Financing Industrial Renewable Energy: A Guide to Incentives & Grants

In recent years, renewable energy has surged in popularity among businesses, driven by its significant environmental and economic benefits. For many business owners, the initial costs of renewable energy projects can appear daunting. However, numerous financial incentives, including tax credits, are available to mitigate these upfront expenses and encourage the adoption of sustainable practices.

Installing renewable energy systems such as solar panels and incorporating technologies such as electric vehicle (EV) charging stations brings several key advantages to your business:

• Cost Savings: Reduce energy costs and operational expenses by lowering dependence on fossil fuels.
• Energy Independence: Generate power onsite, reducing reliance on the grid and protecting against price fluctuations.
• Resilience: Enhance resilience to power outages and grid disruptions with independent energy sources.
• Operational Efficiency: Streamline operations and reduce energy waste through modern renewable technology.
• Earn a reputation for being an environmentally – friendly business: As people become increasingly aware of the environmental impact many industries have on the planet, they will continue expecting business to manage its carbon footprint.

While the benefits of renewable energy are clear, navigating the many financial incentives and grants available can be complex. To simplify this process, here’s a curated list that your renewable energy project may qualify for:

Advanced Energy Project Credit
Through the U.S. Department of Energy (DOE), projects that meet prevailing wage and apprenticeship requirements can receive a 30% credit on investment costs, while those that do not can receive a 6% credit. For more details on qualifications and how to apply, visit the IRS website.

Alternative Fuel Vehicle Refueling Property Tax Credit
Businesses located in low-income or non-urban census tracts installing qualified vehicle refueling and recharging property can receive tax credits up to $100,000. Eligibility requirements and application instructions can be found here.

Solar Investment Tax Credit (ITC)
Businesses can deduct 30% of solar system installation costs from federal taxes for purchased and leased systems. Projects must start before January 1, 2025. The credit begins at 6% and can increase to 30% if the project pays prevailing wages during construction, the first five years of operation, and meets registered apprenticeship requirements.

Energy-Efficient Commercial Buildings Deduction
Building owners and designers who install energy-efficient commercial building property (EECBP) or retrofit property (EEBRP) in qualified buildings or for certain tax-exempt entities can claim a tax deduction. The deduction for installations from 2023 onward is the lesser of the property cost or calculated savings. It starts at $0.50/sq ft for 25% energy savings and increases by $0.02/sq ft for each additional percentage point, up to $1.00/sq ft at 50% savings. Past deductions from the previous 3-4 years may reduce the maximum allowable deduction; learn more here.

Commercial Electric Vehicle & Fuel Cell Electric Vehicle Tax Credit & Commercial Clean Vehicle Credit
The Commercial Electric Vehicle and Fuel Cell Electric Vehicle (EV and FCEV) Tax Credit is available for new EVs, and FCEVs purchased by businesses and tax-exempt organizations. The credit ranges from 15% to 30%  of the purchase price, with a maximum of $7,500 for vehicles under 14,000 lbs. and $40,000 for those above 14,000 lbs. Note that this credit cannot be combined with the Clean Vehicle Tax Credit. The Commercial Clean Vehicle Credit is for businesses and tax-exempt organization. They can receive a tax credit of up to $40,000 under IRC 45W  for qualifying purchases of commercial clean vehicles. For information on requirements and credit amounts, visit here.

Electric Vehicle (EV) Charging Station Grants
Research state-level incentives, too. For example, the Illinois Environmental Protection Agency (IEPA) offers grants to public and private entities for the installation and maintenance of publicly available Level 2 and direct current fast charging (DCFC) stations. Rebate awards may cover up to 80% of the eligible project costs.

The Climate and Equitable Jobs Act (CEJA)
CEJA offers reimbursement for clean energy modifications such as solar panels. CEJA provides state incentives for businesses to transition to solar and has the strongest equity and labor protections of any statewide energy bill.

Incorporating renewable energy into your business operations is a strategic move that can yield substantial long-term gains. Financial incentives, grants, and tax credits make the initial investment more manageable. However, it’s important to act now, as these incentives may change as more businesses apply. Stay informed about available opportunities and consult with experts to maximize your benefits.

Elbert Walters III is a union electrician and the executive director of Powering Chicago, which represents the electrical construction industry. The unionized electrical construction industry invests in training its members and future electricians on safe, reliable renewable energy installations at the IBEW -NECA Technical Institute in Alsip, Illinois.