New York Commercial Solar Incentives
Incentives can translate into significant savings for commercial solar installations.
New York state has an ambitious solar energy program, with policies to promote commercial solar investment. The distributed solar projects associated with expanding the State’s goal from 6 GW by 2025 to 10 GW by 2030 are expected to support private investment, reduce greenhouse gas emissions, bring savings to solar customers and off-takers, create jobs statewide, and generate more clean electricity.
In 2022, NY State Public Service Commission PSC recently approved funding to expand the NY-Sun Program with initial base incentives and various adders intended to ultimately support an additional 3.4 GW distributed solar by 2030. The State estimates these new incentives and planned expansion of the NY-Sun program will provide about 450 billion in incentives across the state with targeted areas such as canopies, community solar, and landfill/brownfield solar development areas.
NY Sun Commercial Industrial Program
NY-Sun offers financial incentives to install solar panels for large commercial and industrial projects. NYSERDA offers performance-based incentives for the installation of new grid-connected solar electric systems based on size criteria that offset the use of grid-supplied electricity. Solar electric systems must be sized primarily to serve project load. The incentives are based on Megawatt (MW) Block designs that allocate incremental MW targets to certain regions within New York State. The incentives decrease over time for each target region until they are no longer offered there. Additional incentives are available for strategic locations, systems with integrated energy storage, parking canopy solar, community solar, landfills/brownfield solar, and solar projects with comprehensive energy efficiency.
Through New York’s Community Distributed Generation (CDG) program, also referred to as community solar, residents and businesses can subscribe to receive bill credits virtually from a solar installation within their local utility service territory. Community solar benefits consumers that may be otherwise excluded from the solar market (renters, shaded property, lack of roof control). Subscribers to community solar programs benefit with annual savings on their utility bills. Property owners can sell or lease their property to solar developers who install and maintain the community solar farms anywhere in New York, regardless of the area’s previous function.
New York Remote Crediting
Currently, New York utilizes remote crediting to earn value with solar through behind the meter solar installations that share bill credits with offtakers within the same local distribution area. Given New York State’s high cost of electricity with respect to other states, the remote crediting program is particularly valuable to businesses. In addition to New York’s electric utility incentives for solar, there are also federal incentives.
The New York State Public Service Commission (PSC) established the Value of Distributed Energy Resources (VDER) or the Value Stack — a mechanism to compensate for energy created by distributed energy resources (DERs), like solar. The Value Stack compensates projects based on when and where they provide electricity to the grid, and compensation is in the form of bill credits. Commercial solar installations in New York State are compensated for their solar generation. Based on a variety of factors (location, demand reduction, system size and environmental benefits) every kilowatt-hour of production is fed onto the grid and businesses receive a monetary credit to reduce their monthly electric costs.
How to Capture Commercial Solar Incentives
Although California hasn’t offered state-specific rebates or incentives for commercial solar panel installations in some time, there are still a number of incentives available to business owners that make solar a particularly appealing investment. From federal tax incentives to accelerated depreciation schedules, business owners are able to recoup upwards of 50% of the total cost of the solar energy system assuming they have the tax appetite to take advantage.
Business Energy Investment Energy Tax Credit
Although it has a different official name, this tax credit works exactly the same way that the residential tax credit does. Business owners are able to earn a 30% tax credit from the federal government and the amount of the tax credit is determined entirely by the total cost of the system. The biggest difference is the average size of the credit available…
Business Energy Investment Energy Tax Credit
Although it has a different official name, this tax credit works exactly the same way that the residential tax credit does. Business owners are able to earn a 30% tax credit from the federal government and the amount of the tax credit is determined entirely by the total cost of the solar energy system. The biggest difference is the average size of the credit available.
For example, in residential solar, the average total cost of a solar system is around 25,000. A homeowner who buys a system for 25,000 is thus eligible for a 7,500 tax credit. By contrast, the average cost of a small commercial solar panel installation is usually around 250,000. This means that business owners, on average, earn a tax credit worth 75,000. Now, it stands to reason that for-profit companies will have larger tax liabilities than homeowners, so these numbers shouldn’t be all that surprising but the large numbers make for large savings and so you can start to understand why a business would be wise to consider solar panels.
This incentive really only makes sense with for-profit companies with large tax appetites as non-profits and other non-taxable entities will not be able to realize the additional savings. Also, with commercial solar panel installations, leases and PPAs are still the most popular solar energy financing option and it is important to note that businesses who enter into a lease agreement or PPA are ineligible to take advantage of the tax credit. The credit will instead go to the lessor.
In most cases, the tax credit can be a straightforward process but make sure to check with your accountant and CPA to be sure your business is eligible for the tax credit.
Federal and State Tax Depreciation
Depreciation is one piece of the tax code that is hugely beneficial for the growth of solar and also the available savings for businesses and business owners. Essentially, the tax code allows business owners to take a tax deduction for the recovery of the cost of tangible property over the life of the property…
Federal and State Tax Depreciation
Depreciation is one piece of the tax code that is hugely beneficial for the growth of solar and also the available savings for businesses and business owners. Essentially, the tax code allows business owners to take a tax deduction for the recovery of the cost of tangible property over the life of the property. The most common method for depreciation is called the Modified Cost Recovery System or MACRS. Under MACRS, for solar panel installations, the taxable basis of the equipment must be reduced by 50% of any federal tax credits associated with the system, which applies to the business investment tax credit explained above. The good news for business owners is that, thanks to the new tax bill, business owners are now able to depreciate 100% of the asset in Year 1.
Basically the new tax bill modifies bonus depreciation to allow 100% expensing for solar panels and other equipment that was installed after September of 2017 and before January of 2023. By increasing depreciation to 100 percent, the bill essentially allows eligible entities to deduct the entire allowable tax basis of the system in the first year of operation. Depending on the effective tax rate of the business, on a system that costs 400,000, the federal depreciation incentive can be worth more than 50,000.
State tax depreciation is not quite as quick in California. Under MACRS, California allows business owners to depreciate 100% of the asset over six years, which is still incredibly fast. On a the aforementioned 400,000 system, that incentive can be worth as much as 30,000.
Depreciation and its value can depend on a lot of different things and it is important for any business owner doing his/her due diligence to speak with a tax professional to understand the incentive in more detail. Tax rate is an important piece to the puzzle and only the business owner will be able to identify those exact rates and thus determine the value of the incentive.
Self-Generation Incentive Program (SGIP)
Batteries or “battery backup” systems are beginning to take hold in the residential space, but they remain much more valuable and worthwhile in the commercial space. While batteries are a bit of an unnecessary luxury…
Self-Generation Incentive Program (SGIP)
Batteries or “battery backup” systems are beginning to take hold in the residential space, but they remain much more valuable and worthwhile in the commercial space. While batteries are a bit of an unnecessary luxury still in residential solar, batteries for commercial solar can help businesses and business owners save a lot of money on their demand charges. The problem is that batteries are still quite expensive and on larger solar panel installations, in order to maximize the benefit of the batteries, you need a lot of them. The good news is that there is still a rebate available for energy storage in California.
The California Public Utilities Commission that set aside money to incentivize “existing, new, and emerging distributed energy resources” and that program is SGIP. Now, there are a number of factors at play when determining the value of that rebate. It can depend on the size of the project, the utility in question, how much of the funding has already been allocated and the number of batteries as well.
For more information on the value of the energy storage rebate in California, follow along here as the program is updated regularly.
Los Angeles Department of Water and Power Solar Incentive Program
Batteries or “battery backup” systems are beginning to take hold in the residential space, but they remain much more valuable and worthwhile in the commercial space. While batteries are a bit of an unnecessary luxury…
How to Get Started with Solar Panels on Your Farm
Now that you know how solar might have a positive impact your farm finances, you can start considering how you might go about your clean energy journey. Here’s something to consider, though. You may be reducing your energy costs, but solar panels can be a significant financial investment initially. So how can a rural small business get financial assistance to make the switch possible?
Vertical
Vertical solar panel installation is one of the newest advents in agrivoltaic farming. Installing the solar panels vertically saves space so it may be a great option for smaller farms or farmers with little farmland available. Vertical solar farming can even save water lost to evaporation and is simpler to install because you don’t need to build elevated platforms to mount your panels on. Usually, solar panels need to be installed facing south but since vertical soar panels are two-sided they can faced in just about any direction and still be efficient.
Space efficiency: High
Energy output: High
Installation difficulty: Moderate
Growing Crops Under Panels and Raising Livestock
Vertical paneling isn’t the only way to maximize your farmland. Growing crops under solar panels is a great way to take advantage of the shade provided by conventional solar panels. This is especially advantageous for farmers who grow salad greens, raspberries, mint and other shade-tolerant produce. Growing crops under panels also helps reduce water use and may increase your yield.
Using land under and around solar panels for grazing is called “solar pasture.” While this may seem simple there are a few considerations to keep in mind. You’ll need to be strategic about what forage mixes can both grow around your panels and nourish your livestock. You should also install your panels in a livestock-friendly way. Got sheep? Make sure any emergency shutdown buttons on the panels mounts are not reachable. Cattle? If your bovine tend to stamped make sure your panels are installed high enough so they don’t knock down and stomp on them.
Space efficiency: High
Energy output: Moderate
Installation difficulty: Moderate
Cost: Moderate
Growing Row Crops
Similar to growing crops under solar panels, growing row crops is both possible and beneficial for your operation. When growing row crops, you can install your solar panels in a rows as well. The lower to the ground, the more shade your panel will provide to your crops. If you need full sun to grow your watermelon, corn or tomatoes, consider installing your panels on a higher mount.
Space efficiency: Moderate
Energy output: Moderate
Installation difficulty: Easy
Greenhouse, Barn or Residence
Much like conventional solar paneling for homes, you can take advantage of extra roof space by installing solar panels on the roof your greenhouse, barn or residence. The energy must be used for agricultural business purposes to qualify for REAP grants.
Space efficiency: Moderate
Energy output: Moderate
Installation difficulty: Easy
Solar Panel Ownership Basics
There are two ways to think about installing panels: Direct ownership or third-party ownership.
If you opt for third-party ownership, you’ll work with a solar company or group of investors to get panels installed on your land. However, the panels aren’t yours so the company or group will get the tax credits or any federal funding and you’ll also pay them for electricity produced by the solar system. Third-party ownership isn’t available in every U.S. state and island, so you’d also need to check if it’s available in your locality. The upside: you probably won’t pay a dime for installation or operation.
With direct ownership, you own the panels outright and the energy that comes from them. Even if you took out a loan to buy the panels, you’ll be able to take advantage of the tax incentives and government funding programs available to solar farmers.
But are there ways to install solar panels without needing a loan from the bank or financing from a solar company?
What is the Rural Energy for America Program (REAP)?
If you’re looking to fund and install solar panels on your farm, making energy efficient improvements can boost your profitability. REAP grants that help you switch to solar power can seem complicated and time consuming. Additionally, applications are narrative based, making them writing and time intensive.
Some farmers choose to hire a grant writer to simplify this process. However, if you prefer to write your grant on your own, a your personal Farmer Success Advisor can offer support and guidance complementary with your FarmRaise Premium account.
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Net Metering
Net metering allows eligible solar system owners to offset their electric bills by returning their excess solar electricity to the power grid. When you participate in this solar program, your utility company fits your system with a meter. When the meter spins forward, you’re consuming energy from your utility company. When it spins backward, you’re using energy your solar system generates. If you use more power from generated solar electricity than from your utility company, you’ll receive a monetary credit on your electric bill. This system helps you manage the costs of solar installation and maintenance.
New York State first passed a net metering law for solar PV systems in 1997. The Legislature has expanded the law to cover other forms of renewable energy, but it still includes the solar industry. Solar programs in New York have been a priority for a long time, and this incentive is still here to offset your maintenance and installation costs.