Agriculture Solar Panels
Five Reasons to go with Quality Solar
Why Go Solar?
Agriculture is our wisest pursuit, because it will in the end contribute most to real wealth, good morals, and happiness. – Thomas Jefferson
Savings - Lower electricity bills for the long term.
Security - Protection against rising electricity costs.
Superior Dependability - To keep operations running 24/7.
Sustainability - Clean, sustainable energy
Solar Financing - Some eligible purposes are as follows
- The purchase and installation of equipment
- Construction and improvements
- Energy audits
- Permit fees
- Professional service fees
- Feasibility studies
- Roof replacement or repairs
- Equipment that runs on direct current electricity
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Applications for Agriculture
Space and Water Heating
The high energy costs to maintain farming operations can be significantly offset by solar. Up to 40% of a dairy farm’s energy costs come from heating water and cooling milk. Air needs to be recirculated and heated in enclosed buildings that house pigs and poultry.
Remote Electricity Supply
Often there are needs for electricity in remote locations where it is not cost effective to run power lines. Solar can power these requirements or store energy in a battery.
Crop and Grain Drying
LP gas drying methods cannot compare with the cost of drying through free renewable energy. Solar dryers protect profit against volatility in the gas markets.
Where there are no power lines, solar power is a viable manner to pump water. Significant amounts of heated water are used to clean equipment on commercial dairy farms.
Whether it is your goal to maximize benefits or provide positive cash flow, we can help determine a financial package that delivers the financial results you desire.
In addition to federal incentives, each state may have its own renewable energy incentives.
Farm Credit – Institution that provides lending options and favorable farm loans.
Greenstone – Financial lenders for America’s rural and farming residents. They offer short and long-term leasing and loans.
PACE – Property Assessed Clean Energy is a financing structure that provides funding for efficiency improvements and renewable energy projects. PACE programs help pay for the upfront costs of green initiatives, such as solar panels. Their goal – to reduce local greenhouse gas emissions by offering affordable loans so owners can enjoy energy efficiency as well as clean the air.
Solar systems qualify as equipment for leasing purposes and all related incentives. Not every business can utilize all the tax benefits of purchasing a solar system. In this case, an operating lease will allow the lessee to monetize the Investment Tax Credit and depreciation to enjoy lower monthly payments. In such situations, the monthly payments are also tax deductible.
- Lease amounts: $100,000 to $5,000,000
- Term: 7 years
- Monthly payments: 100% deductible
- Early buy-out option: Set price at close of 6th year
- Purchase option: Greater than fair-market-value, or 20% at close of the 7th year
- No up-front capital costs
- No drain on cash flow
In order to qualify for leasing under the IRS, the following must be met:
- Transfer of ownership only after maturity of the lease
- No special “bargain” purchase price option
- At the end of the lease the asset must still have 20% of its originally estimated life left
- Lessor must retain at least 20% of asset’s value through lease term
Under the Modified Accelerated Cost Recovery System (MACRS) of 1986, solar equipment is eligible for a cost recovery period of 5 years. Only 85% of the project’s value depreciates, or half of the ITC.
MACRS is a vital tool for businesses to recoup costs over a property’s operation. It allows companies to subtract over five years of tax liability and boosts the rate of return on a solar investment.
In 2010 bonus depreciation was added to incentivize capital investment further. This perk enables companies to depreciate solar equipment by 50% the first year and then further depreciate under MACRS. This 50% bonus is good until 2018, then drops to 40% in 2019, 30% in 2020, and then ends.
Renewable Energy for America Program – REAP grants are part of the Energy Title of the 2014 USDA Farm Bill and It provides grant and loan guarantees to agricultural producers and rural small businesses to help purchase renewable energy systems. It also supports energy efficiency improvements and beneficial studies for renewable energy. For qualifying businesses, a REAP grant can be sought from the United States Department of Agriculture. If approved, 25% of the project cost is settled by the grant.
Investment Tax Credit
Federal tax credit of 30% of total project cost with no cap on the amount a company can claim. The ITC may also be rolled forward into the following tax year if it cannot be used in the current year.
These examples are for educational purposes only. Quality Solar advises you to speak to an accountant regarding how incentives apply to you.
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