uploads///Net Metering

How Much Do Trina Solar’s Customers in the US Really Benefit from Solar Tax Credits?

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Jun. 20 2016, Updated 11:05 a.m. ET

Net metering

Net metering allows the customers to earn credits for the net excess generation from their solar panels. The excess electricity generated during the daytime is sent to the grid, which is recorded if the house is net metered. This gets credited against electricity consumed during the night, and customers are charged only for the net amount of electricity consumed from the grid.

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SRECs

According to renewable portfolio standards, it’s mandatory in some states that utilities are required to produce a portion of their generation from solar generators. In the absence of such generation, utilities can buy SRECs (solar renewable energy certificates) from the market or require solar panel owners to meet their requirements. One SREC corresponds to 1 mWh (megawatt-hour) of solar electricity.

ITCs

ITCs (investment tax credits) are dollar-for-dollar reductions on income tax bills. These apply to both residential and commercial deployment of solar systems. The owners of a solar system are eligible for a maximum tax credit of 30% of his investment value in the applicable solar systems—if construction starts before December 31, 2019. Thereafter, the tax credit amount will gradually be reduced to 26% for construction in 2020, 22% in 2021, and 10% in 2022.

It’s thus important for incumbent solar (TAN) companies like Trina Solar (TSL), Canadian Solar (CSIQ), First Solar (FSLR), SunEdison (SUNEQ), and SunPower (SPWR) to plan their project execution in order to take maximum advantage of the tax credits.

Other incentives

Apart from the above benefits, owners of solar systems also enjoy accelerated depreciation on their solar assets. This helps in the immediate reduction of the tax burden. Other benefits include property tax exemptions and sales tax exemption in certain states. Some states also offer cash rebates and STCs (state tax credits) to promote the installation of solar systems.

Now we’ll discuss how Trina Solar has benefited from its acquisitions.

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