Investment Tax Credit (ITC)
- According to The Energy Policy Act of 2005 (P.L. 109-58) was created and signed into law on August 2005, which gives 30% Investment Tax Credit (ITC) for any solar energy systems project that applied between January 1, 2006 and December 31, 2007.
- In 2006, the Tax Relief and Health Care Act (P.L. 109-432) extended these credits for one additional year through December 31, 2008.
- In 2008, the Emergency Economic Stabilization Act (P.L. 110-343) extended these credits for 8 more years, makes the ITC effective through December 31, 2008
- In 2015, the Omnibus Appropriations Act (P.L. 114-113) added a multi-year extension for ITC until the end of 2023.
Rural Energy for America Program (REAP)
- The United States Department of Agriculture (USDA) is part of the Farm Bill that will provide grants for up to 25 percent of total project costs and loan guarantees for up to 75 percent of total project costs for renewable energy systems and energy efficiency improvements. [31]
- For Solar project, the grant will fund up to $500,000 depending on how much aide is needed. [31]
Procedures for Cost Analysis
In order to determine the Investment Tax Credit, the total cost of to install the solar panels need to be calculated first. Then the Federal will provide a tax credit of 30% of that installation cost.
Cost to install 2961 Solar Panels = $4,586,271
ITC= 30% x ($4,586,271) =$1,375,881.59
The USDA’s grant would be around $2,500 to $500,000. However, it has to be applied and the amount will vary depending on how competitive the application is. Therefore, the grant will not be used in the calculations. But the amount would only benefit and help reduce the investment cost.
Cost to install 2961 Solar Panels = $4,586,271
ITC= 30% x ($4,586,271) =$1,375,881.59
The USDA’s grant would be around $2,500 to $500,000. However, it has to be applied and the amount will vary depending on how competitive the application is. Therefore, the grant will not be used in the calculations. But the amount would only benefit and help reduce the investment cost.