If you’re a business owner or energy manager in Pennsylvania, you probably don’t think of your state as a hub for alternative energy. You may be reluctant to explore solar programs in PA because you think investing in solar energy is discretionary spending that you aren’t prepared to commit to in the aftermath of a tumultuous couple of years. The truth is, businesses today simply can’t afford to ignore federally mandated carbon emissions regulations. In fact, there are many benefits to integrating solar energy into your corporate energy strategy – including federal tax credits. Solar also helps organizations lower energy costs, achieve greater budget certainty, offset carbon emissions, and meet sustainability goals. Plus, there are several solar programs in PA that offer incentives that you can incorporate into your overall energy strategy, making going solar more achievable now than ever before.
The Pennsylvania Public Utility Commission lists the available sources of renewable energy in the state as: solar, geothermal, wind, hydropower and biomass. Citing that the costs for owning and deploying a solar photovoltaic (PV) electric generating systems have declined significantly in the last few years, the site says, “Solar works just about everywhere. Simply put, if you can see the sun, those rays can be converted to electricity to power your home, business, even your car. Solar power even works on cloudy days, albeit less effectively than on sunny days. Nearly 15,000 Pennsylvanian’s have already installed solar at their homes and businesses and this number is rapidly rising.” site provides a Solar FAQs document for download on their website.
Financial Benefits and Incentives for Commercial Solar
Federal Investment Tax Credit (ITC)
A federal solar investment tax credit allows solar owners to deduct a percentage of their solar development costs from their tax bills. The ITC is a tax credit that can be claimed on federal corporate income taxes for a percentage of the cost of a solar photovoltaic (PV) system that is placed in service during the tax year. According to the Guide to the Federal Investment Tax Credit for Commercial Solar Photovoltaics to be eligible for a 30% ITC, a solar PV system must have commenced construction on or before December 31, 2019. The tax credit decreases to 26% for systems commencing construction in 2020, then down to 22% for systems commencing construction in 2021. For systems commencing construction in 2022 or thereafter, the ITC is 10%. Any PV system placed in service after 2023, regardless of when it commenced construction, can receive a maximum tax credit of 10%. If you’re considering commercial solar for your organization, 2021 is the year to start your project!
Federal Department of Agriculture Grants
For rural businesses, the United States Department of Agriculture gives grants and loans of up to 75% of a project’s costs. The program provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements. Agricultural producers may also apply for new energy efficient equipment and new system loans for agricultural production and processing.
PA State and Regional Solar Incentives
The Pennsylvania Department of Community and Economic Development provides a guide to the state’s Solar Energy Program (SEP). The SEP provides financial assistance in the form of grants and loan funds to promote the use of solar energy in Pennsylvania. The program is administered jointly by the Department of Community and Economic Development (DCED) and the Department of Environmental Protection (DEP) under the direction of the Commonwealth Financing Authority (CFA).
There are other regional incentives such as the Allegheny County Solar Program which allows businesses to finance their energy-saving projects through a voluntary assessment on the property. Essentially, a building improvement loan for energy conservation can be repaid through the company’s annual real estate tax bill throughout the life of a renewable energy project. Most solar installations, for example, last for 20-25 years.
There is also the likelihood that Pennsylvania will continue to increase the proportion of electricity that utilities are required to get from solar power.
Solar Power Purchase Agreements
Many organizations choose to leverage a Solar PPA to finance their solar project. A solar PPA is a financial agreement in which a developer arranges for the design, permitting, financing, and installation of a solar energy system on a customer’s property with no upfront capital costs to the customer. If your organization is considering a Solar PPA, it’s important to understand some key elements of the agreement. You can learn more about PPAs in this blog.
Getting Started with Solar Programs in PA
Not only is clean energy good for the planet, it also makes good business sense. Whether it’s a wind or solar energy project or buying renewable energy credits (RECs), renewables help to reduce costs and energy price volatility while offsetting carbon emissions and boosting public appeal. More businesses in Pennsylvania today are benefiting from solar energy. To learn more about how renewable energy creates business value by enabling sustainability and supporting an organization’s environmental, social and governance (ESG) criteria click here.
Renewable energy projects and sustainability planning can take time to put in place. Since there are financial incentives that depreciate over time, and new carbon reduction mandates with specific timelines and reporting requirements, it’s best to begin your solar or another renewable energy project as soon as possible.
Premier Power Solutions consultants are adept at assisting businesses with renewable energy projects and energy benchmarking. We are part of the NextEra Energy Inc. family of companies, the world’s largest producer of wind and solar energy. Our team is uniquely positioned to analyze, facilitate and execute your renewable energy project and ensure it is a cohesive fit with your overall energy strategy. As an unbiased team of energy consultants, we’re here to advocate for you and to help you achieve your business and sustainability goals.
The sooner you begin, the faster you’ll reap the rewards of renewable energy. Contact us to discuss your thoughts and concerns about incorporating renewable energy into your organization’s energy strategy.
Resources
U.S. Department of Energy: Guide to the Federal Investment Tax Credit for Commercial Solar Photovoltaics
U.S. Department of Agriculture: Rural Energy for America Program
Pennsylvania Department of Community and Economic Development: Solar Energy Program Guidelines
Pennsylvania Public Utility Commission: Renewable Energy
PA Public Utility Commission: Solar FAQs