Solar Energy Investments: 2019 will be the last year to maximize financial returns
Solar projects will become more expensive beginning January 1, 2020, when the Federal government reduces the generous 30% Investment Tax Credit (ITC). Whether you’re a business owner or a project investor, you’ll want to start the project development process now to take full advantage of the ITC and secure the best financial returns for your solar energy investment.
The quick take
In 2020, the ITC will “step down” from 30% to 26%. While this may not seem like much, it is a 13% reduction in value. It is the same as taking a 13% salary cut or losing 13% on an investment. In other words, it matters! To realize the highest returns, you must act now to secure your solar energy investment.
As business owners and investors start understanding this, we believe there will be a rush towards Q2 and the middle of 2019 to complete solar projects by year-end. Unfortunately for many, solar installers and developers may be backlogged with projects, and prices may increase because of the demand. Those who start the process too late may find themselves ineligible for 2018 tax credits, as their projects are pushed into 2019, immediately losing 13% on their solar energy investment. We're seeing smart business owners and investors start the process early to secure their solar energy investment.
Returns on Investment (ROI) and other financial performance metrics vary greatly across projects and geographic regions due to many factors. Utility rates, project costs, solar irradiation, and “demand charges” are just some of the factors that influence financial returns. That said, for business owners who install solar, it’s common to see ROIs that exceed 100% and payback periods of 5-7 years. Project investors typically receive expected returns of 8%-12% percent (IRR). These are attractive numbers, but they will worsen if your solar project isn’t complete in 2018.
HelioPower has been developing, building, and financing commercial solar projects since 2001. Whether you’re a business owner or a project investor, let us help you maximize your solar energy investment. Give us a call … while there’s still time.