Each week, we highlight an article that cleantech marketers ought to read. Also, we share a few words about why the article is worth your time.
What it says
The Tax Cuts and Jobs Act of 2017, also known as the Trump tax cuts, may add over 25 percent to the lifetime value of commercial solar projects nationwide.
The tax cuts use two methods to reward commercial solar investors. First, they reduce the federal corporate tax rate. This shields companies from some of the tax liability tied to the project’s return on investment. Second, they allow companies to depreciate the full project cost in the first year of operation. In the past, it took about five years for companies to claim full depreciation.
If you are a commercial solar developer who had a project rejected on economic grounds this year, you now have a New Year’s resolution: calling back those CFOs with updated figures.
Who said it
- Helps lead solar industry’s Orange Button initiative to set up data standards and reduce soft costs
- Worked as investment banker at JPMorgan before entering the solar industry
Why it matters
Commercial solar is the smallest segment of the US market, and has been for several years. Since 2014, as the overall market has grown, commercial solar accounted for a modest 15 to 20 percent of new generating capacity. And industry analysts expect commercial solar to make no significant inroads on the residential or utility solar markets in the years ahead. If the Trump tax cuts help move the needle on commercial solar deployments over the next few years, this would represent a significant stimulus for the market segment that needs it most.
What comes next
Watch for an increase in commercial solar project pipelines. SunPower, O3 Energy, Nexamp, and Greenskies Renewable Energy were among the top commercial solar project developers in 2017. After all, if commercial solar fortunes are on the rise, you might see an upswing in business from these companies.
One more thing
For months, the media fixated on how the Trump tax cuts would affect investors, especially tax equity investors. Too bad that this aspect of the tax bill wasn’t part of the public discussion before the legislation became law. Nevertheless, credit to Samuel Adeyemo for landing a meaningful scoop on the renewable energy news beat.