Will the New Small Business Tax Cut Create a Solar Boom?

solar electricity and small business taxes

Small business owners should consider the financial and tax feasibility of installing solar. 



If I understand the new tax cuts (and who really does given its 500 pages were written in a matter of days) then a business can immediately expense 100% of equipment investment against business income.

That means no more capital depreciation. You buy it, you expense it during its first year of use.

On the surface, this would appear to apply to solar systems. If so, then this could be a huge opportunity for lowering your business electricity costs. Imagine being able to deduct a solar system’s full cost during its first year of operation and then reaping decades of “free” electricity!

The three key steps to finding out if this opportunity is available for your business are:

1.   Work with a tax professional on this question

2.   Retain a rate design expert that can access how your utility uses kWh and KW priceing to charge for electricity

3.   Solicit bids for a solar/battery electricity system.

Utility Rate Design Is Biggest Obstacle To Solar Electricity

Utilities across the country have won rate designs from their regulatory commissions that have robbed solar of its economic value. The utilities’ price weapons of choice have been KW charges and real time pricing. Figuring out how your utility uses these prices designs is key to capturing the economics around 100% immediate capital cost expensing of solar/battery equipment.

Utilities use KW charges to recover their capital investments in power plants, substations and lines. Too often, utilities and their regulators have applied KW charges in a manner that erodes or eliminates solar economics (and the economics of consumers investing in energy efficiency).

Utilities are also using real time charges that can significantly vary during time of year and day to further erode solar economics.

But this type of pricing power can only survive until technologies emerge that offer price competitive electricity and reliability. A perfect storm (from a utility’s perspective) is growing where the technologies of solar, batteries and load control can defeat KW charges and real time pricing.

Utilities are fighting solar so hard because it is now the least cost source of electricity.   I recently developed a solar system combined with a load control system to dramatically cut a medical building’s electricity bills.   The system used solar to generate energy (kWh) and the load control system smartly managed multiple A/C units to achieve both comfort and reduced KW demand.

High battery costs are the current technology weak link. They cost $200+ per kWh which makes them uneconomic in many cases against utility supply. The good news is that battery technology is projected to achieve $100 per kWh breakthrough prices by as soon as 2019.

But, if a business can expense 100% of a solar/battery system during its first year of operation than this could make a solar/battery/load control system price competitive now!

Next page- The Tax Benefits of Solar & Free Electricity and Reliability


About the author

Bill Roth

Bill Roth is the Founder of Earth 2017. Roth is a nationally-recognized business coach that has successfully enabled hundreds of business owners to win new customers, grow product revenues and cut costs. His most recent book, The Secret Green Sauce, profiles best practices in pricing, marketing and branding that win millennial generation customers and their moms! Roth has served as the Green Business Coach for Entrepreneur.com and coach for the U.S Hispanic Chamber of Commerce Green Builds Business program. Roth’s has held numerous executive leadership roles in the development of clean technology projects including the launch of thefirst hydrogen-fueled Prius. Follow him on Twitter