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The clock is ticking on solar CASH Grants and 100% bonus depreciation. How to get yours!

Sonoma County commercial solar federal CASH grants may expire in 2012.

One of the big attractants that make purchasing commercial solar PV a financially feasible investment is the current 30 percent federal cash grant, aka, the Solar Treasury Grant 1603, and the 100% accelerated bonus depreciation in the first year.  Though, with the government budget barely eking by to raise the 2012 debt ceiling, this solar program is floundering by the wayside; possibly slated to expire in the New Year.  So it’s likely we’re going to see the 2011 cash grant sunset and the 100 percent bonus depreciation reduced to 50% for first year accelerated depreciation in 2012.

In addition, we’re beginning to see an influx of third quarter Sonoma County commercial solar buyers who were waiting on the side-lines, and now beginning to come out and attempt to take advantage of the sun setting incentives.  Though, one problem; everyone’s thinking the same thing, and this is already causing commuter backup on the solar causeway.

The problem with this trend is in the perception that “would be buyers” have about timing their market buy-in; they think they can put it off until the end of the year…WRONG.  By our estimates, we are predicting the latest date buyers should make or break for the solar finish line is no later than September 30th.  Our rational stems from the following time-lines in these daily measures:

  • Scheduling and coordination of the site evaluation… two days
  • Analyzing the data, namely utility bills… five to seven business days, depending on the backlog of your solar provider.
  • Scheduling and coordination of the solar project presentation and estimate… two days.
  • Exercising due diligence with board members, accountants, and attorney’s… up to 30 days.
  • Applying for finance… up to 30 days.
  • Obtaining construction permits… up to 30 days.
  • Project installation… 7 to 21 days and up, depending on scope of work.
  • All projects MUST be at least 5 % complete by Dec 3st, 2011 in order to qualify for the 30% cash grant.
  • All projects MUST be 100% complete by December 31st, 2011 in order to receive 100% bonus depreciation.
  • All projects MUST be signed up on the wait list for the CSI “California Solar Initiative” PBI “Performance Based Incentive”, an incentive currently not guaranteed, but available if funds permit.

An adept solar salesperson may be juggling all of these stages at once, helping his customer with the later three steps in synchronicity.  However, not all customers are capable, ready or willing to perform these milestones simultaneously.  Bottom line, commercial solar is a big investment and an emotional one at that, one which cannot be rushed. However, by the time the urge to purchase is realized, it may be too late.

My advice for potential buyers is to think carefully about where you are in your buying process.  If it’s extremely important that you not miss the application deadlines, then I suggest you contact a Sonoma County solar integrator as soon as possible to have an honest conversation about your goals and your decision making time-line.  At least here, you can begin the due diligence process and find ways to cooperate with your solar provider in a manner that doesn’t have you feeling intimidated to buy, but at least has you in queue to take advantage of the solar savings should you decide its right for you.  If it turns out to be the wrong decision, then you can abandon your process without a loss for exercising good judgment.

How, you say?  One way to get on board without commitment is to dedicate yourself to the process of finding out if you’re a good candidate or not.  You can expedite the steps by doing some of the rallying yourself; educating your decision makers and taking the lead in spearheading the project by contacting your tax attorney, accountant, and banker; these are wise preemptive moves for advice, but happen to be the BIGGEST time robbers if exercised too late.  Involve your professionals early; save time to make the decision making process less stressful and without haste.

And what if you decide this year is NOT the right time to buy?  No problem; we say “wait” and avoid buyer’s remorse, but do so with the knowledge that the federal cash grant will most likely revert back to the investment tax credit, and that’s a credit folks, not a JUICY cash grant to spend as you please.  As for the tax credit, some of you may not have a large enough tax appetite to benefit from this incentive, which may further justify for your organization to opt for this year’s cash grant instead; cold hard cash in your pocket.

Waiting may not be the worst thing, as lower prices may eliminate the need for some incentives in a few years… prices of solar modules are continuing to fall and the efficiencies are going up, on average from 175 watts a couple of years ago, to 250 watts today.  The caveat here:  as the federal cash grant is due to sunset, there may be a surge in the price of solar panels.  Why?   The solar panel market may take a production hit from the loss of the cash grant, and available buyers, which helped to drive sales and motivate industry production and economies.  If production falls, then prices may go up, at least temporarily until the market finds its equilibrium.

 

Article written by Jennifer Coleman of Sun Source Solar Energy Brokers, providing energy consulting advice for the expiring 30 percent solar Federal Treasury Cash Grant and bonus depreciation incentives in Marin, Sonoma, Napa, Solano and San Francisco Counties.

 

 

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Sun Source Solar Brokers
525 East Cotati Avenue, #220
Cotati, California 94931
707-888-7046

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