Credits and incentives provide green for going green

Lowering the cost of going green

Many individuals and businesses from around the world are making a conscious effort to "go green" to help protect the environment and sustain natural resources. For a business, "going green" can make not only environmental sense but financial sense as well. According to the US Department of Energy, total commercial energy expenditures increased from $10.7 billion in 1970 to $172.1 billion in 2012.¹ For a business, especially one operating on a thin profit margin, high utility costs can substantially cut into profits.²

An investment in renewable energy may have the potential to dramatically reduce a company's utility bill primarily by consuming energy from on-site sources. For example, Walmart has undertaken an extensive project to equip many of its stores and distribution centers with renewable energy. Among its California locations equipped with renewable energy systems, Walmart has seen cost savings on electricity of 5-30 percent per store.³

There are many forms of renewable energy, including solar, wind, hydroelectric, biomass, hydrogen fuel cells and geothermal. Federal and state governments have recognized the economic, environmental and political value of promoting renewable energy, and in response have created a wide range of incentives to entice individuals and businesses to invest in renewable energy. The types of incentives range from tax credits to grants to "green loans."

The rise of financial incentives has been a major contributor to the rapid growth of renewable energy projects in the residential, commercial and utility sectors.⁴ Solar energy alone comprised 32 percent of all new electric generating capacity in the US in 2014.⁵ Since 2013, new renewable energy capacity has outpaced new fossil fuel generation, and the United States is projected to install more than four times as much renewable energy capacity as fossil fuel generation by 2030.⁶

This article discusses how businesses can use tax credits and other incentives to help lower their overall cost of going green, including the installation of solar panels. Solar energy is the focus of this article as it is generally the most feasible, affordable and accessible form of renewable energy for commercial-scale, distributed generation projects.

The first section of this article outlines some of the current federal, state and local tax credits and incentives available to companies that invest in solar energy projects.⁷ The second section discusses possible financial models that a business may wish to consider to fund its solar energy project.

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