Administration - Incentives

Where found? Administration menu > Incentives

Accessibility? Users with administration permissions only.

How used?

Incentives are financial benefits meant to compel customers to purchase solar and energy efficiency systems. There are hundreds of incentive programs available throughout the US for solar and energy efficiency projects. SolarNexus provides several features that can assist your company in sales of projects that leverage incentive programs, including:

• Automatically calculating incentive amounts and tax effects, incorporating these amounts the economic benefit analysis for the customer (see Analysis)
• Access to an incentive’s application forms (sales user may be able to prepare these prior to visiting a customer to close a sale)
• Management of incentive application paperwork
• Automatic creation of incentive applications in PowerClerk™ (currently limited to California Solar Initiative)

To enable these features, the SolarNexus database contains incentive program definitions.

Check for Your Desired Incentives

SolarNexus adds some of the most prominent incentives programs to its database. However, due to the large number of incentive programs, and their dynamic nature of appearing and disappearing, some incentives may not be populated.

To check for your desired incentive program(s), select Incentives from the Administration menu. On the Incentives screen you can browse existing incentives defined by SolarNexus, or by your own company. Note that all SolarNexus users may see the SolarNexus defined incentives, but only users within your company may see the incentives created by your company.

Use the filters at the top to filter on the type of incentive you are looking for. If you can't find your desired incentive program, it can be added.

Adding Incentive Program Definitions

You have two options for adding a new incentive to SolarNexus:

1. Request that SolarNexus add it to the shared database of incentive programs
2. Create your own incentive program definition - accessible to only your company

To create an incentive for your company, click Add Incentive at the top right of your company incentives screen. The incentive editor will open.

Setting Default Incentives on Solutions

To simplify setting up and running analyses, you can set what incentives should automatically be populated on the Incentives section of the Analysis parameters in a solution.

Go to Administration > Project Settings > Analysis Parameters. (screenshot below)

In the Incentives section, there are two columns, one each for Residential and Commercial jobs - allowing you to set different default incentives for each. There are three settings here:

• Rebates Collected By - If a rebate is included in the incentives, which party will be assumed to collect it? Some rebates allow the contractor OR the customer to collect the incentive money. IF the contractor collects the rebate, that amount can be subtracted from the contract amount to lower the price. However, that would also lower the tax credit amount, if included.
• Auto-Suggest PV Rebates - SolarNexus has access to a third party database of PV rebate incentives (provided by Genability). Checking this box tells SolarNexus to check that database and populate any PV rebate incentives it finds for the solution.
• Include these Incentives as Defaults (w/ Eligible Service Types) - Create a list of incentives that SolarNexus should add to a solution that contains that type of service. When you add an incentive to this list, be sure to click in the box below it and select all types of services that this incentive applies to. For example, in the screenshot, the Federal 30% ITC is eligible for Grid-Tie PV, Energy Storage, or MPU (main panel upgrades).

Note that changing any defaults will NOT affect any existing solutions and analyses. These default settings are applied only when a new analysis is created.

About Incentives

Rebates (aka "buydowns")

A one time payment is made to either the customer or contractor. There are two types:

• Capacity Based Incentives (CBI) - Amount is based on a capacity rating, typically "watts" for a PV system. A rate in dollars per rated capacity.
• Investment Based Incentives (IBI) - Amount is based on the amount spent on the project/system. Typically a percentage of the system cost.

Contractors may choose to "spot the customer" the rebate amount, and agree to collect it themselves. If collected by contractor, the rebates may be applied to lower the contract price. This lowers the price to the customer, possibly improving chances of sale, however it then also lowers the customer's federal tax credit, because the ITC basis is the contract price. Plus then the contractor has to do the rebate administration and collection.

Tax Credits

There are three types:

• Federal Income Tax Credit
• State Income Tax Credit
• Local Income Tax Credit

A tax credit is essentially money that can ONLY be used to pay tax liability. If the customer does NOT have a tax bill amount due, then a tax credit is worthless to them. Tax credits can be calculated in different ways, including fixed dollar amounts, amounts linked to energy produced (performance based), or as percentages of contract prices.

• Analyzing a Solution - Energy and Financial Performance
• Federal ITC and MACRS Informational Resources
• Proposing Solar Loans with Optional ITC Payments
• Why is the Federal ITC amount less than the ITC's percentage of the gross price?

Renewable Energy Credits (RECs)

Renewable Energy Certificates (RECs), also know as Green tags, Renewable Energy Credits, Tradable Renewable Certificates, or State Renewable Energy Certificates (SRECs) are tradable, non-tangible energy commodities in the US that represent proof that 1 megawatt-hour of electricity was generated from an eligible renewable energy resource and was fed into the grid.

If there is an issue, go into the account as an administrator and verify the Rate Unit, Rate and Maximum Annual Amount.   If the issue is a restriction on the maximum SREC price within a particular project, verify that the project's cost is correct.  The user may have entered in the cost in $ instead of in $/watt, for example.

Since RECs are periodically collected in the future through the life of the system's operation, they are not applicable to the upfront contract cost.

Performance Based Incentives (PBIs)

These incentives are paid based on the performance of the system(s) installed. Most common for PV systems are incentives that pay a given $ / kWh produced. They typically provide periodic payments over a given timeframe, for example one payment per year for 5 years.

Since PBIs are periodically collected in the future through the life of the system's operation, they are not applicable to the upfront contract cost.

Depreciation: NOT an Incentive

Because the tax code was amended to provide special accelerated depreciation provisions to solar, some folks consider depreciation an incentive. But for-profit businesses may depreciate ANY durable business equipment. As such, SolarNexus does NOT consider depreciation to be an "incentive," but rather a tax effect. SolarNexus allows you to specify Depreciation ONLY for customers who are "for profit" businesses. You use the Taxes section of the Analysis Parameters to specify Depreciation parameters, including the "method" which includes accelerated depreciation schedule options.