Don’t think you can afford a solar system for your farm?

Renewable energy is a growing area of interest group for many farm . In particular , off - grid solar vim system have become a popular form of renewable vigor . Off - power grid systems are suffer - alone baron units not connected to the electrical grid . They directly use the energy created from solar panels for powering farm system and , as a consequence , can assist reduce electricity costs to connected system on farms . However , a gravid barrier to install off - grid systems has been their price . With the transit of The Inflation Reduction Act , the cost of instalment are potentially much more manageable .

This is a follow - up to the Michigan State University Extension clause : “ Considering Solar Energy ? It Can grant material Cost Savings on Your Farm . ” The first article present scenario of on - farm cost economy from solar vigour systems . In this article , we ’ll focalize on chance through USDA ’s Rural Energy for America Program ( REAP ) to boil down installment monetary value .

REAP focus on renewable Energy Department systems and energy - effective improvements . It provides funding specifically to farming producers and modest businesses in rural areas to instal and implement solar DOE organization . In 2022 , the Inflation Reduction Act ply over $ 1 billion in funding for this syllabus .

Solar Grants Through REAPAdministered through USDA Rural Development , REAP grant can cover up to 50 % of off - storage-battery grid solar installation costs . These are competitive Grant and are not undertake . However , if received , they can greatly reduce solar installation costs .

To illustrate how REAP can aid with offset solar investment funds costs , permit ’s look at an example . Our example farm has decided to install a 10 - kilowatt system ( 1 kW = 1,000 James Watt ) . Using an norm of $ 3 per watt , this 10 - kW system costs $ 30,000 to be fully installed . Our example farm have a REAP President Grant , which decreases cost by $ 15,000 ( 50 % x $ 30,000 ) . This leave $ 15,000 in remain cost . Our example farm use $ 3 per W to direct instalment monetary value , which is often used as a starting point in time for most organisation plan costs . scheme cost vary look on component and the farm ’s desired goals , which determine how much solar is demand . The designing and cost of a solar system of rules will also influence financing and returns on investment .

USDA will soon be taking program to contend for the fiscal year 2024 REAP grants . Round Two of software will be due March 31 , 2024 . Round One was completed in 2023 . Templates are available on the USDA Rural Development program site or at local billet .

guarantee Loans Through REAPREAP also offers guaranteed loans to help cover the remaining initiation costs . The total of grants and loan within REAP can cover a upper limit of 75 % of full project costs . Unlike the grant serving of support , the loan component part must be repaid . With a 50 % concession , a loan could be made for 25 % of projection costs to get to the 75 % maximum . A loanword for 25 % of the installation toll would get over $ 7,500 of our $ 30,000 example system . loanword terms can be up to 40 years . Work with your loaner to place what loanword terms work best for your farm ’s situation . In monastic order for a grant and guaranteed loan to be used , applications must be made together .

Since the program limits Duncan James Corrow Grant and loan financial support to 75 % of the installment cost , the remain 25 % of price will still be call for to pay in immediate payment . In our exercise farm , as shown below , the remaining costs would be $ 7,500 ( 25 % x $ 30,000 ) .

Tax Savings for Solar InstallationsThe Inflation Reduction Act furnish for the Investment Tax Credit , which allows businesses a tax credit of up to 30 % of the cost of instal a solar energy system . Tax credits offset price by straight off decreasing the farm ’s revenue enhancement financial obligation . The U.S. Department of Energy , Federal Solar Tax Credits web page outline the revenue enhancement credit sum of money and eligibility requirement . These tax credits require that systems be new and install prior to 2034 . These systems must be own by you as a line of work owner . Solar systems for leasing or selling electricity are not eligible for revenue enhancement credit . In accession , prevailing wage and learner labor essential put on . Speak with your tax preparer to determine if you qualify for this credit .

To instance the likely benefits of the revenue enhancement credits , let ’s revisit our example farm . Our farm has installed a 10 - kW solar system with a project cost of $ 30,000 . A tax credit for 30 % of task costs would be equal to $ 9,000 .

Additional “ fillip ” tax course credit of 10 % each may also be useable for solar free energy system installation . farm that are turn up in a low - income community may be eligible for the Low - Income Bonus . A downcast - income community is set as one in which the medial fellowship income is 80 % or less of the statewide and/or metropolitan area median income . to boot , the Domestic Content Bonus may practice if building exclusively uses domestic labor and U.S.-made material .

derogation disbursement is another income tax tool that can help recover installation costs . Solar zip systems are depreciable assets . It is important to note that the role of tax credits may limit how much depreciation disbursement is available . Also , the REAP Duncan Grant is considered farm income . Farmers should review with their tax professionals how these implications might bear on their tax direction programme .

It is further crucial to observe that the program benefits and the revenue enhancement savings may occur after the John Cash payment for installation is required . There are a smorgasbord of requirements for the full program benefits and tax savings to apply .

Source : canr.msu.edu