Farmers can have the cost of a new solar panel system reduced by up to 51 percent by a U.S. Department of Agriculture grant and a federal tax credit. No wonder why owning your power via solar panels makes so much sense for farmers.
All of the electricity your solar panels generate will go toward powering your home, barn and silos — lowering the amount you pay the utility company for electricity — and any excess sent back to the grid will show as a credit on your bill.
When you see talk of a 51 percent reduction of anything, you may think the offer is too good to be true. But the math here is very simple, and that’s what makes solar panels an exciting investment.
We start with the USDA grant that’s funded through the Rural Energy for America Program (REAP). REAP provides farmers a grant of up to 25 percent of total project costs for solar systems, and loan guarantees for up to 75 percent of total project costs. Those incentives will provide significant help to farmers as they pay for their solar panel systems. But the benefits don’t stop there.
Farmers are eligible for the federal tax credit of up to 26 percent that’s available to those installing solar in 2020, and the credit becomes 22 percent in 2021. In 2022 and beyond, the credit for installing solar for businesses, including farms, falls to 10 percent. So you see the value in going solar in 2020 — adding the 25 percent USDA grant with the federal tax credit means that farmers could have the cost of their solar systems reduced by more than half.
These benefits provide the backbone of a very attractive energy future, and there even may be state-level benefits where farmers can reap additional savings. Some states offer solar renewable energy credits (SRECs), which are earned for every 1,000 kilowatt hours produced by your solar system. Those credits can be sold to utility companies that buy them to meet renewable energy portfolio standards. That saves you additional money on your solar panel system.
As with all capital expenditures, it’s important to look at how valuable an investment will be to you.
Let’s say you wanted to buy a tractor for $100,000 or a solar array for the same amount. Both expenditures likely qualify for 100 percent depreciation under current IRS tax rules, allowing you claim the full purchase amount in the year you place the item into service.
Where it starts to get fun for farmers is combining the USDA grant with the federal solar tax credit. Based on those grants alone, that will save you up to $51,000 more than is possible on a tractor. Tractors are valuable assets — something your farm may not be able to live without — but it’s clear how valuable and cost-effective of an investment solar panels can be to your present and future.
Keep in mind that REAP applicants must provide at least 75% of the project cost if applying for a grant only. Those applying for a loan, or a loan and grant combination, must provide at least 25% of the project cost.
Beyond the savings we expect farmers to see on their electric bills, there are many environmental benefits associated with going solar. All of the electricity generated by your solar panels comes without generating carbon emissions that have proven harmful to the environment. That’s in contrast to utility companies that still primarily rely on the burning of fossil fuels to generate the electricity they provide to customers. The burning of coal and natural gas is responsible for emitting thousands of metric tons of carbon dioxide into the sky annually.
Farmers make their livelihood from Earth’s bounty, making the message of sustainability and environmental stewardship easy ones to grasp. Farmers that don’t take care of their land, their crops or their animals won’t be in business for long. By taking steps to further care for our planet with a solar panel installation, you’re setting a great example for future generations.
Running a farm is not much different than running any other business, as you have to worry about containing costs and market factors that can affect your operation. That’s why you’ll be able to relate to other businesses that have gone solar with help from POWERHOME. For example, BENLEE Trailers in Romulus, Michigan, which manufactures roll-off trailers for the scrap, waste and environmental industries, found the value in working with us to install 404 panels on their rooftop.
Combine the electric bill savings, the USDA grant, the federal tax credit, first-year depreciation, and environmental benefits into a simple package, and it’s clear why solar panel installation makes sense for farmers. No matter the size of your farm, POWERHOME can build the size system that’s right for you so you can offset your costs and positively impact your financial future and the environmental future of the planet. It’s not often a product can win on such important levels, but solar panels do just that. Call us for more information or to see if solar is right for you.
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Note: POWERHOME SOLAR does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors.