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Financial Impact of Green Energy: Time to Bloom (Sponsor Letter)

SBJ Economic Growth Survey: Inside the Vision

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There has been a lot of buzz around the $740 billion energy and health care package signed by President Joe Biden in August. The bill, known technically as H.R. 5376-Inflation Reduction Act of 2022, is 730 pages of dense lawyer speak. The bill covers a wide variety of topics, including staffing at the IRS, corporate taxes and health care.

While it is a significant stretch to say this bill will reduce inflation, in my opinion, the impact it has on green energy and those looking to combat rising energy costs is without question. Here are a few ways.

ITC increase and extension 
By utilizing the solar investment tax credit and bonus depreciation, businesses have been able to significantly reduce the cost of solar and expedite their payback period. Before the passage of the bill, the opportunity to take advantage of these benefits was rapidly disappearing. Initially set to expire in 2024, the ITC has been increased to 30%, from 26%, and may now be transferred or sold to other taxpayers. The 30% applies to both business and residential projects, including projects installed in 2022, and the credit will last until the end of 2032.

Direct payment option
Because of their tax-exempt status, nonprofits have been an underserved sector for renewable energy. With the passage of the bill, nonprofits can now use a 30% point-of-sale rebate to install solar panels and battery storage devices. The direct pay also extends to state, local and tribal governments, and rural electric cooperatives, with more entities to be added later.

Additional items 
There are additional tax credits for electric vehicles, electrical panels, heat pumps and many other items, as well as significant funding for domestic manufacturing of solar components. 

Regardless of your opinion of the IRA, the financial benefit to go solar and combat your own personal energy inflation has never been more lucrative or accessible.

With rising utility costs, combined with benefits of Rural Energy for America Program grants, the federal tax depreciation system, and additional incentives for domestic materials, the financial benefits of solar have never been more lucrative. Quite simply, there are more opportunities than ever for entities previously left behind. 

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