Water Heating
If you are responsible for managing the energy consumption at your facility then you should consider installing a solar water heating system. The system has four economic benefits.
Government Tax Credits
MACRS Deprecation
Reduced Utility Bill
Asset versus Liability
Government Tax Credits and MACRS
The government has passed legislation to encourage the installation of solar water heating systems. Now restaurants, hotels, schools, factories and many other facilities can afford to invest in solar water heating systems. The government legislation has produced the following lucrative benefits:
Federal tax credit
North Carolina state tax credit
MACRS
The federal government provides a tax credit that is equal to 30% of the purchase price of the solar water heating system, no matter how much the system costs. Tax credits are much more valuable than tax deductions because tax credits reduce your tax liability at the end of the year dollar for dollar. If you do not use all of the tax credit the first year then you can carry the remainder forward to future years.
The North Carolina state government provides a tax credit that is equal to 35% of the purchase price of the solar water heating system, but the state caps the total amount of the tax credit at $2,500,000. Most systems are not expensive enough to reach the cap amount. If the system exceeds the cap amount then there are legal and ethical ways around the cap. The tax credit can be carried forward to future years.
The federal tax credit and state tax credit are added together. The government pays for 65% of your new project!
MACRS (Modified Accelerated Cost Recovery System) is the current method of accounting for deprecation of the system’s equipment. Depreciation is a useful accounting tool because it reduces your tax liability. The IRS allows you to depreciate the purchase price of the equipment over 5 years, and the first year you can depreciate one half of the price of the equipment.
Reduced Utility Bill
A solar water heating system drastically reduces your monthly utility bill. The more hot water you use the greater the percentage reduction in your utility bill. Every facility is different, so we need to collect some information about your current water heating system and the volume of your daily hot water use to determine exactly how much money you will save.
Asset versus Liability
The concluding economic benefit is the concept of asset versus liability. Traditional gas and electric water heaters are a liability because they cost a lot of money up front and consume vast quantities of energy during their service life. The only economic benefit that gas and electric water heaters have is deprecation of the equipment.
Solar water heating systems are an asset because after a certain amount of time the summation of your reduced utility bills exceeds the initial investment in the system. The systems are designed to last 30 years and use free energy all the way.
Contact us for a free consultation.