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      Financial Incentives

      Learn about Transect’s Financial Incentives worksheet to determine your potential tax credits. 

      In a Transect Report, the Financial Incentives section simplifies the complex landscape of renewable energy tax credits. By clearly outlining where and when Investment Tax Credits (ITC) and Production Tax Credits (PTC) apply, developers can easily determine the potential financial benefits of their projects to ensure accurate credit claiming and maximize project returns.

      This outlines the potential federal tax credits for solar energy facility owners, including photovoltaic (PV) or concentrating solar-thermal power (CSP) technologies. This is not professional or tax advice and is subject to change based on guidance from the Treasury Department. This should not be used as the sole information source for decision-making for tax, purchase, or other binding agreements.

      In this article, we’ll review how to:

      Locating the Financial Incentives Worksheet

      The Financial Incentives section is located in the lower-right corner of a Report’s Executive Summary. 

      It can also be accessed by clicking the Financial Incentives tab on the left-side menu.

       

      Calculating the Potential Incentives 

      Within the Financial Incentives Opportunity Worksheet, you will provide information about the project’s size, labor requirements, cost, and power output. After providing the project details, click Calculate to generate an estimate of the potential Investment and Production Tax Credits.

      Required Questions

      • “What is your project size?”
        This determines if your project qualifies for the Low Income Bonus.
      • “Will this project meet the Treasury Department's labor requirements?”
        This indicates if your project will be applicable for the Full Rate Credit.
      • "Will this project meet the domestic content requirements?"
        This determines if your project is applicable for the Domestic Content Bonus.
      • "When will construction begin on this project?"
        This relates to Rate Schedule, which establishes a gradual decrease in tax credits after a specified project construction start date.

      Optional Questions

      • "What is your total estimated project cost?"
        This calculates the total project savings.
      • "What is your estimated power output?"
        This calculates the estimated savings.

      If you’re unsure how to answer any of the questions, click the icon for more information. 

      Reviewing the Potential Incentives

      Once you’ve selected Calculate, you will see your potential savings based on the answers to the context questions. 

      This information is based on the following:

      • Base Credit: The Base Credit will populate if you indicate that your project meets the Treasury Department’s labor requirements (question #2). This means that all construction, alteration, and repair wages for the first five ITC years and ten PTC years must match local prevailing rates. Additionally, a mandated percentage of construction labor hours must be completed by apprentices. 
      • Domestic Content Bonus: The Domestic Content bonus will populate if you indicate that your project meets the domestic content requirements (question #3). To qualify for a 10% bonus to the ITC or PTC, a solar project must use U.S.-made steel and iron and meet increasing domestic content requirements for manufactured products. These requirements start at 40% of product costs for projects beginning before 2025 and gradually increase to 55% by 2027.
      • Energy Community Bonus: The Energy Community bonus will populate if the project is within an Energy Community.
      • Low Income Bonus: The Low Income bonus will populate if the project is less than 5 MW AND within a Low Income Community OR Indian Lands. 

      For more information on the ITC and PTC, click Description. For additional resources, click Links or follow this link.

       

      Exporting Financial Incentives 

      Once you've calculated your potential Financial Incentives, you can include that in an export.

      Export-Incentives

      • Select the Export icon in the upper right-corner.
      • Drag and drop the Financial Incentives layer to the "Selected Report Sections."
      • Click Generate PDF.

      References

      Federal Solar Tax Credits for Businesses - US Department of Energy
      Business Energy Investment Tax Credit (ITC) - DSIRE
      Energy Communities: Coal Closure - US Department of Energy
      Energy Communities: Brownfields - Resources.org
      Energy Communities: Fossil Fuel Employment + High-Than-Average Unemployment Statistical Areas*** - Resources.org