MISSOURI SOLAR POWER REBATES AND INCENTIVES
Missouri – and Kansas City – is a terrific location for solar energy. While solar-irradiation levels do vary across the US, building owners can produce a significant portion of their electrical load from their roof space, no matter what state they are in.
Kansas City’s solar irradiation levels are on the same level as those in southern U.S. cities such as Houston or New Orleans (you can learn more about solar irradiation in the United States by visiting the National Renewable Energy Laboratory website).
SOLAR ENERGY IN MISSOURI
Missouri has solar energy incentives, from the federal solar tax credit to solar-power rebates offered by utility companies.
In 2008, Missouri passed Proposition C with overwhelming support (67%). Proposition C required Investor Owned Utilities (IOU’s) to offer a $2/watt solar-energy rebate and to generate 15% of their power from renewable sources by 2021.
Just recently, in May 2013, HB 142 - compromise legislation between the Missouri Solar Energy Industry Association (MOSEIA) and two of Missouri’s investor-owned utilities (KCP&L and Ameren) – passed. We have a blog post outlining exactly how HB 142 will affect Missouri’s renewable energy market, but the headline with regard to incentives is that the rebate will gradually step down over seven years, starting in 2014 at $1.50/watt.
FEDERAL SOLAR INVESTMENT TAX CREDIT (ITC)
Through the solar investment tax credit, owners of solar property are eligible for a tax credit equal to 30% of the cost of the solar property, reducing tax liability for businesses that purchase solar-panel systems.
UTILITY SOLAR-POWER REBATE
KCP&L and Ameren provide a $2/watt rebate per account, up to a solar-panel system maximum of 25 kilowatts – or $50,000. Rebates can only go to KCP&L or Ameren account holders and are typically paid within 30-60 days of installation.
Beginning in 2014 at $1.50/watt, this rebate will gradually step down over seven years. This rebate step-down is a result of the passing of HB 142. Read all about the passing of this bill in our blog post, “End of Session Update: Missouri Solar Rebate and Net-Metering“.
The federal government established the Modified Accelerated Cost-Recovery System (MACRS) in 1986 as a tool of depreciation that allows businesses to recover investments in certain tangible property over the lifetime of the property.
Solar-panel systems are eligible property for a cost recovery period of five years, reducing tax liability for the owners and accelerating the rate of return on a solar investment. When an Investment Tax Credit (ITC) is claimed on eligible equipment, the owner is able to deduct 85 percent of his or her tax basis.
In 2008, Congress made the decision to further incentivize capital investment by accelerating the MACRS depreciation schedule economy-wide, qualifying solar-panel system owners for a 100% depreciation bonus on systems placed in service by December 31, 2011.
Under current law, qualifying solar-energy systems placed in service by January 1, 2014 are eligible for 50-percent bonus depreciation. This means that during the first year of a solar system’s service, businesses can choose to depreciate 50-percent of the tax basis while the remaining 50-percent is depreciated under the normal MACRS schedule.
Bonus depreciation can create a net operating loss that may be carried back to the two prior tax years and provide an immediate tax refund. A net operating loss may also be carried forward twenty years.