Federal Energy Incentives Abound

Rural energy projects

reap energy incentives

We’ve never seen clean energy incentives like these. The Inflation Reduction Act passed in 2022 is a $360B climate bill. The goals mandated by the bill are actual programs now–and money is starting to move rapidly to businesses, non-profits and individuals for renewable and energy efficiency projects. In fact, savings of 20-40% compared to traditional grid power are common. (!) Let’s look at just how rich these incentives are, and for whom.

Top of the list are $1B in “REAP” grants from the Department of Agriculture, which pay 50% of the cost of a clean energy project for any rural small business. “Rural” means less than 50,000 residents. “Small” is complex but generally requires under 500 employees. Effectively, REAP grants create 20-40% savings compared to buying traditional power from the grid. REAP grants are competitive, with a 15% scoring bonus going to projects in economically depressed zones. In sum, REAP savings are tremendous–if you qualify.

Right behind REAP grants are clean energy tax credits. Any business or individual completing a clean energy project gets a 30% credit toward their taxes, and if you’re in a low-income area it’s 40%. Non-profits that don’t pay taxes can get a direct payment from the IRS for the same amount. While we’re not tax experts, we’re told that tax credits apply to the balance remaining after a REAP grant. So the two together can pay for 65-70% of a project’s total cost!

Eligible projects are many and varied. Renewable energy projects like solar panels, solar heating or combined heat and power all qualify. So do efficiency projects like heat pumps, production equipment upgrades, HVAC controls and insulation. Energy storage projects also qualify. For now, it’s almost everything.

Acting quickly is key. The current REAP grant program is for only another 13 months. More money is allocated after that, but nobody knows how the rules will change. Moreover, as more people hear about REAP grants, competition will increase and they’ll be harder to get. Also, solar tariffs are again looming for late 2024, which will push prices up and slow projects down. Finally, these incentives may impact government receipts at a level much greater than anticipated, causing policy-makers to pull back.

Bottom line, energy incentives today are unprecedented–which makes now the right time to apply them to your business. A quick and easy way to start is with a free Energy Scorecard from Sustaine. By matching your energy bill to all available incentives, you’ll see how to get your greatest energy savings.

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