Auto Dealerships Should Seize Time-Limited Government Incentives for Solar Installations

Auto Dealerships Should Seize Time-Limited Government Incentives for Solar Installations

The shift towards EVs is altering the landscape of U.S. auto dealerships, as EV charging stations start to become features on more and more neighbourhood car lots. Given the skyrocketing price of grid power and the up-front installation costs, however, installing EV chargers can be a challenging decision for small and mid-sized businesses. 

Fortunately, federal and state governments are responding with programs designed to help businesses offset the costs of installing chargers (which can then be powered through renewable energy infrastructure, such as photovoltaic solar panels and batteries, to reduce draws from the grid.) Typically, the programs for EV chargers involve rebates, tax credits or grants. Many funds are capped and offered on a competitive or first-come, first-served basis.

With the transition to EVs inevitable, it makes sense for dealerships to leverage these programs sooner rather than later, as many are approaching funding limits or nearing their scheduled end. Here’s a brief outline of a few currently available program options, to get businesses in California and New York started on their energy transition — before funds are exhausted or programs are terminated.

The federal government’s Alternative Fuel Infrastructure Tax Credit (ITC) lowers federal business tax liability based on a percentage of the value of investment in a renewable energy project. The ITC (Internal Revenue Code Section 30C) offers a 30% tax credit — up to a total value of $30,000 per property — for the purchase and installation of EV charging infrastructure prior to December 31, 2022. 

The recent Inflation Reduction Act extends this credit (through Section 30D) per property to $100,000 per EV charger 2023 through 2032. This includes two-directional chargers, where power is exchanged in both directions between battery and the power grid. To qualify for the full credit under 30D, dealerships must be located in non-urban areas with defined income specifications and meet labour standards.

California-based water and air management agencies, Districts and local utilities offer a wide range of incentives. For example, Santa Barbara Air Pollution Control District offers grants of between $10,000 and $250,000 for EV charging installations through their 2022 Clean Air Grants for Infrastructure program. Southern California Edison offers its commercial customers rebates for EV chargers through its Charge Ready Program

At the state level, California has submitted a draft Deployment Plan for almost $400 million (to 2026) in funding through the National Electric Vehicle Investment (NEVI) Formula Program. Grant opportunities for EV charging infrastructure, accessible through a state-wide competitive solicitation process, will be determined over the winter 2022–23. 

Dealerships in New York state can take advantage of a tax credit on EV charging installations equal to the lesser of $5,000 or 50% of the charger value. The Joint Utilities of New York cover up to 50% of the cost of installing EV charging facilities on commercial sites through their EV Make-Ready Program. The Direct Current Fast Charger Incentive Program, offered statewide through utilities, provides a per-plug incentive for the installation of fast EV chargers by businesses. And National Grid finances up to 100% of the electric infrastructure costs associated with installation of EV charging equipment, for its customers.

Once the EV chargers have been installed, dealerships can leverage a further list of program incentives. For example, California’s Self Generation Incentive Program rewards the installation of renewable on-site energy sources like photovoltaic solar panels and storage batteries to reduce demand on the grid. Once solar energy is being produced by businesses, utilities offer net-metering programs, which provide credit for the transfer to the grid of any surplus renewable energy produced on-site.

Dealerships can also leverage government programs designed to increase the supply of energy to the public grid from on-site energy storage. Known as Value of Distributed Energy Resources (VDER) incentives, these can offer significant compensation for the installation of storage devices like batteries, especially when coupled with solar photovoltaic panels, on commercial properties. For example, New York state’s program, led by the Public Service Commission, provides compensation through bill credits with state utilities.

These are just a sample of the incentives available to dealerships taking their first step or two on the inevitable transition to a new generation of innovative technology. Investing in EV chargers and then renewable energy facilities on-site, like photovoltaic solar panels, introduces opportunities for facility-wide management and optimization of energy usage that will further reduce costs and provide a solid return on investment.

As the next-generation auto industry emerges, mCloud is committed to helping dealerships navigate the complex maze of government programs through its Managed Energy Service. By subscribing to applicable incentives on behalf of dealers, mCloud provides a guaranteed rate on total energy costs for the car lot, for the term of the Service deal. The alternative would be for the dealers to hire a consultant or expert who would take a cut of the incentive, typically between 15% and 30%. Innovations like these are just one of the ways mCloud is helping pave the way for the transition to a lower-carbon future and the next generation of auto buyers.

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