Tax credits, Grants and Incentives Encourage Investment in Clean Energy

The sun and wind are free in their natural state; but the equipment and technology needed to convert that energy into electricity or heat can be costly. The U.S. government offers financing resources and incentives to promote clean energy development. Because solar and other renewable energy systems do not emit harmful pollutants, they help protect the environment and reduce U.S. reliance on imported fuels.

Businesses and residents may take a closer look at alternative energy products and services, thanks to a variety of tax credits, rebates, loans and incentives offered by government agencies and utilities.

Thirty-percent solar investment tax credit (ITC) has economic advantages

A 30-percent tax credit is a popular financial incentive for installing solar energy systems in one’s home or place of business. Since 2006, residential and commercial properties have been benefitting from extensions to the solar investment tax credit (ITC), which can be applied to projects through 2021.

The solar ITC extends the 30-percent tax credits through the end of 2019; then drops the credit to 26 percent in 2020; 22 percent in 2021; and then permanently to 10 percent for commercial projects and no further credit for residential projects. Business owners who commence construction on their projects before Dec. 31, 2021, can claim the larger credit, provided the project is in service before the end of 2023.

According to the Solar Energy Industries Association, “The recent ITC extension is expected to nearly quadruple solar deployment by the end of 2020 while doubling U.S. solar employment and spurring $140 billion in economic activity.”

“The tax credit has been a beneficial mechanism to prompt solar innovation and installation. With many small businesses capitalizing on clean energy products and services, the economic impact may be as significant as the impact on climate stability,” said Larry Pearce, Crestmark executive vice president and Joint Ventures Group president.

“As Crestmark continues to grow its services to businesses involved in renewable energy, the certainty provided by investment tax credits is critical. Businesses and investors want assurances and risk reduction as they launch new energy services and invest in innovations,” Pearce said. “Having these credits in place can put reluctant business owners at ease.”

Business energy investment tax credit (ITC) provides incentive for renewable technologies

Although some parts of the bill have expired, there are still potential benefits from the federal business energy investment tax credit (ITC). The ITC applies a 30-percent rebate to solar, fuel cells and wind technology; a 10-percent rebate to geothermal electric technologies; and a sliding 24-12-percent rebate for large wind.

The legislation, originally signed in 2015, has been extended in some areas, and offers a gradual step-down of credits between 2019 and 2022. Some eligible technologies have already expired, but those remaining include solar photovoltaic (PV) cells, solar water heating, solar space heating and cooling, solar process heat, geothermal electric and large wind technologies.

A longstanding innovator of creative financial solutions, Crestmark offers many flexible programs to meet the needs of business owners. For instance, Crestmark funds Alternative Energy Development Group (AEDG) LLC, and an affiliated company SolarSense LLC, headquartered in Berwyn, Pennsylvania, with a combination of sale and leaseback transactions. Crestmark provides sale-leaseback financing for several 500kW (AC) solar projects to deliver clean, reliable and renewable energy to the state of Vermont on a power purchase agreement (PPA) basis.

“In this agreement, Crestmark owns the solar panels and leases them back to the developer. Some companies don’t have enough taxable income to take advantage of the 30 percent credit. With our support, the tax credit is utilized for maximum benefit to all parties involved,” Pearce said.

Small-business loans and vouchers continue to advance growth

Small businesses receive special consideration from the U.S. Small Business Administration (SBA) through its SBA loan programs. These government-guaranteed options are available up to $750,000 for products or services with energy-efficient features.

Additionally, the U.S. Department of Energy’s (DOE) National Renewable Energy Laboratory (NREL) provides support through the DOE’s Small Business Vouchers (SBV) program, which encourages advanced energy innovations and technologies. To date, the SBV has built partnerships among 114 small businesses and corresponding national labs that help overcome technical challenges and bring energy innovations to market more quickly and efficiently.

The U.S. Department of Agriculture (USDA) Rural Energy for America Program (REAP) helps energy developers purchase, install and construct renewable energy system. This funding resource supports farmers, ranchers, business owners and other entities to incorporate renewable energy into their operations, thereby reducing energy use and cost and improving the bottom line.

Grants, loan guarantees and financial assistance may also be awarded through the U.S. Department of Housing and Urban Development, and the U.S. Environmental Protection Agency.

Crestmark experts can help companies maximize their renewable energy efforts and incentives by funding them properly. As technology advances, new benefits are continually made to the economy. With a growing client-base of businesses producing goods and services related to solar, wind and clean energy, Crestmark is helping to grow and launch small businesses who have big ideas for the planet.

Call us at 888-999-8050.