IRS ruling seen as paving way for more community solarMatt Whittaker | Sep 11, 2015
The IRS has issued a ruling that could broaden the already-growing community solar market, making it available to more people without space for photovoltaic panels on their rooftops. The IRS in July told Vermont resident Roland Marx he could claim a 30-percent federal residential income tax credit on his ownership of solar panel infrastructure in the 30-member Boardman Hill Solar Farm in West Rutland - even though the panels are not at his home. The ruling deals with an area plagued by legal ambiguity - whether individual direct owners in such offsite community solar projects were eligible for the credit. Commercial owners of community solar development who sell to customers already get a tax credit. Although the IRS says so-called private-letter rulings as in Marx's case can't be used to establish precedent, community solar advocates believe the ruling nonetheless provides guidance that will probably be acted upon by others wanting to enter the market. "This ruling helps pave the way for even more growth under the widely-successful federal investment tax credit," Solar Energy Industries Association CEO Rhone Resch said in a statement. Marx said other owners at the Boardman Hill project would be inclined to take the credit as well. "If the same facts exist for another taxpayer, isn't it likely that the IRS would look favorably on them?" Marx said. When asked whether the IRS has any intent of making the ruling more broad, a spokeswoman said federal privacy laws prohibit the IRS from commenting on any specific taxpayer's situation. Warren Leon, executive director of the non-profit Clean Energy States Alliance, which hired law firm Foley Hoag to issue the request for the ruling, said "there are certainly wider implications" of the ruling. Adam Wade, a Boston-based associate who works in energy and clean tech with the law firm, said the Boardman Hill model and the ability to claim the tax credit could open up new business opportunities for the community solar space. The 150-kilowatt project feeds power to the grid of utility Green Mountain Power, and the Boardman Hill owners are issued credits via net metering to offset their electric use. The project also has a non-profit to act on participants' behalf on administrative matters such as insurance, service and maintenance. Unlike commercially owned community solar projects where a developer owns the infrastructure and sells electricity to customers, Boardman Hill's solar panels are all individually owned. The scale of community solar projects provides better economics than is typically seen with residential rooftop solar, said Nils Behn, founder and CEO of Aegis Renewable Energy, the Vermont company that developed the Boardman Hill project. There's no doubt of that. Often, community solar projects are between 200-500 kilowatts compared to a typical residential project of 6-10 kilowatts, he said. His company is also working on two other community-owned net metered projects that mirror Boardman Hill. At a purchase prices of $2.87 per watt, Marx claims that the 620 panel Boardman Hill cluster is the lowest-cost system of its kind in the state. He said the group was able to get a price like that because it cut out the middlemen on service and maintenance. More financially attractive community solar means that rooftop-like solar is no longer dependent on whether ones roof faces the right direction, or whether there are trees on the property, Wade said, noting that the number of people who have ideal rooftop situations is much less than those who don't. CESA says community shared solar offers opportunity for the roughly half of all households and businesses in the country that current aren't good solar panel system candidates on their own property. http://www.energycentral.com/functional/news/news_detail.cfm?did=37350747 |