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

solar electricity and small business taxes

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The Tax Benefits of Solar

Companies from Apple to Walmart are currently installing solar in solar friendly states like California. One reason is that investing in solar generates a 30% investment tax credit (ITC) plus five year accelerated depreciation. These tax incentives plus the potential for lower electricity costs can generate a system payback in a little over five years.

This new tax plan may now allow solar/battery system investment recovery in just one year!

If so, that could mean realizing “free” electricity starting in year two. It will be “free” because solar has zero energy costs. Its maintenance costs are minimal, typically the cost of cleaning the panels once or twice a year.

Significant costs should not incur until around year 10 of operations when inverters may need to be replaced.  Inverters convert solar’s direct current into the alternating current used by A/C units, motors, etc.

Solar panels have degradation in their output. This is usually around .5% annually. So in 20 years the panel system is producing 80% of its first year’s output.

Battery life is a complex question involving numbers of discharges and depth of discharge. Working with a technical expert is critical to designing a battery system that will offer years of cost effective protection against KW demand charges and high real time prices.

But from an accounting and cash flow perspective, this new tax law could open the economic door to solar/battery/load control systems that will lower electric bills (or eliminate electric bills) over decades of use.

Free Electricity Plus Increased Reliability

The business bottom line is that solar/battery systems can be cheaper than buying from the utility if:

1.   Your business can write off 100% of investment against business income during the first year of installation

2.   The system can reduce your electric bill by reducing or eliminating KW demand charges and kWh consumption.

Higher electricity reliability is the icing on the cake for solar/battery systems. The recent utility equipment failure at Atlanta’s airport provides a graphic example of the challenges utilities face in providing electricity reliability. A solar system located on a roof or in a building’s parking lot has a lower risk profile than a utility pole on a busy street.

Utilities also struggle to maintain urban voltage because utility power plants are located far removed from cities to minimize human impacts from pollution or nuclear waste. On the other hand, a solar/battery system is integrated into a building’s electrical system and is digitally monitored in real time for voltage, distortions and reliability.

In summary, the new tax cut legislation my be another reason small business owners in 2018 should consider a solar/battery system for their buildings.

Editor's note: Please see your professional finacial advisor to determine the finacial and tax benefits in your local area.

Related articles:

What a Solar Puerto Rico Could Do for America

3 Steps To A Zero Energy Commercial Building 

Making Money In The Climate Change Economy

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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

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