant. Unlike fossil fuels, solar power does not generate harmful carbon emissions and other greenhouse gases that contribute to climate change. With solar, you can significantly reduce your environmental footprint and participate in the “clean energy economy” of the future.
6. Provides savings on heating and cooling. Solar panels on a rooftop provides another layer of protection between a building and the elements; it can help reduce heating and air conditioning bills by keeping the building warmer in the winter and cooler in the summer.

Debunking Common Concerns about Rooftop Solar

The benefits that solar offers are well documented, but what about the myths that keep people from fully committing to solar? Below, we debunk many of the most common myths surrounding rooftop solar installations.

1. “Solar will damage my rooftop or void my warranty.”
   One of the most common concerns we come across every day is whether adding a rooftop array will damage a roof membrane. That is, does installing solar on a roof mean puncturing holes, running a risk of leaking, or voiding a roof warranty? The short answer is no. If you have a flat roof, it’s unlikely that any attachments or membrane penetration will even be needed. That’s not to say that attachments are a bad thing. Sometimes, on pitched or more complex rooftops, attachments are needed, but these products will not damage your roof and are specifically designed to maintain your current roof warranty. In fact, Solect will work directly with your roofing company and/or roof membrane company to ensure that your roof warranty is not voided.
2. “My roof needs to be repaired or replaced.”
   Roof repair or replacement is certainly not inexpensive, which is why it makes sense to consider adding solar to your roof at the same time. Incorporating solar can significantly reduce or even eliminate your roof replacement cost through upfront or ongoing lease payments.
3. “Adding solar just makes my roof more difficult to maintain.”
   Solar panels are made to be durable and low maintenance, with warranties equaling 25 years. More importantly, Solect offers Operations & Maintenance services to ensure the optimal upkeep of all mechanical, electrical, and photovoltaic components of your solar system. Therefore, there is essentially nothing that you need to do to take care of the actual solar system after it is installed.
4. “I can’t afford solar right now.”
   Financing is perhaps the most common excuse given in the solar industry, and we understand why – a solar array is a major investment. The good news is that there are multiple financial solutions available to solar customers that fit the economic requirements of almost any company. Financing solutions, such as a solar operating lease, capital lease, or Power Purchase Agreement, require little to no upfront costs while still providing significant energy savings and environmental benefits.

Go Solar!

Generous incentives, rising electricity costs, and ambitious sustainability goals translate into this being an ideal time for businesses. schools and universities, non-profits, state and local governments, and municipalities to go solar. If you would like to discuss how your organization might leverage solar to transition to lower operating costs and protect against the volatile energy prices, schedule a free, no obligation consultation with Solect Energy. You can contact us by email info@solect.com, phone 855.800.4211 (press 1), or click on the button below to submit a form.

The Non-Residential Renewable Energy Solutions (NRES) program offers generous solar incentives for Connecticut businesses and property owners to transition to low cost, renewable energy – a proven way to save money on your electric bills, stabilize your electricity rates, or add a new source of revenue. However, time is running out to get into the next round of incentives. 

How to “Monetize” Solar Incentives on Your Solar Project…

You can choose to own the array, or allow Solect to own the array. Either way, you benefit from the Connecticut NRES Program incentives.   

1. Owning the Solar Installation

If owning the solar installation is right for you, you can pick from two compensation options through the NRES Program: Buy-All or Netting.  

Buy-All: Send all the electricity from your solar project to the electric grid, without supplying power to any on-site energy consumption. 

• The utility purchases the power from you at a fixed 20-year rate which is approved by the Public Utilities Regulatory Authority (PURA).
• A Renewable Energy Certificate (REC) is generated for each megawatt-hour (MWh) of electricity that your system generates.
• You receive compensation as either an on-bill credit to offset your monthly bill, or a quarterly or annual cash payment to a third party. (You can specify a percentage of your compensation to be split between the two options).
• Any on-bill credits not used to offset your bill can be cashed out at the end of the 20-year term.

Netting: Use the electricity generated from your solar project to offset your site’s energy consumption; monthly excess generation is carried forward as a credit on your bill which can offset future energy costs. 

• Every kilowatt-hour (kWh) produced by solar offsets a kWh of supply and delivery charges on your electric bill.
• Separately under the NRES Netting incentive, projects receive a quarterly payment for RECs from the utility at a rate set for 20 years, which is separate from the savings on the electric bill. 
• Monthly excess generation from your system is sent to the grid and receives net metering credits, which are applied to your bill in dollars at the full kWh retail value, and used to offset future electric supply and delivery charges. 
• Net metering credits are carried forward each month, and cashed out if you stop electric service.

2. Let Solect Own the Solar Installation

If not owning the solar installation is your preferred approach, you can decide between a lease agreement or a Power Purchase Agreement (PPA).  

• Lease  – Lease your roof to Solect, and receive a lease payment for the term of the lease, typically 20 to 25 years. Lease payments can be in regular installments, such as annually, or a combination of an upfront payment and regular installments. An upfront payment is a way to pay for roof upgrades before solar is installed, or other property enhancements.  
• Power Purchase Agreement (PPA) – A PPA is a financing model in which a third party investor (like Solect Energy) builds, owns, and maintains the solar system on your property, enabling you to purchase the energy at a discounted rate for 20+ years without having to come up with the money to buy the installation. 

Who Is at Risk of Missing Out

Currently, projects that are < 200kW can apply anytime their application is ready since their incentive agreements are awarded on a first come, first served basis. Proposed changes by the utilities may impact this. As a sizing reference, an approximately 20,000 square foot roof is needed for a 200kW solar installation.

A deadline is looming for projects that are > 200 kW and < 2,000 kW. These larger projects are awarded incentive agreements through a competitive bid process during two annual bid periods. In 2023, the first application period opens in February, and lasts for six weeks. The second application period is in August. 

Category	Project Size (AC)	Project Selection Process
Small Zero Emissions Projects	< 200 kW	Ongoing, first-come, first-served
Medium Zero Emissions Projects	> 200 kW and < 600 kW	Competitive Solicitation
Large Zero Emissions Projects	> 600 kW and < 2,000 kW	Competitive Solicitation

Exciting Changes in Federal Incentives

Recent developments in federal incentives make the economics of going solar even better! With the signing of the Inflation Reduction Act (IRA) of 2022, the investment tax credit (ITC) increased to 30%. Plus, the potential to stack bonus credits onto that base rate means certain projects could be eligible for a total federal tax credit of 40%, 50%, or more! Learn more about the changes to the federal incentives by reading Quick look at how the new federal solar incentives can help your business. 

Go Solar!

NRES presents a compelling financial opportunity for Connecticut businesses and property owners to go solar, especially when combined with the generous federal incentives. 

If you would like to discuss how your organization might leverage these incentives to save money on your electric bills, stabilize your electricity rates, or add a new source of revenue, schedule a free, no obligation consultation with Solect Energy. You can contact us by email info@solect.com, phone 855.800.4211 (press 1), or click on the button below to schedule an initial consultation.

The recently passed Inflation Reduction Act of 2022 (the “Act”) has generated a lot of buzz – and rightly so. This is a nearly $400 billion legislative package that expands tax incentives and discounts for solar, energy storage, and other renewable energy resources. For the first time ever, the law provides tax-exempt entities alternate ways to monetize solar tax credits. 

In this blog, we describe the two federal solar tax credits included in the Act, and the alternate ways for certain tax-exempt entities to monetize these tax credits. 

What Are the Federal Solar Tax Credits? 

The federal solar tax credits are tax credits for installing a solar array; these are a dollar for dollar credit on an organization’s federal taxes. There are two types of federal solar tax credits, and eligibility for 100% of a tax credit requires that certain prevailing wage and apprenticeship requirements are satisfied. 

• The Act increased the investment tax credit (ITC) to 30% of the total cost of a solar project.
• The Act reinstated the production tax credit (PTC) which provides a per kilowatt hour (kWh) rate for the electricity produced and sold by the solar installation, starting on the date the facility is originally placed in service and lasting for ten years. The current PTC (adjusted for inflation) is 2.6 cents per kWh. 

Bonus Incentives

The Act offers generous bonus tax incentives or “adders” to ensure that the climate investments create American manufacturing jobs and help communities that have benefited less from previous climate legislation. 

• 10% bonus ITC or PTC for projects that meet “domestic content” requirements. 
• 10% bonus ITC or PTC for projects built in certain energy communities with ties to traditional energy resources. 
• 10% bonus ITC for projects built in certain low-income communities. The low-income adder does not provide the opportunity for a higher PTC.

The potential to stack multiple “adders” onto the base ITC or PTC means that certain projects could be eligible for a total ITC of 40%, 50% or more, or PTC of 120%! 

Monetize Solar Tax Credits 

The law provides two approaches for certain tax-exempt entities to participate in these solar tax credits: (1) direct pay option or (2) selling the tax credits to a third party. 

With the direct pay option, certain tax-exempt entities can choose to receive a cash payment from the Treasury in lieu of claiming a solar tax credit. While the Act has provisions to accelerate US manufacturing of solar components, it is anticipated that it may take several years for US manufacturing to ramp up to meet demand. The IRA tries to address that gap – a project that does not meet the domestic content requirements may claim the following percentages of the tax credit: 

• Construction begins before 2024: 100%
• Construction begins during 2024: 90%
• Construction begins during 2025: 85%
• Construction begins after 2025: 0%

And, 90% or 85% of a 30% ITC is still really good! 

In addition, domestic content waivers for receiving direct payment may be granted if: 

• Domestic products would increase the overall cost of the solar installation by more than 25%
• Satisfactory domestic products are not available

The Act includes a credit transfer provision, where certain tax-exempt entities can sell all or part of their tax credits to unrelated persons. The sale must be in cash. Additional guidance from the Treasury is needed before this option can be pursued. 

Go Solar!

The energy-related tax provisions of this historic legislation have provided an unprecedented economic opportunity for non-profits, state and local governments, and municipalities to go solar. If you would like to discuss how your organization might leverage these incentives to transit