There are several types of incentives available to subsidize the cost of a solar installation. Aurora offers you the flexibility to compute any type of national or local financial incentive.
Cost Based Incentives (CBIs)
These are incentives that are calculated based on the system's cost to the consumer. There are two categories of CBIs:
- National CBIs: In the US, input the 30% Investment Tax Credit (ITC) here.
- Local CBIs: Input any state or local rebates here.
- Local CBI cap: Often local CBIs have a specific dollar max amount - input it in this field.
The Investment Tax Credit (ITC) is a type of CBI. Here is how to add it to a financing template:
Performance Based Incentives (PBIs)
These are incentives that are calculated based on the system's production. PBIs are applied as they are earned (i.e. as your system produces energy).
- National PBI: Input a $/kWh rate for any national Performance Based Incentives. There are currently not any performance based incentives in the US at a national level.
- Local PBI: Input a $/kWh rate for any local Performance Based Incentives. Solar Renewable Energy Certificates (SRECs) are the most common of these (we are assuming $.19/kWh in our example).
- PBI Duration: The number of years for which you will be receiving the performance based incentive (we are assuming 10 years in our example).
- PBI Taxable: Specify whether income from PBIs are taxable. If they are taxable, the PBI will be taxed at the input (National or Local Tax Rate). In the US, PBIs are almost never taxable.
- PBI Escalation Rate: At what rate are PBIs expected to increase each year. If PBIs are expected to decrease, input a negative number in this field if they are expected to decrease. We are assuming 2% increase.
Some states offer Solar Renewable Energy Credits (SREC s). Here is how to add an SREC to a financing template:
These incentives are applied as reductions to the system cost. For financial analysis purposes, these are applied in month zero - i.e. even before the project is commissioned.
- Fixed Amount: Input an amount for the rebate (we are assuming $6,500 in our example). Here is how to add it to a financing template:
- There are also grants whose value are are based on the DC system size (we are assuming $.5/W in our example), and that have a cap. Most system DC system size based grants have a nominal limit (we are assuming $2,500 in our example). Here is how to add it to a financing template: