RENEWABLE ENERGY INCENTIVES – VA
With its neighboring states firmly leading the solar charge, the Commonwealth of Virginia has begun taking steps to keep pace in offering incentives and implementing policies to encourage the development of clean, renewable energy for its constituents. Among those already in place are a property-improvement tax exemption (the added value that a solar system brings to a property cannot result in an increased property tax), and a net-metering policy for residential systems between 10-20 kilowatts in size and commercial/agricultural systems under 500 kilowatts in size. Dominion Virginia Power offers a Solar Purchase Program to help customers with the upfront cost by buying the total system’s estimated 5-year production at the rate of $0.15 per kilowatt hour. Customers then continue to purchase energy Dominion at their existing rate schedule until the end of the 5-year period. For net-metering with Dominion, customers have a distribution standby charge of $2.79 per kilowatt per month and a transmission standby charge of $1.40 per kilowatt per month for their net metering services. (Learn more here).
While there’s still progress to be made to shorten the payback times, such as more state-based grant programs and the development of an SREC market, Virginians are eligible to register with the Pennsylvania SREC market, and the 30% Federal tax credit and the eligibility-based USDA grant are still more than enough to make solar a practical, prudent investment for Virginia residents.
FEDERAL TAX CREDIT
The federal government offers a tax credit (known as the Solar Investment Tax Credit) on systems that begin construction before December 31st, 2019 for 30% of the system cost, with no cap (a limit of $2,000 was removed from residential systems back in 2008). It’s important to note that this is a crediting, not a deduction; a deduction is removed from your taxable income, but a credit is directly removed from your final tax liability. If the 30% exceeds your total tax liability for that year, it can be rolled over to the following year and further deducted from your liability for that year. Currently, the 30% credit period ends on December 31st, 2019 and gradually ramps down over the following three years to 10%, after which it ends completely for residential systems and stays at 10% for commercial systems for the foreseeable future.
With these changes on the horizon, now is the time to move on making the switch to clean energy. Contact a Smucker’s representative today to find out how much you can save by going solar!
USDA REAP GRANT
For rural small companies, local government offices, and agricultural businesses (such as farms), the United States Department of Agriculture instituted a grant/loan program in 2003 that sought to assist these institutions in establishing clean, renewable energy sources (like solar systems and wind generators) that would ultimately lead to massive cost savings. With the USDA now accepting grants year-round (with yearly deadlines on April 30th and October 31st), Smucker’s stands ready to help you save thousands on your eligible solar or wind installation by handling the applications for the grant start to finish. If you qualify for a USDA grant, you may be in a position to save over 50% of your base system cost with the Federal tax credit and other local incentives taken into consideration.
The grant program (called the Rural Energy for America Program, or REAP) is for up to 25% of the total solar or wind system cost, with a cap of $500,000. Eligibility is limited to small businesses (as defined by federal standards), farms, land-grant universities and colleges, government offices, and electric cooperatives and public power companies located in designated ‘rural’ bounding areas by the USDA (agricultural producers are not limited to the rural bounding areas). There are a few guidelines to keep in mind when calculating grant eligibility:
- The USDA REAP is a “competition” grant, meaning that grants are non-guaranteed and are organized according to the requested amount (below $20,000 and above $20,000, also referred to as “Unrestricted”). Applicants within their respective categories are essentially competing against each other for grant money. Grants are paid out according to technical merit, energy efficiency, project readiness, and more. There are specific annual application deadlines for the grant—for 2016 and presumably, beyond, the $20,000 or less deadline is October 31st, and the Unrestricted is April 30th (similar to Tax Day, these dates automatically adjust to the closest following business day). The USDA conducts an on-site inspection of all awarded systems, and following approval they send their grant payment via the SAMs systems as soon as “[the applicant] fully utilizes the funds from [their] matching share” (per the USDA website). Projects must start construction within 24 months of receiving the grant.
- Site usage must be considered at least 51% commercial (or otherwise eligible) power to apply for the grant. For properties that are both residential and commercial in nature, the grant can only be calculated based on the percentage of electricity used commercially. In other words, if a farm and a home are on the same meter, and the farm uses 60% of the electricity fed to that meter, the USDA grant amount will be calculated using a number that is 60% of the system cost—not the total system cost. If there are separate commercial and residential meters, only the commercial meter is eligible for the grant.
- There are three grant application tiers: projects costing under $80,000, projects costing between $80,000 and $200,000, and projects costing over $200,000. Each tier has its own application form that needs to be submitted, but Smucker’s Energy works closely with you to correctly fill out and submit each form according to your system specifications.
Over $60 million in grants and loan guarantees was awarded in 2015 after the USDA expanded their program and budget even further to encourage submission and streamline the application process. The REAP Program continues to serve as one of the premier incentives for qualifying agricultural entities looking to transfer to affordable, renewable energy.