Buffalo businesses jump on solar panel installation tax breaks

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David Beltz, chief financial officer of Hostetler Dutch Country Store, saw Buffalo, Mo. going through a miniature solar revolution this summer. As his store helped with some of the logistics of installations for other businesses, he started asking about it for himself. The results were hard to ignore.

“It was a no-brainer on both sides,” Beltz said. “It was good to do what we could for the environment, but also good for our bank account to get money back in five years.”

He owns ABC Motors in town and installed panels on the roof there. He made the move at Hostetler because of a powerful cocktail of rebates, incentives, and credits that made now a good time to jump on the solar bandwagon there, too.

The federal investment tax credit, or ITC, allows businesses to deduct 30 percent of the installation costs of solar panels off their taxes. The United States Department of Agriculture offers grants between $5,000 and $500,000 for businesses in rural areas installing solar panels. Privately owned electric companies are required to generate or purchase 10 percent of their electricity through renewable sources by 2018 thanks to Proposition C, a measure on the 2008 ballot in Missouri. That number will increase to 15 percent by 2021.

All told, it could turn an estimated $185,000 installation for Hostetler Dutch Country Store into around $65,000.

But those credits will soon sunset.

ITC will dip to 10 percent by 2022. The USDA grant program is year-to-year. Proposition C offers no guidance beyond 2021.

“The return on investment for customers isn't going to be as good, so there won't be as many jobs out there for us and for the industry itself,” Mo Solar Apps sales consultant Emily Durgan says. “It kind of has put us in a sticky situation where we really need it to survive as a well-profiting business.”

Mo Solar Apps has done several installations in Buffalo. Durgan says once she explains all the money business owners can save off the installation price, plus the long term savings a solar grid provides against traditional electricity costs, business owners are on board.

“You do have to show the math,” she said. “Businesses are looking for anywhere from a one-to-five-year payback. If you can't reach that then businesses aren't really interested.”

The solar industry is racing to get itself ready for the possibility that the credits won’t be extended at their current rates. They also face supply chain concerns. An Italian company supplies some of Mo Solar Apps’ panels, and they have had trouble keeping up with demand.

It is still a booming business. The Solar Foundation conducts an industry census every year, and says that there were 260,077 solar employees in 2016, which tripled their initial report in 2010.

“The industry has successfully improved its efficiency and we've been able to keep pace by lowering our costs to offer prices that are at or below what the cost was with the rebate years ago,” Mo Solar Apps vice president of operations Jeffrey Owens said. “We look forward to, by 2021, making significant improvements so that we don't need to benefit from the federal tax credits.”

They have a significant gap to close. Without all of the incentives, Beltz wouldn’t have been able to justify the high upfront costs of solar installation.

“We'd like to see those continue to encourage those kinds of activity,” he said.

Many of those same incentives aren’t available in more populated areas like Springfield, and Proposition C doesn’t apply to City Utilities or electric co-operatives.

“Our company was established out of Jefferson City, so we're at the forefront,” Durgan says. “We're always at the courthouse steps trying to push our public service commissioners to do what the customer needs, and not just what the utility companies want them to do.”