Commercial Solar Incentives: Investment Tax Credit vs. Production Tax Credit

January 31, 2024 | Reading Time: 5 minutes

The Investment Tax Credit (ITC) and the Production Tax Credit (PTC) are clean energy incentives supported by the Federal government to encourage commercial renewable energy adoption. We’ve broken down these incentives to help you decide which option is better for your business.

ITC vs. PTC: How Are They Calculated?

The investment tax credit is calculated based on a percentage of the cost of installing a commercial solar system.

The production tax credit is calculated based on the amount of electricity a commercial solar system produces over a set period of time.

How does the Investment Tax Credit work for commercial Solar?

The ITC offers a 30% credit that reduces federal income tax liability. The specified percentage will remain at this value for until 2033. To receive this credit, commercial solar projects must begin before then.

How does the Production Tax Credit work for commercial solar?

The PTC offers 2.75 cents per kWh produced by the commercial solar system for 10 years. This rate is locked in until 2033 so systems must begin construction before then.

ITC vs. PTC: Which Is Better?

Whether ITC or PTC is a better option is dependent on the size of your system and how much sunlight it’s projected to receive.

Investment Tax Credit: Fixed and Upfront

The ITC is best for small-scale or large-scale commercial projects that are not located in particularly sunny areas. This upfront incentive may be a better option for projects like these as electricity production would likely not be high enough to get the full benefit of a PTC.

Production Tax Credit: Long-Term and Performance-Tied

The PTC is ideal for large-scale commercial projects based in especially sunny areas. Systems expected to produce high amounts of electricity throughout the entire year will reap the most value from a PTC.

Solarize Your Business

If you have any questions about these commercial incentives or are curious about installing solar panels for your business, Isaksen Solar is here to help.

Give us a call, (508) 717-3820, or request your free quote today.