Commercial System Costs & Incentives

How much does a typical commercial solar PV system cost?

A number of factors determine the final price of a PV system, including its size, component options and configuration, labor costs, local permitting costs and available incentives and tax credits. 

The cost of a solar electric system is measured in dollars per watt. The average cost for a commercial system is currently $2-4 per watt. That means a 20-kW commercial system will cost $40,000-$80,000, prior to tax credits or incentives.

What incentives and tax credits are available?

A one-time federal investment tax credit (ITC) is available for commercial solar PV systems. The credit is based on a percentage of the total solar PV system cost. If the system is placed in service before Dec. 31, 2019, a federal tax credit of 30% of the total system cost is available. After Jan. 1, 2020, the tax credit will start to decline. After Jan. 2022 the tax credit will stay at a permanent 10% of the total system cost for commercial systems.

Federal Investment Tax Credit

Placed in ServiceTax Credit Percentage
By 12/31/201930%
1/1/2020 - 12/31/202026%
1/1/2021 - 12/31/202122%
1/1/2022 -10%

Note: Businesses must have the tax liability to utilize the credit, but a portion of the credit may be carried forward if not completely usable in the installation tax year. Depending on your local utility, there may be local solar rebates or incentives available. For more information on incentives, visit DSIRE. To find out if your business is eligible to receive a tax credit, please contact a tax professional.

Commercial tax depreciation

An income tax deduction exists for property that has a useful life of over one year and is used by the taxpayer in their business. Many renewable energy technologies including solar systems are eligible. See the IRS website on depreciation and contact a tax professional for more information.

Solar Renewable Energy Credit

Renewable energy certificates (RECs) are granted to renewable energy producers in certain states for every 1,000 kilowatt-hours (kWhs) their system contributes to the electric grid.  Some utilities or renewable energy aggregators may compensate solar producers for their portion of solar RECs that will be used to meet renewable portfolio standards. See the U.S. Department of Energy Green Power Market website for more information.

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