Ask and Expert for the week of November 10th, 2014

Here is a sample of some of the submitted Ask an Expert questions for the week of November 10th, 2014:

Please keep in mind when reviewing these responses that it is not the role of the Solar Outreach Partnership to provide legal or tax advice, and nothing herein should be construed as such. These responses are provided for educational purposes only, and should be verified by experienced legal counsel before any decisions or actions are taken.

Question: If a person owns a rental home in California and rents and lives in a home in another state, but plans on moving into the rental home in 2017, can they get solar now for the rental home and be eligible for the federal tax credit now?

Answer: If someone installs a solar PV system on a rental home they own prior to Dec. 31, 2016, they are eligible to receive the federal tax credit, even if this is not their primary residence and they live out-of-state. For more details on the federal tax credit, you can check out the Database of State Incentives for Renewables and Efficiency: http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US37F&re=1&ee=1

 

Question: Are there any educational resources available for residential consumers to help them make informed decisions when installing a PV system on whether to purchase, lease, or contract for a PPA?

Answer: There are a handful of online tools available to help customers decide between the various financing options available for solar PV.

SolarOPs has published a guide on local lending for PV which describes the opportunity for local lending institutions to offer lending products for solar PV and details the differences between loans and PPAs:

See: http://solaroutreach.org/wp-content/uploads/2013/11/Local-Lending-for-Solar-PV-Final-Feb-2014.pdf

EnergySage (a private company) has an online “instant estimate tool” that breaks down the differences between financing a PV system via cash, loan, and a PPA. EnergySage’s assumptions are not revealed on the site and therefore the DOE cannot confirm or deny the tool’s accuracy.

See: http://www.energysage.com/news/energysage-launches-instant-solar-estimates

The Institute for Local Self Reliance (a non-profit) also has an online tool to help potential PV system owners evaluate the difference between owning and leasing.

See: http://ilsr.org/ultimate-solar-calculator/

The California Center for Sustainable Energy has an information page on its website that walks through the advantages and disadvantage of owning versus financing via a PPA.

See: https://energycenter.org/california-solar-initiative/homeowners/purchase-vs-lease/ppa

Finally the National Renewable Energy Laboratory has a number of publications and tools that provide more detailed and technical details surrounding the financing options and performance of solar PV depending (depending on how much of an energy geek you are).

See: http://www.nrel.gov/docs/fy10osti/46723.pdf; https://financere.nrel.gov/finance/content/crest-cost-energy-models; https://sam.nrel.gov/;  http://www.nrel.gov/docs/fy09osti/44853.pdf;

 

Question: Can the Federal ITC be leveraged by individual participants for a community owned solar project?

Answer: The structure of community solar projects can vary significantly and so it’s difficult to give an answer in general terms without knowing the specifics of the project. Many community solar projects are organized as Special Purpose Entities, in which community members effectively create and invest in a business, which operates the solar project. In these situations, it can be difficult to realize the full value of the investment tax credit due to IRS rules on passive income, and there may be limits on the number of investors able to participate in a program due to securities regulations. There are several possible workarounds to this problem, including partnering with an investor with a larger tax appetite who will own the system for tax purposes. NREL has developed a review of some of the possible ownership arrangements for community solar, which is available at http://www.nrel.gov/docs/fy11osti/49930.pdf.

 

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