Purchasing Options, Incentives and Rebates

Netting Tariff

Under the Netting Tariff option, energy generated by the renewable system is first used to offset the property’s electricity consumption. Any power production in excess of the building usage is sent back to the grid and measured via a bidirectional utility meter. At the end of each month, if more energy was produced by the system than consumed on site, the customer receives a credit on their bill that can be accrued and used in later months. This credit is termed a "tariff". Customers may also qualify for an incentive payment calculated based on the total production of the renewable system. These payments are termed "Renewable Energy Certificates (RECs)".

Buy-all Tariff

Under the Buy-All Tariff option, the solar building owner exports all electricity produced by their renewable energy project to the grid directly through a second meter without supplying power to their property. The Utility Company purchases all the generated clean energy at the Buy-All Tariff price while the customer continues to purchase all the energy for their property from the grid via the standard utility meter. This option is ideal for building owners with tenants that pay the electric bill, as the income from the solar PV system does not rely on savings on the bill.

Federal Income Tax Credit

The Investment Tax Credit (ITC) is currently a 30 percent federal tax credit claimed against the tax liability of commercial investors in solar energy property. The business that installs, develops and/or finances the project claims the ITC. A tax credit is a dollar-for-dollar reduction in the federal income taxes that a company would otherwise pay. The ITC is based on the amount of investment in solar property. The commercial ITC is currently equal to 30% of the basis that is invested in eligible solar property.

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Modified Accelerated Cost Recovery System (MACRS)

The U.S. tax code allows for a tax deduction for the recovery of the cost of tangible property over the useful life of the property. The MACRS depreciation is the current depreciation method for most property, including solar photovoltaic systems. Typically, the adjusted basis of a solar PV system after the ITC is depreciated on a 5-year depreciation schedule. As opposed to the ITC, MACRS is a tax deduction rather than a credit.

Inflation Reduction Act (IRA)

In addition to the new CT utility solar programs, the recent changes to the solar tax credit from the Inflation Reduction Act have significantly increased the amount of money you can make from your roof. Whether you pay the electric bill or have tenants that pay the bill, you as the building owner can generate an income from rooftop or ground mounted solar. Notably, the IRA increased the ITC from 26% to 30% and locked it at that rate through 2032. Also, ITC % bonuses are available for brownfield projects, low income housing, projects in distressed communities and various other factors. Our solar experts can walk you through all of the solar options available for your project.

Purchase Outright 

A building owner that has upfront capital and the tax liability to utilize the tax incentives may opt to purchase and own the system directly. This involves an upfront investment with a payback on that investment via the tax incentives, tariff income and REC income.

Commercial Property Assessed Clean Energy (CPACE)

A building owner that wishes to preserve their capital may be able to enjoy ownership through a $0 out of pocket loan through the CPACE program. Loan terms can be anywhere from 5 to 20 years and are often cashflow positive from the first year.

Power Purchase Agreement (PPA)

A PPA is a third-party ownership model in which a finance company purchases, owns and operates the solar PV system on a building owner’s property and the building owner agrees to purchase the energy produced from the system at a discounted rate. This option is ideal for non-profit and government entities which are not able to use the tax incentives available through direct ownership.

Roof/Property Lease 

This is another third-party ownership model in which a finance company purchases, owns and operates the solar PV system. However, under this model, the finance company sells the power produced to the utility company and pays the building owner a lease payment to allow access to the owner’s roof or land. This option is ideal for non-profit building owners which have tenants that pay the electric bill, as the income from the solar PV system does not rely on savings on the bill.