By: Scott Nelson, Director of Business Development, Telamon Energy
Telamon Energy and the Indianapolis Public Library
The Inflation Reduction Act (IRA) of 2022 is a major new piece of legislation that provides a number of significant benefits for commercial, industrial, and not-for-profit entities that are looking to develop solar energy systems. The Act extended and increased the Investment Tax Credit (ITC) for solar projects that are placed in service before December 31, 2032, with increased ITC rates of 30-60%. This ITC rate is significantly higher than the previous rate of 26%, and it is expected to have a significant impact on the cost of solar projects.
In addition to the increased ITC rate, the Inflation Reduction Act of 2022 expands eligibility for the ITC to include not-for-profit entities, such as charities, churches, and other non-profit organizations. It also extends the ITC to cover energy storage systems, including batteries and other energy storage technologies. The Act also allows businesses to claim the ITC on projects that are placed in service prior to the expiration of the Act.
The Inflation Reduction Act of 2022 also provides a number of other incentives and benefits for businesses and not-for-profits looking to develop solar energy systems. It allows businesses to take advantage of accelerated depreciation, which allows businesses to deduct the cost of their solar projects over a shorter period of time than traditional depreciation. It also allows businesses to claim a tax credit or Direct Pay benefit (for tax exempt entities) for 30-60% of the cost of their solar projects.
Overall, the Inflation Reduction Act of 2022 provides a number of significant benefits for businesses looking to develop solar energy systems. The increased ITC rate and expanded eligibility for the ITC are expected to have a major impact on the cost of solar projects with the Act in place, there has never been a better time for businesses and non-profits to take advantage of the benefits of solar energy.