Should I wait for solar? Why delaying can cost you thousands
By Rachel Propst, Solar Consultant
If you’ve been considering solar for your home or business in 2017, you should pull the trigger as quickly as possible in order to avoid price increases that are projected for 2018.
There are two main factors that should influence whether you get started on your solar project this year or next and we’ve briefly outlined them below.
Upcoming Tariffs on Imported Solar Panels
On September 22nd, the International Trade Commission voted unanimously (4-0) that imported solar panels and modules have harmed domestic panel manufacturers. The ITC has until November 2nd to send President Trump recommendations on remedies before the administration will impose their ruling on the matter, which is likely to favor restrictions on solar panel imports.
Where did this all come from? Suniva is one of the panel manufacturers who filed for bankruptcy in early 2017 just before it petitioned the ITC for tariffs on imported solar panels. Joining SolarWorld Americas, Suniva requested a 40-cent-per-watt duty on imported cells a 78-cent-per-watt floor price for imported modules.
While this case has caused a considerable rift in the solar industry, both sides of the argument have presented numbers to reflect the impact of aggressive tariffs on imported solar. The Solar Energy Industries of America (SEIA) estimates that the tariffs could cause the industry to lose almost 90,000 jobs.
Regardless, everyone in the industry is awaiting for President Trump’s ruling on the subject, which could increase the cost of solar modules up to 40%. Judging by the White House’s verbiage and track record regarding clean energy policy (www.nytimes.com/2017/10/09/climate/clean-power-plan.html), we imagine a price increase in imminent.
So if you’re happy with the price of your current proposal, you may want to consider moving forward quickly in order to avoid almost inevitable price increases.
It’s in the news! Read one article: https://arstechnica.com/information-technology/2017/09/trade-commission-decision-finds-solar-manufacturers-harmed-by-imports/
Reduction in 50% MACRS Bonus Depreciation in 2018
All commercial solar installations completed after January 1st, 2018, will include a decreased MACRS bonus depreciation of 10%.
What is MACRS? Qualifying solar energy equipment is eligible for a cost recovery period of five years through a specific depreciation schedule. This depreciation schedule allows businesses to deduct the system to reduce tax liability and accelerate the rate of return on their solar investment.
In general, “depreciation” means the loss of value over time when one purchases an object for a specific use. Business owners are eligible to deduct these losses from their taxable income when used for business. If you run your business out of your home, you might be eligible for MACRS at that location.
One thing to note is it’s important to understand your tax rate. Contact your CPA to determine this if you’re not sure.
￼￼In terms of the 50% bonus depreciation, businesses can elect to depreciate half of the basis while the remaining half is depreciated under the normal MACRS recovery period, which would expedite your payback period and return on investment.
However, the solar project must be in service before January 1st, 2018, to claim the 50% bonus. After this period, the percentage lowers to 40% during 2018 and decreases to 30% during 2019. This could mean that waiting to get started on your solar project will cost you a few extra thousand dollars. Not to mention while you wait, you are paying your regular utility bill. Those payments to the utility are effectively lost money.
Read more on MACRS and solar: https://www.seia.org/initiatives/depreciation-solar-energy-property-macrs
So should I wait for solar?
In South Carolina, commercial solar owners typically see between a 3-5 year payback period on their investment given the current MACRS bonus and current panel pricing. If you delay until 2018, you will likely see a market that increases the price to the consumer.
There is also the reality that the state tax credit will run out. California, North Carolina and other states have already discontinued their credits. There is no certainty that it will be here in 2018 in South Carolina. In addition, while you are waiting to make a decision on solar, you are spending money each month you wouldn’t with a solar system.
Technology isn’t improving so fast that it makes solar obsolete. Those who have installed solar five years ago have systems that are producing free power for their owners right now. Solar is not like the latest iPhone, where a new version is dozens of times better than its last iteration.
The reality is that the sooner you are able to make an investment in solar, the better off you will be.