Solar energy is an excellent opportunity for businesses, increasing property value, generating long-term savings in building operating expenses, and demonstrating environmental consciousness to the community. But when paying cash is not an option or preferred, how do these clean energy investments get financed?
Property Assessed Clean Energy (PACE) is one such solution that offers bank-competitive financing for property owners that invest in a wide range of efficiencies, such as solar. MinnPACE is Minnesota’s division of the program that specifically works with commercial properties to finance solar panel systems and other energy-efficiency upgrades.
Thanks to this program, there are no upfront costs for solar panel systems. Payments are only made twice a year and paid with property taxes through a special tax assessment, where term installments typically stretch from 10 to 20 years.
Along with MinnPACE financing, there are additional tax credit incentives for installing solar systems at your business. As part of the Inflation Reduction Act (IRA), passed into law in August of 2022, the base solar investment tax credit increased to 30 percent of the total cost of each solar panel system. This rate increased from the previous amount of 26 percent and is expected to stay in effect through 2032.
There are even more financial benefits to investing in solar energy, as outlined in the 2022 IRA. Projects constructed with predominantly U.S.-manufactured supplies could be eligible to earn an additional tax credit above and beyond the base 30 percent. This requires iron, steel, and most all other manufactured components in the system to be U.S.-made, with minimal exceptions. Formal guidance on these requirements is forthcoming from the IRS, which will bring this requirement into focus even further.
Lastly, if these projects are done in former fossil fuel communities directly impacted by the nation’s energy transition to cleaner fuels, there is yet another potential additional tax credit. If all of these requirements were met on a single project, certain system owners could earn up to a 50 percent tax credit on their solar panel system. These federal tax incentives can be paired with MinnPACE financing to help more customers realize maximum savings.
Want to know more about MinnPACE or other solar installation incentives and how they could apply to a project at your property? Contact All Energy Solar’s dedicated commercial team today to get a free site assessment and see what opportunities are available for you.
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