Now Every Commercial Building, Including Nonprofits, Can Harvest Value from Renewable Energy Systems
Sustainability is increasingly a part of many Boardroom discussions. At the same time, facilities have to find ways to cut operating costs and hedge against future increases, maintain operations under threats of electricity or fuel shutoffs, and achieve all of these things with as little capital expense as possible.
Renewable energy microgrids (solar + batteries + intelligent controls + other resources) have emerged as one of the most powerful and effective solutions. In particular, high-value incentives have significantly lowered net costs and raised the return on investment (ROI).
Historically, non-profits have been barred from access to the full value of these tax credits and other incentives and have been forced to rely upon third parties to build projects and provide services. The Inflation Reduction Act has changed the landscape dramatically. Now, nonprofits can reap valuable tax credits as a direct cash payment from the IRS despite having no tax burden, realize the full value of cutting high and unpredictable utility energy bills, meet increasingly vocal stakeholder demands for sustainability, and dramatically harden their facilities against natural and man-made threats to the energy system.
Faraday Microgrids is poised to be your trusted partner to realize the full benefits of renewable energy microgrids.
NOT Having a Sufficient Tax Burden No Longer Matters
Before the Inflation Reduction Act (IRA), only entities that paid high income taxes could take advantage of Federal tax credits. Even though there was the potential to receive a credit for up to 30% of eligible costs, nonprofits and businesses with low tax rates either had to forego this value or rely upon third-party investors to pay for the systems, take the credits, and provide services to the facilities.
Under the IRA, entities or individuals can now opt for one of four approaches to monetize the tax credits:
1. Does your entity not pay any taxes? You may opt for “Direct Pay,” where the IRS will send a cash payment equal to the amount of the tax credit.
2. Have some tax burden but not enough? You can utilize as much of the tax credit as you need and sell the remainder. And- the sale is tax-free!
3. Prefer to maximally reduce a tax burden? The new provisions allow credits to be carried back three years and forward up to 22 years on Federal taxes.
Tax Credits Have More than DOUBLED
Until the IRA was passed, the ITC was scheduled to go down to 22% and was on a schedule to sunset very soon. The IRA fixes the tax equity for 10 years and allows for up to a 70% ITC, under specific conditions.
The key is to have a project partner that understands how to maximize your benefits.
What if you are a nonprofit in a low-income community? At Faraday Microgrids, we understand what it takes to comply with the provisions of the new law, and may be able to reach a 60% incentive level. Imagine an energy project to slash your utility expenses, demonstrate sustainability, and harden your facility’s resiliency…and the Federal government will pay you to get it done!
Using a Third-Party Investor Has Got Even Better
Since the introduction of tax credits, using Other People’s Money (OPM) to get a renewable energy microgrid project done has been a great strategy to achieve cost savings, sustainability, and resiliency without capital expense (CAPEX). However, declining tax subsidies have required that investors keep energy services prices higher to meet expected returns.
With the significant increase in tax incentives, the net cost experienced by project investors has plummeted. This means that they can charge less for the renewable energy, demand reduction, resiliency services, or other features of advanced microgrids.
Faraday Microgrids has a stable of investors who are eager to help businesses that want to slash their operating costs without capital expense. Let us show you how to “capitalize” on these exciting opportunities!
Entities in Disadvantaged Communities Are Eligible for Special Advantages
In the past, organizations that lie within and served disadvantaged communities were largely passed over for the benefits of renewable energy microgrids. Whether this was due to lack of capital for project development or lack of adequate returns for potential third-party investors, many deserving communities have been unable to realize the cost savings, resiliency, and sustainability.
The IRA has recognized this oversight in prior incentive programs and has made decisive moves to correct this. With up to 70% Federal Investment Tax Credits, 65-80% accelerated Federal depreciation, and up to 100% State depreciation, properly configured projects could have low enough net cost to a third-party investor that they can provide energy services to sites at historically low cost—meaning the target communities reap the fullest possible rewards.
Faraday Microgrids is your full-service team with knowledge of the regions, entity types, and compliance requirements to maximize the tax benefits and drive optimal savings and performance.
High Tax Burden Makes Microgrids a Must
Nobody likes writing a check to the IRS.
And, when it comes out of your facility’s bottom line, it feels like it is draining the lifeblood of your operations. With the changes contained within the IRA, now is the time to pull your money back from the IRS and stop the bleeding.
Whether a project at your facility “only” qualifies for a 40% tax credit or you are fortunate enough to be the type of facility that is eligible for up to a 70% tax credit (plus depreciation), you have the opportunity for the IRS to pay for a significant part of your project.
What could be more satisfying than pulling your money back from the IRS and putting it to work adding value to your facility, slashing utility costs, hardening resiliency, and achieving true sustainability?
A Faraday Microgrid combines your solar power with energy storage (battery), smart controls, and any other resources that best suit your needs, to optimize your energy ecosystem. The intelligent microgrid controls unlock the full potential of these energy assets to collaborate and streamline utility approvals, offset the most expensive utility energy, cut demand costs, and maintain operability even during weather events and utility outages.
And the IRA adds unprecedented value.
Faraday Microgrids = REAL GREEN
Let the expert Faraday team unburden yours and capture the significant financial, operational, & reputational benefits of a renewable energy microgrid!