Commercial solar developers and EPCs looking to kick-start projects now have the perfect opportunity: the upcoming deadline of the federal solar safe harbor tax incentive. Now through the end of 2020, the ITC is 26 percent. However, as of January 1, 2021, the ITC decreases to 22 percent. That 4 percent amounts to substantial savings and should serve a prime motivator for EPCs and developers to take action now.
C&I solar EPCs and developers have a little more time to take advantage of the tax incentive before it decreases, but the clock is ticking. To leverage the full benefits of the ITC, the time to act is now.
How C&I Solar EPCs and Developers Can Safe Harbor
Since its initial debut in 2006, the investment tax credit has significantly supported the growth of solar energy across the country. Currently, the tax credit lets commercial operations reduce tax obligations on 26 percent of the solar project cost in 2020. The tax credit steps down to 22 percent for 2021 and sunsets to a permanent 10 percent in 2022.
There are two routes developers and EPCs can take for safe harboring the tax incentive. The first route is to incur 5 percent of the project’s cost by December 31, 2020, which would lock in the incentive with the safe harbor. One quick way to meet this threshold is to purchase inverters and panels for the project.
The second route is for developers to begin construction on any qualified facility or energy property. This must be actual break-ground construction, and not just the initial plans to do so. Early-stage steps, such as securing funding or obtaining permits, do not meet the threshold for the incentive. In addition, work involving previously held inventory components does not count toward the incentive.
Since the ITC will decrease at the end of this year, now’s the best time to use the incentive. The low price of a PV system, coupled with the speed, savings and quality provided by Trina Solar’s C&I Solutions, means developers and EPCs can lock in great value for their commercial solar projects.
Time is of the essence in order to achieve the full 2020 tax credit. Click here to speak to the C&I Solutions experts at Trina Solar about getting your projects on track today.
(Ed. note: The statements in this article should not be construed as professional tax advice, and business owners should consult with their tax professionals.)
Smart Energy Solutions
delivered straight to your inbox