The financial incentives of New Jersey's solar program are considerable and with some of the benefits due to expire December 31, 2011 the window of opportunity is beginning to close.
2011 Federal and State Benefits Include:
- 30% Federal Cash Grant - The American Recovery and Reinvestment Act of 2009, enacted in February 2009, created a renewable energy cash grant that may be used in lieu of the federal business energy investment tax credit (ITC). Originally, this program was available if a system was in place or construction of the system was started in 2009 or 2010, however the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, extended the program through 2011. The ITC is now due to revert to a tax credit on January 1, 2012. Organizations wishing to utilize the 30% cash back grant to offset system installation costs need to have their project at least 5% completed by December 31, 2011 to qualify.
- Bonus Depreciation - H.R. 4853 also included provisions that allow companies to elect 100% bonus depreciation through 2011 and 50% through 2012.
- Solar Renewable Energy Certificates (SRECs) - New Jersey's renewable portfolio standard (RPS) requires each electricity supplier/provider serving retail customers in the state to include 22.5% qualifying renewables in the electricity it sells by 2021. SRECs represent the renewable attributes of solar generation and provide a means for electric suppliers to buy these certificates in order to meet their solar RPS requirements. The annual sale of SRECs provides additional income to the solar system owner allowing for shorter pay back periods on system installation costs and can actually generate new income for companies after the system has paid for itself.
- Energy Savings - New Jersey electric rates are projected to increase by 5.5% annually and have increased on average 8.5% annually over the last 10 years. Most solar technologies are warranteed for 25 years with a projected useful life of much longer, allowing electric costs to be fixed minimally for the next 25 years hedging against future price increases.
30% Cash Grant + 100% Depreciation + SREC Income + Energy Savings = NEW INCOME
Expiration of Solar 30% Cash Back Grant is Looming Large . . .
To qualify for the cash grant, solar projects must be well under way by December 31, 2011. The guidelines include a "safe harbor" provision that sets the beginning of construction at the point where the applicant has incurred or paid at least 5% of the total cost of the property, excluding land and certain preliminary planning activities.
- The Challenge... As New Jersey solar fence sitters decide to move forward, supply chain and work order backlogs may occur (as they did in 2010) potentially jeopardizing eligibility of the cash grant.
- The Solution... Earlier decision makers will have the advantage in securing equipment and their position in installation queues, thus ensuring receipt of a cash rebate. If your organization is at all interested in solar energy, the time to perform your due diligence is now.