Commercial & Industrial Solar Energy Services

Serving Missouri & Northwest Arkansas

At Solera Energy, we are committed to bringing clean, renewable energy to businesses throughout Missouri and Northwest Arkansas. For the past 12 years, we have completed more solar panel installations than all other companies in the area combined, and we’re just getting started.

Our team thrives on creating positive change in the lives of our customers and our community by providing the opportunity to efficiently and affordably own your power. Tapping into clean, renewable solar energy to power your office or commercial space will not only save you money, but it will increase the overall value of your business property.

Interested in securing commercial solar energy services for your Missouri or Northwest Arkansas business? Call our team at (866) 346-2009 or schedule your free consultation online today!

Get Started With Solera Energy Today

Why Go Solar?

What Does “Own Your Power” Really Mean?

The answer is simple: You want to “own your power” for the same reason you want to own your home. When you own your home your monthly mortgage payment goes toward building a long-term asset that increases in value over time. But when you rent a house that monthly rent payment is gone forever – you never get it back. The same is true when you pay your monthly utility bill to the utility company – that money is gone forever. With solar, however, you replace all or most of your monthly utility bill with solar – an asset that immediately increases the value of your buildings or land and continues to pay above-market financial returns for years into the future. Many of our commercial and industrial customers save thousands or even millions over the life of their solar investment.

Top 10 Reasons to Go Solar

Need more of a nudge to make the switch to purely solar-powered energy for your Missouri or Northwest Arkansas commercial property? Consider these 10 reasons to go solar:

  1. Above-market returns compared to stocks and bonds.
  2. Saves your business money.
  3. Increases the value of your business property.
  4. Is a secure investment.
  5. Take advantage of federal tax credit and depreciation benefits.
  6. Low payback period.
  7. Receive up to 60% of your investment back within 12 months.
  8. Warrantied performance on equipment.
  9. Avoid ever-increasing energy costs for the utility.
  10. Preserves the environment by significantly reducing your carbon footprint.

If you’re ready to reduce your carbon footprint by replacing your business’s traditional electricity source with clean, renewable solar power, contact Solera Energy at (866) 346-2009 to set up a free consultation today!


Why Go Solera?

Solera Energy LLC is the established industry leader in solar investment strategies and long-term value creation for its business clientele. Solera’s success in attracting talented professionals from the legal, accounting, investment, engineering, logistics, electrical design, real estate development, and solar technology fields has been the catalyst for creating a truly unique company that’s highly customer-focused and consistently delivers above-market returns to business owners using customized solar investment strategies.

Solera first seeks to understand its client’s long-term goals, then utilizes a proprietary analytical process to assess the client’s investment and energy needs, and works with them to develop and implement turnkey solar energy solutions to enhance the value and operational efficiency of the client’s business.

Five Reasons to Choose Solera Energy

  1. The right design and engineering team – Solera’s design and engineering team is there to customize your power plant to your specific business or organizational needs.
  2. The right equipment – Solera’s Platinum partner status with its solar equipment providers is there to make sure you have the right equipment.
  3. The right construction team – Solera’s track record and experience with utility-scale, commercial and industrial, and residential solar is there to make sure you have the right construction team.
  4. The right knowledge about regulatory requirements and solar incentives – Solera’s team of seasoned professionals is there to make sure your power plant complies with all regulatory requirements and that you are receiving the incentives you deserve.
  5. The right financial structure – Solera’s team of professionals is there to make sure you are using the right transaction structure for your unique business, farm, municipality, or not-for-profit.

The professional Solera team is experienced with sales transactions, lease transactions, power purchase agreements, and solar service agreements. Depending on your unique business or not-for-profit circumstances, choosing the right financial structure is key to implementing a successful solar investment strategy. Solera will work with you diligently to ensure the structure you are using is right for you and is designed to optimize your return on investment and improve your operational efficiency through energy savings.

Get started with your commercial solar services today by calling (866) 346-2009 or contact the Solera team online!



How It Works – Going Solar in Six Steps

Solera Energy takes a consultative approach with you and your business to determine the right solution for your specific needs. Our goal is to provide your business with a valuable investment asset while consuming minimal time and effort on the part of your management team. Solera Energy has a simple six-step process designed to minimize the time commitment from you while delivering a turnkey, state-of-the-art solar energy system that will last for many years to come. Note: Please have your last 12 months of utility bills available at the initial meeting.

Step #1: Initial Meeting for Business Needs Assessment & Information Gathering (Estimated time – 1 hour)

  • Gain an understanding of management’s business operations, investment goals, and income tax situation.
  • Educate management on the financial benefits of solar.
  • Obtain last 12 months of utility bills (please have these available at the initial meeting).
  • Obtain building’s physical addresses.
  • Determine if there’s available land for use.
  • Conduct a site survey if time allows.

Step #2: Perform Site Survey at Facility Location (Estimated time – 1 hour)

  • Electrical and engineering staff visit site.
  • Obtain pictures of existing electrical equipment.
  • Obtain video of electrical and utility interconnection on property.
  • Determine type of existing electrical system.
  • Take measurements of roof and/or available land.

Step #3: Preliminary Energy Plan & Investment Analysis (Estimated time – 2 weeks)

  • Determine layout of power plant at facility site.
  • Perform energy usage and production analysis.
  • Develop cost/benefit and investment analysis.
  • Identify available tax and non-tax incentives.
  • Assess benefits from federal income tax credit and depreciation.
  • Determine if utility company rebates or federal and/or state grants are available.
  • Determine appropriate transaction structure – purchase, lease, PPA, SSA, etc.

*Step #3 is performed by Solera’s NABCEP-certified staff and professional engineering and design team.

Step #4: Presentation of Energy Plan & Investment Analysis to Management (Estimated time – 1 hour)

  • Present visual layout of solar equipment on site.
  • Present detailed financial analysis including:
    • Annual energy savings
    • Return on investment
    • Internal rate of return
    • Payback period
    • Estimated impact of income tax benefits and incentives
  • Present types of solar equipment selected.
  • Review equipment warranties.

Step #5: Engineering, Procurement & Construction (EPC) Contract Finalized (Estimated time – 2 weeks)

  • Final engineering and design completed.
  • Finalize equipment selection.
  • Equipment delivery and construction timelines completed.
  • Engineering, Procurement, and Construction (EPC) contract finalized.

Step #6: Project Construction Through Permission to Operate (Estimated time – 4 to 8 weeks)

  • Permitting and licensing completed.
  • Net metering contracts completed.
  • Equipment ordering and delivery completed.
  • Equipment installation completed.
  • Installation of monitoring equipment and testing completed.
  • Commissioning and Permission to Operate completed and supervised by Solera Energy.
  • Equipment installation completed.
  • Installation of monitoring equipment and testing completed.

Get started with your business’s clean, renewable solar panel installation today by calling (866) 346-2009 or scheduling a FREE consultation online!



Solar Financing

There are several ways to finance your home’s solar power upgrade. The most common financing techniques include:

  1. Cash Purchase
  2. Bank or Lender Financing
  3. Lease
  4. Power Purchase Agreement
  5. Solar Services Agreement

The right financing structure is critical for a successful solar investment. Solera Energy’s team is experienced with all aspects of solar financing. Solera Energy has the experience and in-depth knowledge to work with you to ensure you are choosing the right structure to optimize your return on investment and achieve your business goals. The Solera team also has the knowledge to work hand in hand with your income tax advisors, attorneys, bankers, and other professional business advisors you may use.

Learn more about our commercial solar financing options by reaching out to our team today! Call us at (866) 346-2009 or contact us online to get started!


Frequently Asked Questions About Commercial Solar Panels

When it comes to making the positive change to renewable, clean energy to power your commercial property, we understand there is a lot to consider. We’ve put together some of the most common questions we receive from business and property owners about making the switch to solar.

How long do solar panels last?

Solar panels have advanced to the point where they can last many, many years. The consensus is that newer panels will perform for at least 40 years and perhaps even beyond 50 years.

How many homes can be powered by a megawatt of energy?

The national average is approximately 164.

How much will solar energy from a solar facility vary on a year-to-year basis?

Weather is difficult to predict over the short term. Most estimates are that power production will not vary more than 5% from projected production on an annualized basis. Production projections should average out over time. Most projects will have months that exceed projections and months, or years, where production is more or less than projected.

How will I know how well the project is performing?

The project is monitored at least monthly by Solera Energy to ensure all components are working properly. You will also have access to software that allows you to monitor the performance of the system in real time.

Are the main components of a Solera solar system covered by warranties?

Yes. The panels and inverters, the two key components of the system, are covered by manufacturer’s warranties. Solera will review the warranties on selected products with you prior to implementation.

Can hail break solar panels?

Yes, but it is rare. It would require at least golf ball-sized hail. The panels are usually warranted to withstand golf ball-sized hail and are insured against breakage from weather in general and hail specifically.

Should I check with my insurance agent to make sure my solar system is insured?

Yes. Some insurance policies will already cover improvements made to your property. However, a new solar system is a very valuable asset designed to last for years so we highly recommend that you contact your insurance agent/broker to make sure you have the coverages you need.

How is power measured?

Power is measured in kilowatts or megawatts. A 1 MW power plant produces 1,000 kilowatts of power if it is operating at full capacity. When someone says 1 MW, they typically mean the number of kilowatts or megawatts being transferred to the grid. It is a “stream” of power and it will fluctuate somewhat, even under ideal conditions.

What is the difference between kilowatts (kW) and megawatts (MW)?

A megawatt is 1,000 kilowatts. A kilowatt is equal to 1,000 watts. A megawatt is equal to 1,000,000 watts.

What is meant by the degradation rate?

Solar panels slowly lose their efficiency over time and the rate of loss is referred to as the degradation rate. The rate is estimated to be less than .5% per year and most panels are warranted to produce 80% of their original power at year 25.

Will a solar facility produce power if it is cloudy or foggy?

Yes. Solar projects will produce power at a reduced level (10%-25%) on very foggy or cloudy days. All that is required is some level of ambient light.



Tax Credit Questions & Answers



What is the federal solar investment tax credit (ITC)?

The solar ITC credit for 2020 is equal to 26% of the cost of eligible solar property installed during the year and is a dollar-for-dollar offset against the owner’s federal income tax liability. For example, claiming a $1,000 federal tax credit reduces your federal income taxes due by $1,000. The solar ITC falls to 22% in 2021.

What is eligible solar property?

Eligible solar property includes solar PV panels, racking, wiring, curtain walls, step-up transformers, circuit breakers, surge arrestors, power conditioning equipment, transfer equipment, energy storage devices, installation costs, sales/use tax on equipment, other equipment and supplies necessary for the solar system to operate, and related solar development and construction costs.

Who is eligible for the federal solar ITC?

Businesses that pay for solar panel installation where the power from the panels is used by the business can claim the solar ITC, so long as the business, or its owners in the case of pass-through entities, have the federal income tax liability in the year of installation. The business must be the owner of the solar panel system to qualify for the solar ITC. If you choose to get solar power through a solar PPA, solar SSA, or solar lease, you will typically not be eligible for the solar ITC because you do not actually own the solar panel system.

What if I cannot use all the solar ITC in the year of installation?

The solar ITC is a nonrefundable tax credit, which means you will not get a tax refund for the solar ITC that exceeds your income tax liability for the year. However, you can carryback the ITC one year and carryover the ITC 20 years to obtain a tax refund of your federal tax liability in those years.

In what year do I get to claim the federal solar ITC?

The solar ITC is generated at the date the solar system is “placed in service” and must first be claimed in that income tax year before being carried back or carried forward. This generally means that the ITC must first be claimed for the year in which the solar system becomes operational.

What if my business is taxed as a C-corporation?

The solar ITC is claimed by the C-corporation and does not pass through to the C-corporation shareholders. We recommend consulting with your tax advisor to ensure you are maximizing the federal income tax benefits available to you.

What if my business is taxed as a pass-through income tax entity such as a partnership or S-corporation?

Solar credits generated at the placed-in-service date will pass through to the owners of the partnership or S-corporation as of this date. We recommend consulting with your tax advisor to ensure you are maximizing the federal income tax benefits available to you.

Can the solar ITC offset alternative minimum tax (AMT)?

Yes. The solar ITC is a “specified credit” and can offset both regular income tax and AMT.

Can the business claim depreciation on the solar system?

Yes. The depreciable basis of the solar system is the actual cost of the eligible solar property minus 50% of the solar ITC generated. For example, assume that in 2020 the business installs eligible solar property costing $100,000. The depreciable basis of the solar system is $87,000 ($100,000 cost minus $13,000, which is $26,000 solar ITC x 50%).

How is the eligible basis of the solar system depreciated?

The eligible solar property is depreciated over 5 years using MACRS depreciation rates for federal income tax purposes. Generally, the MACRS depreciation rates are as follows:

  • Year 1 – 20%
  • Year 2 – 32%
  • Year 3 – 19.2%
  • Year 4 – 11.52%
  • Year 5 – 11.52%
  • Year 6 – 5.76%

Is a new solar system eligible for bonus depreciation?

Yes, if the solar system is placed in service on or before December 31, 2022.

How do the passive activity rules affect my ability to recognize the benefits from the federal solar ITC and depreciation of the solar system?

For businesses that are pass-through entities for federal income tax purposes (for example, partnerships and S-corporations), the owners of the business that “materially participate” may generally claim the credits and depreciation without limitation by the passive activity rules. Owners for which the business is considered a “passive activity” for federal income tax purposes may be limited in their ability to claim the credit and depreciation deductions. Generally, any activity involving the conduct of any trade or business in which a taxpayer does not materially participate, and most rental activities, are passive activities. The passive activity tax rules could cause owners that do not “materially participate” in the business to have solar ITC and losses from depreciation suspended and carried forward until such time the credits and losses can be claimed. We recommend contacting your tax advisor to determine the impact, if any, the passive activity rules may have on your specific circumstances.

What percentage of my income tax can be offset with solar tax credits?

Solar credits are “specified credits,” meaning they can offset both regular federal income tax and alternative minimum tax. This generally means that solar credits can offset up to 100% of your federal income tax liability.

What if I sell the solar system, building, or land on which the solar system sits within 5 years of installation of the solar system?

Under the tax rules you are eligible to claim 100% of the solar ITC in the year the solar system is placed into service. To avoid recapture of your solar ITC, you must continue to own and operate your solar system for a period of 5 years. Once you have owned and operated the system for 5 years, recapture goes completely away. If you sell or otherwise dispose of your solar system within 5 years, then a portion of the ITC claimed in the placed-in-service year will be recaptured. The amount of potential ITC recapture goes away 20% per year for each year you own and operate the system—20% of potential recapture goes away after year 1, a total of 40% of potential recapture goes away after year 2, a total of 60% of potential recapture goes away after year 3, a total of 80% of potential recapture goes away after year 4, and 100% of potential recapture goes away after year 5. For example, assume in 2020 you install a solar system costing $100,000 and claim a solar ITC of $26,000 on your 2020 federal income tax return. If you were to sell the solar system after owning it for only 3 years, you would be subject to ITC recapture in the amount of $10,400 ($26,000 x 40% recapture percentage).

More questions? We’d love to discuss your Missouri and Northwest Arkansas commercial solar energy needs and inquiries! Give us a call at (866) 346-2009 or schedule your FREE consultation online today!

Serving Missouri & Northwest Arkansas

At Solera Energy, we are committed to bringing clean, renewable energy to businesses throughout Missouri and Northwest Arkansas. For the past 12 years, we have completed more solar panel installations than all other companies in the area combined, and we’re just getting started.

Our team thrives on creating positive change in the lives of our customers and our community by providing the opportunity to efficiently and affordably own your power. Tapping into clean, renewable solar energy to power your office or commercial space will not only save you money, but it will increase the overall value of your business property.

Interested in securing commercial solar energy services for your Missouri or Northwest Arkansas business? Call our team at (866) 346-2009 or schedule your free consultation online today!

Get Started With Solera Energy Today

Why Go Solar?

What Does “Own Your Power” Really Mean?

The answer is simple: You want to “own your power” for the same reason you want to own your home. When you own your home your monthly mortgage payment goes toward building a long-term asset that increases in value over time. But when you rent a house that monthly rent payment is gone forever – you never get it back. The same is true when you pay your monthly utility bill to the utility company – that money is gone forever. With solar, however, you replace all or most of your monthly utility bill with solar – an asset that immediately increases the value of your buildings or land and continues to pay above-market financial returns for years into the future. Many of our commercial and industrial customers save thousands or even millions over the life of their solar investment.

Top 10 Reasons to Go Solar

Need more of a nudge to make the switch to purely solar-powered energy for your Missouri or Northwest Arkansas commercial property? Consider these 10 reasons to go solar:

  1. Above-market returns compared to stocks and bonds.
  2. Saves your business money.
  3. Increases the value of your business property.
  4. Is a secure investment.
  5. Take advantage of federal tax credit and depreciation benefits.
  6. Low payback period.
  7. Receive up to 60% of your investment back within 12 months.
  8. Warrantied performance on equipment.
  9. Avoid ever-increasing energy costs for the utility.
  10. Preserves the environment by significantly reducing your carbon footprint.

If you’re ready to reduce your carbon footprint by replacing your business’s traditional electricity source with clean, renewable solar power, contact Solera Energy at (866) 346-2009 to set up a free consultation today!


Why Go Solera?

Solera Energy LLC is the established industry leader in solar investment strategies and long-term value creation for its business clientele. Solera’s success in attracting talented professionals from the legal, accounting, investment, engineering, logistics, electrical design, real estate development, and solar technology fields has been the catalyst for creating a truly unique company that’s highly customer-focused and consistently delivers above-market returns to business owners using customized solar investment strategies.

Solera first seeks to understand its client’s long-term goals, then utilizes a proprietary analytical process to assess the client’s investment and energy needs, and works with them to develop and implement turnkey solar energy solutions to enhance the value and operational efficiency of the client’s business.

Five Reasons to Choose Solera Energy

  1. The right design and engineering team - Solera’s design and engineering team is there to customize your power plant to your specific business or organizational needs.
  2. The right equipment - Solera’s Platinum partner status with its solar equipment providers is there to make sure you have the right equipment.
  3. The right construction team - Solera’s track record and experience with utility-scale, commercial and industrial, and residential solar is there to make sure you have the right construction team.
  4. The right knowledge about regulatory requirements and solar incentives - Solera’s team of seasoned professionals is there to make sure your power plant complies with all regulatory requirements and that you are receiving the incentives you deserve.
  5. The right financial structure – Solera’s team of professionals is there to make sure you are using the right transaction structure for your unique business, farm, municipality, or not-for-profit.

The professional Solera team is experienced with sales transactions, lease transactions, power purchase agreements, and solar service agreements. Depending on your unique business or not-for-profit circumstances, choosing the right financial structure is key to implementing a successful solar investment strategy. Solera will work with you diligently to ensure the structure you are using is right for you and is designed to optimize your return on investment and improve your operational efficiency through energy savings.

Get started with your commercial solar services today by calling (866) 346-2009 or contact the Solera team online!



How It Works – Going Solar in Six Steps

Solera Energy takes a consultative approach with you and your business to determine the right solution for your specific needs. Our goal is to provide your business with a valuable investment asset while consuming minimal time and effort on the part of your management team. Solera Energy has a simple six-step process designed to minimize the time commitment from you while delivering a turnkey, state-of-the-art solar energy system that will last for many years to come. Note: Please have your last 12 months of utility bills available at the initial meeting.

Step #1: Initial Meeting for Business Needs Assessment & Information Gathering (Estimated time – 1 hour)

  • Gain an understanding of management’s business operations, investment goals, and income tax situation.
  • Educate management on the financial benefits of solar.
  • Obtain last 12 months of utility bills (please have these available at the initial meeting).
  • Obtain building’s physical addresses.
  • Determine if there’s available land for use.
  • Conduct a site survey if time allows.

Step #2: Perform Site Survey at Facility Location (Estimated time – 1 hour)

  • Electrical and engineering staff visit site.
  • Obtain pictures of existing electrical equipment.
  • Obtain video of electrical and utility interconnection on property.
  • Determine type of existing electrical system.
  • Take measurements of roof and/or available land.

Step #3: Preliminary Energy Plan & Investment Analysis (Estimated time – 2 weeks)

  • Determine layout of power plant at facility site.
  • Perform energy usage and production analysis.
  • Develop cost/benefit and investment analysis.
  • Identify available tax and non-tax incentives.
  • Assess benefits from federal income tax credit and depreciation.
  • Determine if utility company rebates or federal and/or state grants are available.
  • Determine appropriate transaction structure – purchase, lease, PPA, SSA, etc.

*Step #3 is performed by Solera’s NABCEP-certified staff and professional engineering and design team.

Step #4: Presentation of Energy Plan & Investment Analysis to Management (Estimated time – 1 hour)

  • Present visual layout of solar equipment on site.
  • Present detailed financial analysis including:
    • Annual energy savings
    • Return on investment
    • Internal rate of return
    • Payback period
    • Estimated impact of income tax benefits and incentives
  • Present types of solar equipment selected.
  • Review equipment warranties.

Step #5: Engineering, Procurement & Construction (EPC) Contract Finalized (Estimated time – 2 weeks)

  • Final engineering and design completed.
  • Finalize equipment selection.
  • Equipment delivery and construction timelines completed.
  • Engineering, Procurement, and Construction (EPC) contract finalized.

Step #6: Project Construction Through Permission to Operate (Estimated time – 4 to 8 weeks)

  • Permitting and licensing completed.
  • Net metering contracts completed.
  • Equipment ordering and delivery completed.
  • Equipment installation completed.
  • Installation of monitoring equipment and testing completed.
  • Commissioning and Permission to Operate completed and supervised by Solera Energy.
  • Equipment installation completed.
  • Installation of monitoring equipment and testing completed.

Get started with your business’s clean, renewable solar panel installation today by calling (866) 346-2009 or scheduling a FREE consultation online!



Solar Financing

There are several ways to finance your home’s solar power upgrade. The most common financing techniques include:

  1. Cash Purchase
  2. Bank or Lender Financing
  3. Lease
  4. Power Purchase Agreement
  5. Solar Services Agreement

The right financing structure is critical for a successful solar investment. Solera Energy’s team is experienced with all aspects of solar financing. Solera Energy has the experience and in-depth knowledge to work with you to ensure you are choosing the right structure to optimize your return on investment and achieve your business goals. The Solera team also has the knowledge to work hand in hand with your income tax advisors, attorneys, bankers, and other professional business advisors you may use.

Learn more about our commercial solar financing options by reaching out to our team today! Call us at (866) 346-2009 or contact us online to get started!


Frequently Asked Questions About Commercial Solar Panels

When it comes to making the positive change to renewable, clean energy to power your commercial property, we understand there is a lot to consider. We’ve put together some of the most common questions we receive from business and property owners about making the switch to solar.

How long do solar panels last?

Solar panels have advanced to the point where they can last many, many years. The consensus is that newer panels will perform for at least 40 years and perhaps even beyond 50 years.

How many homes can be powered by a megawatt of energy?

The national average is approximately 164.

How much will solar energy from a solar facility vary on a year-to-year basis?

Weather is difficult to predict over the short term. Most estimates are that power production will not vary more than 5% from projected production on an annualized basis. Production projections should average out over time. Most projects will have months that exceed projections and months, or years, where production is more or less than projected.

How will I know how well the project is performing?

The project is monitored at least monthly by Solera Energy to ensure all components are working properly. You will also have access to software that allows you to monitor the performance of the system in real time.

Are the main components of a Solera solar system covered by warranties?

Yes. The panels and inverters, the two key components of the system, are covered by manufacturer’s warranties. Solera will review the warranties on selected products with you prior to implementation.

Can hail break solar panels?

Yes, but it is rare. It would require at least golf ball-sized hail. The panels are usually warranted to withstand golf ball-sized hail and are insured against breakage from weather in general and hail specifically.

Should I check with my insurance agent to make sure my solar system is insured?

Yes. Some insurance policies will already cover improvements made to your property. However, a new solar system is a very valuable asset designed to last for years so we highly recommend that you contact your insurance agent/broker to make sure you have the coverages you need.

How is power measured?

Power is measured in kilowatts or megawatts. A 1 MW power plant produces 1,000 kilowatts of power if it is operating at full capacity. When someone says 1 MW, they typically mean the number of kilowatts or megawatts being transferred to the grid. It is a “stream” of power and it will fluctuate somewhat, even under ideal conditions.

What is the difference between kilowatts (kW) and megawatts (MW)?

A megawatt is 1,000 kilowatts. A kilowatt is equal to 1,000 watts. A megawatt is equal to 1,000,000 watts.

What is meant by the degradation rate?

Solar panels slowly lose their efficiency over time and the rate of loss is referred to as the degradation rate. The rate is estimated to be less than .5% per year and most panels are warranted to produce 80% of their original power at year 25.

Will a solar facility produce power if it is cloudy or foggy?

Yes. Solar projects will produce power at a reduced level (10%-25%) on very foggy or cloudy days. All that is required is some level of ambient light.



Tax Credit Questions & Answers



What is the federal solar investment tax credit (ITC)?

The solar ITC credit for 2020 is equal to 26% of the cost of eligible solar property installed during the year and is a dollar-for-dollar offset against the owner’s federal income tax liability. For example, claiming a $1,000 federal tax credit reduces your federal income taxes due by $1,000. The solar ITC falls to 22% in 2021.

What is eligible solar property?

Eligible solar property includes solar PV panels, racking, wiring, curtain walls, step-up transformers, circuit breakers, surge arrestors, power conditioning equipment, transfer equipment, energy storage devices, installation costs, sales/use tax on equipment, other equipment and supplies necessary for the solar system to operate, and related solar development and construction costs.

Who is eligible for the federal solar ITC?

Businesses that pay for solar panel installation where the power from the panels is used by the business can claim the solar ITC, so long as the business, or its owners in the case of pass-through entities, have the federal income tax liability in the year of installation. The business must be the owner of the solar panel system to qualify for the solar ITC. If you choose to get solar power through a solar PPA, solar SSA, or solar lease, you will typically not be eligible for the solar ITC because you do not actually own the solar panel system.

What if I cannot use all the solar ITC in the year of installation?

The solar ITC is a nonrefundable tax credit, which means you will not get a tax refund for the solar ITC that exceeds your income tax liability for the year. However, you can carryback the ITC one year and carryover the ITC 20 years to obtain a tax refund of your federal tax liability in those years.

In what year do I get to claim the federal solar ITC?

The solar ITC is generated at the date the solar system is “placed in service” and must first be claimed in that income tax year before being carried back or carried forward. This generally means that the ITC must first be claimed for the year in which the solar system becomes operational.

What if my business is taxed as a C-corporation?

The solar ITC is claimed by the C-corporation and does not pass through to the C-corporation shareholders. We recommend consulting with your tax advisor to ensure you are maximizing the federal income tax benefits available to you.

What if my business is taxed as a pass-through income tax entity such as a partnership or S-corporation?

Solar credits generated at the placed-in-service date will pass through to the owners of the partnership or S-corporation as of this date. We recommend consulting with your tax advisor to ensure you are maximizing the federal income tax benefits available to you.

Can the solar ITC offset alternative minimum tax (AMT)?

Yes. The solar ITC is a “specified credit” and can offset both regular income tax and AMT.

Can the business claim depreciation on the solar system?

Yes. The depreciable basis of the solar system is the actual cost of the eligible solar property minus 50% of the solar ITC generated. For example, assume that in 2020 the business installs eligible solar property costing $100,000. The depreciable basis of the solar system is $87,000 ($100,000 cost minus $13,000, which is $26,000 solar ITC x 50%).

How is the eligible basis of the solar system depreciated?

The eligible solar property is depreciated over 5 years using MACRS depreciation rates for federal income tax purposes. Generally, the MACRS depreciation rates are as follows:

  • Year 1 – 20%
  • Year 2 – 32%
  • Year 3 – 19.2%
  • Year 4 – 11.52%
  • Year 5 – 11.52%
  • Year 6 – 5.76%

Is a new solar system eligible for bonus depreciation?

Yes, if the solar system is placed in service on or before December 31, 2022.

How do the passive activity rules affect my ability to recognize the benefits from the federal solar ITC and depreciation of the solar system?

For businesses that are pass-through entities for federal income tax purposes (for example, partnerships and S-corporations), the owners of the business that “materially participate” may generally claim the credits and depreciation without limitation by the passive activity rules. Owners for which the business is considered a “passive activity” for federal income tax purposes may be limited in their ability to claim the credit and depreciation deductions. Generally, any activity involving the conduct of any trade or business in which a taxpayer does not materially participate, and most rental activities, are passive activities. The passive activity tax rules could cause owners that do not “materially participate” in the business to have solar ITC and losses from depreciation suspended and carried forward until such time the credits and losses can be claimed. We recommend contacting your tax advisor to determine the impact, if any, the passive activity rules may have on your specific circumstances.

What percentage of my income tax can be offset with solar tax credits?

Solar credits are “specified credits,” meaning they can offset both regular federal income tax and alternative minimum tax. This generally means that solar credits can offset up to 100% of your federal income tax liability.

What if I sell the solar system, building, or land on which the solar system sits within 5 years of installation of the solar system?

Under the tax rules you are eligible to claim 100% of the solar ITC in the year the solar system is placed into service. To avoid recapture of your solar ITC, you must continue to own and operate your solar system for a period of 5 years. Once you have owned and operated the system for 5 years, recapture goes completely away. If you sell or otherwise dispose of your solar system within 5 years, then a portion of the ITC claimed in the placed-in-service year will be recaptured. The amount of potential ITC recapture goes away 20% per year for each year you own and operate the system—20% of potential recapture goes away after year 1, a total of 40% of potential recapture goes away after year 2, a total of 60% of potential recapture goes away after year 3, a total of 80% of potential recapture goes away after year 4, and 100% of potential recapture goes away after year 5. For example, assume in 2020 you install a solar system costing $100,000 and claim a solar ITC of $26,000 on your 2020 federal income tax return. If you were to sell the solar system after owning it for only 3 years, you would be subject to ITC recapture in the amount of $10,400 ($26,000 x 40% recapture percentage).

More questions? We’d love to discuss your Missouri and Northwest Arkansas commercial solar energy needs and inquiries! Give us a call at (866) 346-2009 or schedule your FREE consultation online today!

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