There are three California and federal subsidies that together can reduce the cost of a commercial solar power system by 70-80% of the original installed price.

1. California Solar Initiative

In 2006, CA Public Utilities Commission President Michael Peevey laid the foundation for the California Solar Initiative, a 10-year, $3 billion program designed to stimulate growth of solar market in California.

The program was implemented in early 2007 and today, the California Solar Initiative ("CSI") provides strong incentives to encourage California businesses and residents to adopt solar power.

CSI incentives are available in two forms. The first, available only to projects 30kW and smaller, is a cash rebate paid based on the solar power system generating capacity (i.e., measured in Watts) called the Expected Performance-Based Buydown, or EPBB. The second, for projects greater than 30kW, is incentive which pays solar power generators a monthly payment paid over 5 years for power generated (measured in kilowatt-hours or kWh) called the Performance-Based Incentive, or PBI.

Following the successful model established by similar subsidy programs in Germany and Japan in the 1990s, the CSI program is designed to evolve with growing market demand such that as applications for rebates grow, the program is designed to pay lower subsidies accordingly. Currently, commercial rebates are at what the program administrators refer to as "Step 6".

2. Federal Investment Tax Credit for Commercial Solar Energy Property

Businesses investing in solar energy equipment and its installation can take 30% of the total project costs (including supporting structures and new roofing installed in conjunction with PV systems). For more information, see IRS Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562.

Alternatively, the 2009 American Recovery and Reinvestment Act provides for a Renewable Energy Grant, administered by the US Department of Treasury, equal to the 30% Investment Tax Credit. There is an online application process, and applications are currently being accepted. (Sunlight Electric completes these applications on our customers’ behalf.) See the program web site for more information, including answers to frequently asked questions.

Grants are available to customers purchasing solar power systems placed in service before the end of 2010 or after 2010 if construction begins on the property during 2009 or 2010 and the property is placed in service by Jan 1, 2017.

3. MACRS Accelerated Depreciation

Investment in solar power generating equipment and its installation are subject to 5-year accelerated depreciation under the IRS' Modified Accelerated Cost Recovery System. Inexplicably, though solar power equipment is considered a 5-year asset, fully depreciating it takes six years.

Now that you know about these subsidies, click here to learn about other ways Sunlight Electric can make solar power affordable for your business.