Inflation Reduction Act 2022: Benefits for Businesses

Get Your Free Solar Bid
Inflation Reduction Act - Benefits for Businesses - Cedar Creek Energy

Among many other climate-positive initiatives, the Inflation Reduction Act’s (IRA) new Investment Tax Credit is game-changing for Minnesotan businesses who may be considering a solar power installation or a string of solar projects over the coming years. In the words of Carol Andress, associate vice president of climate and legislative affairs at the Environmental Defense Fund (EDF) the IRA puts renewable tax credits “on steroids”. But what does this mean for Minnesota’s business community, and how much could your company save?

The New Investment Tax Credit is Twice as Big for Business

The 30% Investment Tax Credit, now renamed the Clean Energy Credit, has been reinstated for both commercial and residential solar power projects having previously fallen to 26% – and this applies retroactively to solar projects placed in service during or after 2022! From 2023 onwards, this also includes stand-alone battery systems not connected to solar power and interconnection costs will also be included in the tax credit, for projects smaller than 5 MWac. But things get a lot more exciting for businesses under the IRA: 10% more is added for selling the electricity to low income families through community solar schemes; another 10% for using US-manufactured solar products and construction material; 10% for solar projects located on former fossil fuel energy sites. All of these bonus tax credits combined amount to a super-tax credit of up to 60%. That’s right – more than half the cost of the entire solar power installation. Curious about what that means for your overall costs? Give us a call and we’d be happy to number crunch with you!

How Much Can the Clean Energy Credit Save Your Business?

The CEC will grant you a tax credit of up to 60%, and potential tax deductions of up to $600,000 for every $1 million invested in solar power. According to Green Building Elements, an average 100kW commercial solar project costs $251,162. A standard 30% tax credit for this is $75,348.60, and 60% comes to $150,697.20. This cost savings alone is staggering – even before you consider the potential cost savings on utility and fuel bills created by solar power installations. The US Energy Information Administration put the average monthly electricity cost for Minnesotan businesses at 13.10 cents per kWh in June 2022; Solar.com puts the average cost of solar energy at 7 cents per kWh – a little over half that! Cedar Creek Energy’s solar power installation for HOM furniture’s Rogers location now generates over 670,000kWh – nearly 60% of all electricity use! Our solar power project for the City of Becker Wastewater Disposal Centre generates 1,000,000 kWh per year, saving the city approximately $100,000 annually. As initial outlay is the most expensive part of a solar installation, this new tax credit transforms the playing field for Minnesota’s business community!

A New Decade of Solar For Minnesotan Businesses

After years of starting and stopping, where solar tax credits are concerned, Minnesota’s businesses can now rest assured that this tax credit will be around for the next 10 years (if you consider that it applies retroactively to all commercial solar projects completed in 2022). The ITC expires at the end of 2032, decreasing to 26% in 2033 and 22% in 2034 (unless it is extended AGAIN, of course). This new level of stability allows businesses to make firm long-term plans, particularly concerning matters like planning the costs around the transition to net zero. It helps to compensate for factors of high inflation and global supply chain issues. On the other hand, looking at the long-term picture, can your business afford to wait for the next fuel crisis to take hold? Minnesota’s leading home-grown solar business, Cedar Creek Energy builds long-term partnerships with local businesses – we are happy to show you the cost-benefit analysis for current and future commercial solar power projects!

The CEC won’t be around forever – the rate drops back to 26% in 2033 and projects must commence by 2025 to qualify for 30%. So, if you’ve been considering exploring the benefit of solar power for your business, now could be the time to find out just how much money you could save. We can estimate your savings from the tax credit and the incredible savings available in energy and fuel bills from a commercial solar power installation. Get in touch today and our experts will be happy to give you a quote!