Whether you use it to power computers in an office building or operate equipment at a manufacturing warehouse, every business needs electricity to run. But all that energy costs money, and as utility prices continue to rise, it’s only going to get more expensive to keep the lights on.
That’s why Massachusetts businesses should make 2021 the year they go solar. With a commercial solar energy system generating electricity for your business, you will no longer need to rely exclusively on the grid for power. As a result, you’ll be able to save significantly on your electric bills and could even eliminate them altogether. And the sooner you start on your commercial solar installation, the more money—and energy—you’ll be able to save.
The solar Investment Tax Credit (ITC), also referred to as the federal solar tax credit, is a major player when it comes to saving on commercial solar panel installation. The ITC allows businesses to reduce their federal tax liability by a percentage of their total commercial solar installation costs, leading to substantial savings.
At its inception, the ITC allowed businesses to claim a credit worth 30% of their total installation costs. That number has always been on a step-down schedule, and was set to drop down to 22% in 2021, and then again to 10% in 2022, where it would remain indefinitely. However, at the end of 2020, an ITC extension was pushed through.
After this extension, businesses will be able to claim a tax credit of 26% of their solar installation costs in 2021 and 2022. However, that number will drop to 22% in 2023 before being locked in at 10% for businesses from 2024 onward. Thanks to the extension, businesses have more time to take advantage of the solar tax credit in 2021 and the following years, helping to shorten payback period and increase their ROI.
To qualify for a specific tax rate percentage, your commercial solar project must have either commenced construction (started physical work of a significant nature) or met the 5% Safe Harbor rules (paid or incurred 5% or more of the total cost of the project in the year that construction begins) by December 31st of the year you’re claiming the tax credit. As long as continued progress is made each year, you then have until the fourth calendar year to complete the project.
The ITC isn’t the only incentive available to businesses that go solar in MA: there are additional incentives at both the local and federal levels, and you can maximize savings by taking advantage of them all in 2021.
SMART – Through the MA SMART solar incentive program, utility companies pay businesses a fixed rate per kWh of electricity that their solar panels produce for a duration of 10-20 years. The sooner you sign up, the higher your rate will be!
MACRS – The Modified Accelerated Cost Recovery System is a method of depreciation that allows businesses to recover some of the costs associated with commercial solar panel installation through annual tax deductions. Businesses have the option to either choose 100% bonus depreciation that can be monetized in year 1 or rolled into a standard 5-year depreciation schedule..
Net metering – Net metering allows solar users to send excess energy that their systems produce back to the grid in exchange for a credit. That credit can then be used to pay for the electricity you pull from the grid when your solar system is not producing electricity (when there is no sunlight). The sooner you get your solar system up and running, the sooner you’ll be able to start accumulating credits, and the more you’ll save or eliminate your electricity operating costs.
All of these incentives can help you generate income from your solar panel installation by shortening your ROI and payback period.
While monetary benefits may be the driving force behind the solar industry, the environmental impact of solar energy is equally important. As more businesses make the switch to solar, we move increasingly further away from our reliance on fossil fuels. This is great news for the world at large, and can shed a positive light on your business in the eyes of eco-conscious consumers, as you’ll be doing your part to help create a healthier and more sustainable future for us all.
What other reason could there be to transform your business with solar energy generation? You’ll also be supporting a growing clean energy industry here in Massachusetts. Just in the last two years, Massachusetts moved up the ranks from 19th to 8th in the nation for solar generation. Investing in solar for your Massachusetts-based business means you’ll be supporting an economic recovery at the local level through clean energy jobs and infrastructure.
If you’re thinking about having commercial solar panels installed at your business, you probably have a million questions, like “how much do solar panels cost?” and “how much will they help me save?” Partnering with a trusted commercial solar provider is the first step in getting these questions answered so that you can move forward with your solar journey confidently.
Boston Solar is a 100% locally owned and operated solar company that understands the needs and concerns of Massachusetts businesses, because we are a Massachusetts business! Our commercial solar team can answer your questions, recommend the best commercial solar energy system for your business, and help you qualify for as many commercial solar rebates and incentives as possible, like the ITC and the SMART solar Massachusetts program.
Unlike many other commercial solar companies that have one-size-fits-all solar panels for sale, we take a personalized approach and will set you up with a custom system that meets your businesses unique energy needs. With more than 4,400 installations across the state, we’re one of the best solar companies in Massachusetts, and we would love to help you get started with a free commercial solar consultation. Wondering what solar panels might look like on your business? Check out some of our recent commercial solar panel installations!
Ready to invest in commercial solar for your business in 2021? Boston Solar is here to help! Call 617-858-1645 or contact us here to schedule a free consultation.