Solar Incentives for Businesses & Farms
Commercial and Agricultural Solar Incentives
There are many solar incentives available for businesses and farms to help finance your solar system. Below are three programs that may be available to you. In the process of working with you to create your unique solar system design and meet your specific needs, we will also walk with you to look at these and are always available for any questions that you may have.
USDA - Renewable Energy for America Program (REAP)
Full Information Here: USDA.gov
What is REAP?
The program provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements.
Who Is Eligible?
Agricultural Producers
An entity directly engaged in production of agricultural products where at least 50% of the gross income comes from agricultural operations.
Rural Small Businesses
Must be located in eligible rural areas, and one of the following:
Private, for-profit entity (sole proprietorship, partnership, or corporation)
A cooperative
An electric utility that provides service to rural consumers and operates independent of direct govt control
Must meet the Small Business Administration size standards in accordance with 13 CFR 121.
Must have no outstanding delinquent federal taxes, debt, judgment, or debarment.
Must be in an eligible area: projects must be located in rural areas with populations of 50,000 residents or less.
Click the questions boxes for answers to more FAQs.
-
Loan guarantees on loans up to 75% of total eligible project costs
Grants for up to 50% of total eligible project costs
Combined grant and loan guarantee funding up to 75% of total eligible project costs
Loan guarantee percentages are published annually in a Federal Register notice, and REAP loans approved in Fiscal Year 2024 will receive an 80% guarantee.
-
Funds may be used for the purchase and installation of renewable energy systems, such as:
Biomass
Geothermal for electric generation or direct use
Hydropower below 30 MW
Hydrogen
Small and large wind generation
Small and large solar generation
Ocean (tidal, current, thermal) generation
Funds may also be used for the purchase, installation, and construction of energy efficiency improvements, such as:
High efficiency HVAC
Insulation
Lighting
Cooling and refrigeration units
Doors and windows
Electric, solar, or gravity pumps for sprinkler pivots
Switching from a diesel to electric irrigation motor
Replacement of energy-inefficient equipment
Energy Efficiency Improvement applications must contain an Energy Audit or Energy Assessment (depending on total project costs).
-
Applications for this program are accepted year-round at your local office.
We are located in Area 3, and the office is in Harrisonburg at 1934 Deyerle Ave. Our Area Director is Steven Davis.
Additionally, questions can be directed to our Rural Development person:
Tracey Krespach
Richmond, VA
(804)287-1606
tracey.krespach@usda.gov
-
What are the interest rates for the loan guarantee?
Interest rates are negotiated between the lender and borrower, may be fixed or variable, and may not be adjusted more often than quarterly.
Are there fees of the loan guarantee?
There is an initial guarantee fee, currently 1% of the guaranteed amount. There is also a guarantee retention fee, currently 0.25% of the outstanding principal balance, paid annually.
What are the grant terms?
Renewable Energy System Grants:$2,500 minimum
$1 million maximum
Energy Efficiency Grants:
$1,500 minimum
$500,000 maximum
Are there additional requirements?Applicants must provide matching funds if applying for a grant only. More information at the USDA page linked at the top.
Applicants must provide at least 25% of the project cost if applying for a loan.
All projects must have technical merit and utilize commercially available technology.
All projects require an environmental review prior to award or construction.
Why does USDA Rural Development do this?
This program helps increase American energy independence by increasing the private sector supply of renewable energy and decreasing the demand for energy through energy efficiency improvements. Over time, these investments can also help lower the cost of energy for small businesses and agricultural producers.
SRECS - Solar Renewable Energy Certificates
More Info Here: epa.gov and dominionenergy.co
What are SRECs?
A renewable energy certificate (REC) is a market-based instrument that represents that property rights to the non-power attributes of renewable electricity generation.
Solar RECs (SRECs) are created for every 1,000 kilo-watt hours of electricity generated by a solar energy system.
The owner of the SREC is the person or entity that owns the solar system, or ability to generate electricity from solar.
Many states (including VA) have created SREC markets to spur the development of solar by requiring electricity suppliers (like Dominion) to purchase SRECs produced by in-state solar systems as part of their obligation under the state's Renewable Portfolio Standard (RPS). Virginia's RPS.
Through the purchase of SRECs, electricity suppliers are ensuring that their products meet the RPS-mandated amount of solar power.
The monetary value of an SREC in these state markets is determined by supply and demand, with demand largely driven by electricity suppliers.
As of 2024, in Virginia, the current going rate for one SREC sold is around $45.00. However, similar to the stock market, the SREC rates will go up and down year to year, due to supply and demand.
Who Is Eligible?
Anyone who owns a solar system in a state that participates in SRECS - like Virginia.
This applies to homeowners and business owners.
Click the questions boxes for answers to more FAQs.
-
Many people think that since they generate solar energy on a monthly basis, they will get paid for SRECs monthly - however this is not accurate.
SRECs are purchased, by Dominion, whenever they need to purchase them, and this is not regularly, though it is often annually at least.
So you can likely make some money from this annually, but it's best not to depend on this as a regular monthly income source.
-
You can technically hold on to your SRECs and try to sell them yourself, however this is not recommended, for two reasons.
First, Dominion is extremely unlikely to seek out individual solar system owners to purchase SRECs from, preferring to purchase in bulk, or from larger producers whenever possible.
Second, working with an SRECs aggregator (who can bundle many SCRECs together and sell them for a better price, and ensure they are sold because there is large volume, offers you a better chance to ensure you sell yours regularly.
For this reason, Green Hill Solar partners with an industry SREC aggregator that we are able to sign clients up with who are interested.
-
No, this is separate from your electric bill and is available to anyone, whether they are a Dominion customer or not - so long as you own a solar system.
-
There are some fees associated with selling your SRECS through an aggregator (which we use), so your payback will be a bit lower than the going market rate.
Modified Accelerated Cost Recovery System (MACRS)
Full Information Here: IRS.gov
What is MACRS?
This is a system that allows you to recover the cost of business or income-producing property through deductions for depreciation using special depreciation allowances and deductions. The MACRS puts fixed assets into classes that have set depreciation periods.
Depreciation is an annual income tax deduction that allows you to recover the cost or other basis of certain property over the time you use the property. It is an allowance for the wear and tear, deterioration, or obsolescence of the property.
MACRS is the proper depreciation method for most assets as it allows for greater accelerated depreciation over longer time periods. This is beneficial since faster acceleration allows businesses to deduct greater amounts during the first few years of an asset's life, and relatively less later.
From a helpful article on Investopedia.
What Property can be Depreciated?
Must be property you own
Must be used in your business or income-producing activity
Must have a determinable useful life
Must be expected to last more than 1 year
This is less of an "incentive" and more of something available for business accountants to utilize when adding property such as solar systems into the business mix. There is a LOT to this, some linked below, but be sure to use a tax professional or CPA to help you sort through this option properly.