Farmers across Illinois and Missouri are discovering solar as a great investment and can stabilize their energy costs. With federal and state incentives for agricultural operations, 2020 is shaping to be a great year for farmers to go solar.
There are three federal incentives, as well as two incentives Illinois-specific, and one Missouri incentive appropriate for farmers. You should consult your tax professional as these incentives can have different impacts on your finances depending on your situation.
On the federal side, incentives include the Investment Tax Credit, MARCS Depreciation, and the USDA REAP grants and loans. The Federal Investment Tax Credit is set at 26%. The Federal Investment Tax Credit is only here through 2020, and in 2021 the credit steps down to 22%. This is a 1:1 credit against your tax liability. Watch the video below about the federal Tax Investment Credit and watch this video to see an example of how this credit works. Note: the video highlights the 30% Federal Investment Tax Credit as that is what it was during 2019.
Modified Accelerated Cost Recovery System (MACRS) Depreciation is also a credit against your tax liability based on your tax bracket. The IRS takes the capital cost of the property and recovers it over a certain time period through annual deductions. Solar is a specific asset class that qualifies for this depreciation category. This allows 85% of system costs to be recouped over time as a deduction against taxable income. Please click here to learn more about MACRS Depreciation.
The US Department of Agriculture Rural Energy for America Program (REAP) grants and loans are special tools that are unique for agricultural businesses to take advantage of to bring down the net cost of going solar. The grant allows for-profit agricultural entities to reduce their net cost of a solar installation up to 25%, while the loan allows agricultural businesses to finance up to 75% of the system costs. You do not have to take out the loan to qualify for the grant. Check your eligibility and learn more about this great resource here.
Illinois farmers and agribusiness owners can also utilize the Illinois Shines program and the $250/kW Smart Inverter Rebate.
The Illinois Shines program is administered by the Illinois Power Agency, which allocates solar array owners Solar Renewable Energy Credits (SRECs) to the state’s three investor-owned utilities. Each credit is worth 1 megawatt of energy that is produced by the array. The SRECs allow the investor-owned utilities to meet their state-mandated renewable energy obligations as set by the renewable portfolio standard. An aggregator between the Illinois Power Agency and the solar array owner calculates how many SRECs the system will produce over the span of 15 years, and distributes the funds to the array owner. The value of a solar array’s SRECs will likely be on average 30% or more of the system’s upfront cost – allowing solar array owners to recover a significant portion of the system’s cost in either year one or over five years, depending on system size. The utilities then own the renewable energy generation from your array, and can add it to their portfolio.
The $250/kW Smart Inverter Rebate allows large installations that qualify to receive a $250 rebate per each kilowatt installed. Qualifying installations are generally those in Ameren territory with a peak demand of over 150 kW, or in ComEd territory with a peak demand more than 100 kW. These installations are required to use smart inverter technology, to make the utility able to facilitate grid reliability.
Missouri farmers and agribusiness owners in Ameren territory can take advantage of the Ameren Missouri rebate. This direct cash rebate allows the solar array owner to reclaim $0.25/watt for systems under 150 kW. This rebate is available until December 31, 2023. Click here to read more about the Ameren Missouri $0.25/watt rebate.
At StraightUp Solar, our solar installers for agriculture have placed arrays on a wide variety of farms and agribusinesses. Call us at 844-97-SOLAR today or email hello@straightupsolar.com and let us know that you are a farmer interested in receiving a FREE, no-obligation solar assessment from us!
