Solar United Neighborhoods Act (SUN Act)

By John O'Neill on November 28, 2011

Background: The Federal Government provides a number of incentives for solar energy including a tax credit, a grant and accelerated depreciation. The incentives change with time and since they are mostly designed as tax incentives — favor large companies that can take advantage of the tax benefits.

Many of the “innovations” in community renewable energy projects such as the “Power Purchase Agreement” are in fact creative gyrations that allow regular people and non-profit organizations to take advantage of the incentives as they are currently structured.

  • For a comprehensive list of incentives for renewable energy visit the DSIRE website.

Issues: The most recent issue surrounding government incentives for community solar projects it the ability to apply them to systems that are off site. In other words, systems that are not on the property that they are generating power for.

One of the most used Federal incentives is the 30% Federal Solar Investment Tax Credit (ITC). Currently, the Internal Revenue Code requires that in order for a solar power system to qualify for the Federal Solar Investment Tax Credit (ITC), the system must be physically located on the site that it is generating the electricity for.

Thus, collectively owned solar systems such as solar gardens – or other projects where people own solar that is not physically connected to their own property are not able to take advantage of the ITC and the people behind these projects are left with a larger initial investment.

News: Recently, the Solar United Neighborhoods Act (SUN ACT) was re-introduced by the U.S. Congress to address this short coming in the current structure of the ITC. The SUN Act would amend the Internal Revenue Code so that the on-site requirement is lifted and those who participate in an off-site project can receive the Federal Solar Investment Tax Credit. Currently, the 2011 SUN ACT is in the first stage of legislation – review by a Congressional Committee.

Click here to track the bill:

Check out Vote Solar to learn more about the bill and join efforts to support the bill!