In order to spur the growth of renewable energy, and solar in particular, federal and state governments as well as the utility companies have established programs to issue tax credits, rebates and other incentives to purchasers of solar power. Bonterra helps each of our clients identify available incentives and even helps with the paperwork!
Federal Tax Credit
The Federal government provides an Investment Tax Credit (ITC) of 30% for the purchase of a qualifying solar system. Qualifying solar systems include solar hot water systems used for domestic water heating or space heating, photovoltaic systems, and hybrid solar lighting systems. If you have questions regarding other types of solar or have questions in terms of what other expenses may qualify for the federal tax credit, please see a comprehensive FAQ from the Solar Energy Industry Association at www.seia.org. In order to determine the basis to be used in calculating the tax credit, the purchaser should use the gross amount paid for solar equipment. This number includes labor, so long as the labor was directly related to the installation of the solar equipment. Please note that solar pool heating systems do not qualify for the federal tax credit.
The federal investment tax credit was recently extended in 2008 for a period of 8 years and all caps that were in place limiting the amounts of credits available were removed.
If a purchaser cannot claim the entire 30% tax credit in the purchase year, the credit may be carried forward for the succeeding year of the system purchase.
In order to claim the federal tax credit, you must submit IRS Form 5695
State Tax Credits
Like the Federal ITC, many states also offer tax credits in an effort to spur the growth of renewable applications. The tax credits differ by state, but in Hawaii, qualifying residential Solar Hot Water systems are eligible for a 35% credit (or $2250, whichever is less). Qualifying Solar Electric (PV) Systems are also eligible for a 35% state tax credit (or $5000, whichever is less).
Many states have begun adopting Renewable Portfolio Standards (RPS) which are state policies requiring electricity providers to obtain a minimum percentage of their power from renewable energy resources by a certain date. As of Q2 2009, Hawaii’s RPS require that 20% of the state’s power come from renewable energ resources by 2020. Due to these requirements, Hawaii Energy has been offering various rebates for both residential and commercial customers. Please contact us to receive the latest details.