Micro-utility owners get 20 years
of income & major tax credits.

Federal Investment Tax Credit (ITC):

As the owner, you will receive a check from the Treasury Department equal to 30% of the total system cost. This is not a tax deduction. It is a cash grant.

Timing: The ITC Treasury Grant is payable within 90 days after the system is installed and approved.

State Rebate:

California offers customers a CSI Rebate based on the size of the solar system they install, which varies depending on which utility services the location. Currently customers in PG&E territory are entitled to a $350 per kW of solar they install. After taxes are deducted, this equals to $220 per kW, which in this example, totals $6,852.

Timing: Currently the CSI rebates are on hold. Therefore, they are not reflected in the projections above.

Solar system owners are entitled to deduct the 100% of the system cost (minus 50% of the ITC credit) in the first year of ownership. Normally an asset like solar with a useful life of 20 years would require the depreciation deductions be spread evenly over 20 years. By offering this 100% “bonus depreciation” to system owners, the federal government helps accelerate the simple payback period. As opposed to the tax credit, the depreciation deduction works like other typical deductions. That means it is not a dollar for dollar reduction of your tax bill. Instead, you reduce your taxable income by the deduction amount. Ultimately your taxes owing will be less as your taxable income drops. To figure out the actual size of your depreciation deduction, multiply the depreciation deduction amount by your tax rate. The example above shows this result in the “After Tax Value Of Deduction,” assuming the investor’s tax rate is 35%.

Timing: The investor can claim the solar depreciation deduction on the first tax return he files after the system in installed. His tax bill will then decrease by the amount in the “After Tax Value of Deduction” column.

This is pure incoming cash flow from the host customer for your micro-utility. The host customer signs a PPA that obligates him to buy your solar electricity at a pre-determined rate. These energy payments from the customer are your primary project revenue. In this example, that rate plan starts by discounting the customer’s current price for energy by 25%, and then it raises that price by 2.5% each year.

Solar is truly low maintenance, yet preventative maintenance insures high performance. The maintenance program includes simple cleaning, system check-up, and minor electrical repairs once or twice a year. In addition, system owners should carry insurance covering the solar array against property damage.

The equipment and installer warranties cover almost all major repair scenarios. The one exception is that some point after the solar power inverter 10-year warranty expires, the inverter will need to be replaced. We budget $15,000 for this replacement, and include it as a cost here in year 2021.

This column represents the net revenue the investor receives each year. It equals the Electricity Payment A Year minus the O&M Cost A Year. This column does not include the value of the tax incentives the investor receives.

This column reflects the tax incentives’ reduction of Gross Cost, by adding the Investment Tax Credit and after tax value of Bonus Depreciation to Net Revenue.