It is a good long-term investment to install solar energy systems for your business. Commercial solar will lower the cost of electricity, guard against the increase in utility rates, and assist companies in achieving sustainability. Nonetheless, the initial price of a solar installation may be an issue.
Fortunately, businesses in the United States can take advantage of several grants, incentives, and financial programs at the federal, state, and local levels that significantly reduce the cost of going solar.
This guide explains the most important grants available for commercial solar installations and how businesses can benefit from them.
Federal Grant Programs for Commercial Solar
Federal programs are considered to be one of the most effective funding opportunities to commercial solar projects, particularly those involving businesses situated in rural or underserved locations.
USDA Rural Energy for America Program (REAP)
One of the most popular grant programs for commercial solar installations is the USDA Rural Energy for America Program (REAP).
What REAP Offers
- Grants to cover up to 50 percent of project costs which are eligible
- Optional loan guarantees which may be added to the grant
- Grants that are between thousands of dollars and up to 1 million dollars
Who Is Eligible?
- Small businesses
- Agricultural producers
- Companies in rural areas (usually towns of fewer than 50,000 people)
Why REAP Is Important?
REAP has the potential to greatly lower the initial expense of a solar project, which means that large commercial installations are now affordable to farm and rural businesses.
Energy Efficiency and Conservation Block Grant (EECBG)
The Energy Efficiency and Conservation Block Grant (EECBG) program supports energy projects that reduce energy use and promote renewable energy.
How This Program Helps Businesses
- The grants are given to state, local, and tribal governments.
- Such governments tend to collaborate with commercial property owners or businesses.
- The money can be used to finance solar systems on commercial facilities or community energy initiatives.
Businesses may often enjoy the local energy programs which are financed by EECBG grants.
Other Federal Solar Grant Opportunities
Periodically, federal agencies issue special grant opportunities to fund:
- Clean energy deployment
- Solar innovation
- Community solar projects
- Access to energy in underserved regions
Such grants are generally competitive and can be narrowly scoped, but can directly offer financial aid to eligible commercial solar projects.
Federal Incentives That Function Like Grants
While not technically grants, federal incentives often provide equal or greater financial value and are essential to any commercial solar strategy.
Federal Solar Investment Tax Credit (ITC)
Solar Investment Tax Credit (ITC), a tax credit that is given to businesses, enables them to deduct 30 percent of the overall costs of solar installation from their federal tax liability.
What Costs Are Covered:
- Solar panels and inverters
- Installation and labor
- System-related electrical upgrades
The ITC is particularly useful in large business projects as no limit exists on the size of the system.
MACRS Depreciation for Commercial Solar
Accelerated depreciation commercial solar systems are subject to the Modified Accelerated Cost Recovery System (MACRS).
Benefits of MACRS
- Enables the business to write off the major part of the system cost within a short time span
- Reduces taxable income
- Enhances the cash flow during the initial years of the solar investment
When combined with the ITC, depreciation can significantly lower the effective cost of a commercial solar system.
State and Local Solar Grant Programs
Federal support is not the only support available; numerous states, cities, and utility companies provide solar grants, rebates, and incentive programs to commercial installations.
State-Level Solar Grants
Certain states have provided direct grants to companies that install solar systems.
Funding of these programs can be done by:
- State energy offices
- Public benefit funds
- Clean energy initiatives
Different states have varying amounts of grants and can be based on the size of the system, energy generation, or the type of business.
Utility Company Solar Incentives
Many electric utility companies provide incentives on commercial solar installations such as:
- Upfront rebates
- Performance-based incentives
- System output-based payments
Through these programs, the utilities can control the demand and also motivate the businesses to produce clean energy.
Commercial Property Clean Energy (C-PACE) Programs
C-PACE programs are present in a few states, which allow long-term financing and grant-like incentives on renewable energy improvements.
How C-PACE Works
- Investment is linked with the property and not the business.
- The process of repayment is in the form of property taxations.
- Energy efficiency upgrades can be added to solar projects.
- The C-PACE programs are especially applicable to large business buildings.
How to Find Commercial Solar Grants
Finding the right grants requires research and early planning.
Use National Incentive Databases
National incentive databases enable businesses to search:
- Federal programs
- State grants
- Local and utility incentives
The search results will be narrowed down by the location, the type of business, and the size of the project.
Work With a Commercial Solar Installer
Professional solar installers tend to:
- Establish possible grants and incentives
- Assist in the preparation of grant applications
- Make sure that projects are program appropriate
Collaborating with an installer at the beginning of the planning process will improve the chances of funding.
Contact Local Energy and Economic Development Offices
Local governments and economic development agencies can provide:
- Energy improvement grants
- Sustainability incentives
- Funding of business development that includes solar projects
Such programs are usually under-funded and granted on a first-come/first-serve basis.
Tips for Maximizing Commercial Solar Grants
Combine Multiple Incentives
The reduction of total project costs through stacking is applied to many businesses:
- Federal grants
- Tax credits
- State and utility incentives
Merging programs could reduce solar installation expenses by 40 per cent or more.
Apply Early
Grant programs often have:
- Limited funding
- Strict deadlines
- Rivalrous application processes
Early application enhances the chances of approval.
Keep Accurate Documentation
To be successful, one must have:
- Detailed project proposals
- Cost estimates
- Projections of energy production
Delays or rejections can be prevented through proper documentation.
