Financial Services

General Questions

What are the benefits of renewable energy credits?

The American Recovery and Reinvestment Act of 2009 (ARRA) encourages the development and operation of renewable energy in the United States and included nearly $79 billion for renewable energy and energy efficiency. Under current tax laws, incentives are available for wind, solar, geothermal, biomass and other sources in the form of grants, rebates, loans or tax credits. Generally, federal and state tax credits provide powerful benefits to both developers and institutional investors alike. These incentives serve developers by lowering their out-of-pocket development costs when they monetize, or sell their tax credits to investors. Investors that purchase tax credits are provided competitive and socially-responsible investment opportunities that reduce or eliminate their federal or state tax liabilities. Although a very brief overview, this forms the basics of government incentives for private sector investment in green solutions and sustainability.

Where can I find more information about federal and state incentives available for my renewable installation?

DSIRE – Database of State Incentives for Renewables & Effficieny is a comprehensive source of information on state, federal, local, and utility incentives and policies that support renewable energy and energy efficiency. Established in 1995 and funded by the U.S. Department of Energy, DSIRE is an ongoing project of the North Carolina Solar Center and the Interstate Renewable Energy Council, Inc.

How large is the solar energy marketplace?

Solar power is the fastest growing energy sector in the US with installed capacity now in excess of 3.65 GW. By 2014, the Solar Energies Industry Association expects the US to become the largest solar market in the world.

What is the solar investment tax credit, or ITC?

The solar investment tax credit (ITC) reduces the tax liability for individuals or businesses that purchase qualifying solar energy technologies. As a stable, multi-year incentive, the ITC encourages private sector investment in solar manufacturing and solar project construction. The solar ITC is the cornerstone of continued growth of solar energy in the United States. In the U.S. tax code, the ITC is a 30 percent tax credit for solar systems on residential (under Section 25D) and commercial (under Section 48) properties. Under current law, the ITC will remain in effect through December 31, 2016.

What is the history of the solar investment tax credit?

The Energy Policy Act of 2005 (P.L. 109-58) created a 30 percent investment tax credit (ITC) for commercial and residential solar energy systems that applied from January 1, 2006 through December 31, 2007. These credits were extended for one additional year in December 2006 by the Tax Relief and Health Care Act of 2006 (P.L. 109-432). In 2007, global investment in clean energy topped $100 billion, with solar energy as the leading clean energy technology for venture capital and private equity investment. The solar tax credits helped to create unprecedented growth in the U.S. solar industry from 2006-2007. The amount of solar electric capacity installed in 2007 was double the capacity installed in 2006. The Emergency Economic Stabilization Act of 2008 (P.L. 110-343) included an eight-year extension of the commercial and residential solar ITC, eliminated the monetary cap for residential solar electric installations, and permitted utilities and companies paying the alternative minimum tax (AMT) to qualify for the credit. In 2009, under the American Recovery and Reinvestment Act (P.L. 111-5), the $2,000 credit cap on solar hot water installations was eliminated.

For more information, please contact:

Devin Sanderson   (727) 233-0563  dsanderson@CSGfirst.com