Many construction projects begin with similar goals in mind. Sticking to a budget and building within a designated timeline are important steps, but as technology and renewable energy trends continue to evolve, you should also think about how a structure–commercial or residential–can give as much as it takes.
With continuing government initiatives and programs for renewable energy such as solar power, construction companies need to understand the benefits and pass them along to their customers.
Energy Efficiency in Commercial Buildings
While few companies don’t find benefits from solar power, some are better suited than others. For example, if a company has high electrical demands or relies heavily on gas, they will see a quick return on investment after making the renewable energy switch. Tech companies or data centers are prime candidates.
Especially in a new construction project, renewable energy procedures have lasting benefits. Choosing to include initiatives like solar power in your construction plans will give you a return on your investment much sooner than you may think – especially with cost-saving initiatives from the government.
Understanding Federal Tax Credits
Wrapping your head around the potential tax benefits for renewable energy isn’t always simple. Over the last few years (and decades), different government administrations have created or extended several benefit packages. For example, the Investment Tax Credit (ITC) was established by the Energy Policy Act of 2005 was set to expire at the end of 2007. It was so popular, however, that it has been extended several times–for homeowners and business owners alike. As it currently sits, the tax credits remain as follows:
- 2016 – 2019: For new residential and commercial projects, 30 percent of the cost is tax-deductible
- 2020: For new residential and commercial projects, 26 percent of the cost is tax-deductible
- 2021: For new residential and commercial projects, 22 percent of the cost is tax-deductible
- 2022 and Future Projects: For commercial projects only, 10 percent of the cost is tax-deductible. Residential systems do not receive a credit after 2021.
As we await the beginning of a new government administration, the program will likely continue in some form beyond 2022.
State of Minnesota Solar Initiatives
On top of federal tax credits, many states may have initiatives and tax credits as well. The Made in Minnesota Solar Incentive Program was discontinued back in 2017, but if you had a solar power system up and running before the end of 2018, you may still be eligible. And that certainly doesn’t mean there aren’t other initiatives for Minnesota residents.
In general, a newly-installed solar power system is exempt from property taxes. This is especially beneficial for property owners, as a property’s value rises significantly once solar energy is installed. Further, you may be eligible for more rebates and incentives from your power company.
Xcel Energy customers, for example, may sign up for their Solar*Rewards Program. You receive monthly payments in exchange for Renewable Energy Credits (RECs) for the energy your new system produces. Should you produce more than you need, the extra energy is credited to your bill–meaning your new system has the potential to make money!
The Future of Solar Power
Many experts are expecting an increase in solar energy in the coming years. There are many reasons for this–the expansion of renewable energy sources, project delays due to COVID-19, and new technological developments. As the U.S. government also develops further legislation around renewable energy, it’s a good time to invest in renewable energy. You can safely assume that federal incentives are here to stay.
At BCI Construction, we understand the benefits of solar energy. We even reap the rewards ourselves! Many of our team members are familiar with the requirements and procedures of installing a solar energy system. If you are interested in learning more about how solar energy can benefit your business, contact us to get started.