Solar Financial Incentives
Consolidated Solar Tech. strives to educate our clients about the numerous financial incentives available for the development of a solar energy system in New Mexico.
For a basic explanation, please refer to the following outlines:
New Mexico Residential Solar Incentives
New Mexico Commercial Solar Incentives
There are many government and utility-based financial incentives available which drastically increase the ability of a PV system to save you money and establish a hedge against increasing business overhead. The two primary incentives are at the Federal level. Many state incentives and local utility incentives also exist, but vary substantially from state to state, for a comprehensive list please visit the Database for State Incentives for Renewables & Efficiency (DSIRE) at www.dsireusa.org
Federal Incentives
Investment Tax Credit (ITC) - Allows for the owner of a commercial photovoltaic system to recapture 30% of the system cost as a federal tax credit. This is not a deduction, it is a dollar-for-dollar reduction in the amount of federal tax owed. This substantial credit can be carried forward up to 20 years if a companies taxes prohibit using the 30% credit in the first year.
Accelerated & Bonus Depreciation - Allows the owner of a commercial photovoltaic system to depreciate the cost of the system rapidly over a 5 year period. In addition, the depreciable basis of the system is higher than the effective initial cost resulting from the ITC 30% credit. The basis is calculated using the following method:
- Depreciable Basis = Total Cost - 1/2 of Tax Credits (ITC)
An Example System:
| System Size= | 50kW |
| System Price= | $400,000 |
| -30% ITC= | $120,000 |
| Actual Initial Cost= | $280,000 |
Depreciation Basis = $400,000 - (1/2 x $120,000) = $340,000
The combination of the Federal ITC and Bonus Depreciation allows the owner to depreciate the asset at a higher basis than their effective initial cost.