Bill Morris in Bricks & Bucks on November 2, 2022
There’s a palpable sense of gloom and doom among many co-op and condo boards as Local Law 97 draws near. Board members fret at the high cost of reducing their buildings’ carbon emissions enough to satisfy the law and avoid stiff fines, which will begin hitting in 2024.
Anika Wistar-Jones, director of affordable solar at the nonprofit Solar One, has a ray of good news for the doomsayers. “Federal and state incentives for solar energy are at a peak,” she says. “The upshot is that solar used to pay for itself in five to 10 years, but now it’s easily within five years. That’s huge, because the systems last 25 to 30 years.” Which adds up to 20 to 25 years of pure savings — and helps boards comply with Local Law 97.
Wistar-Jones offers the following breakdown of how federal and state incentives are making solar an attractive option for cutting carbon emissions:
Inflation Reduction Act (IRA). This federal legislation has earmarked $370 billion toward reducing carbon emissions 40% by 2030. A key tool for reaching this goal is the Investment Tax Credit, which reduces federal taxes by 30% of the cost of installing a solar system. The tax credit is good until 2032, after which it begins a phase-down.
“In addition to the 30% tax break, there are also some adders,” Wistar-Jones says. “Buildings that are in a part of town that’s defined as low-income can get an extra 10% tax credit. A bunch of co-ops and condos will qualify for that.” Some affordable co-ops could get an additional 20% tax break, which would add up to half of their total installation costs.
The IRA also changes the way the tax break is distributed. “Until now,” Wistar-Jones says, “the federal tax credit had to be divided among all residents. Buildings can still do that, but it’s complicated. Now there’s another option for co-ops and condos called transferability, which allows the building to sell its tax benefit to anyone for cash. It sounds wonky, but it means the co-op or condo can take the cash instead of dividing the credit up among residents. And that’s really beneficial, because it’s 30% of the cost of the system.”
The Investment Tax Credit is not tech-specific. It will offer 30% credits for projects involving geothermal, fuel cells, wind, cogen and waste-energy recovery.
New York State Incentives. NY-Sun, which is run by the New York State Energy Research and Development Authority, offers an upfront solar incentive that has been increased to $1.20 to $1.40 per watt for market-rate properties, and to $1.60 to $2 per watt for affordable properties such as Mitchell-Lama and HDFC co-ops.
That means a modest 10 kilowatt solar system would come with at least a $10,200 incentive, while a typical 50 kilowatt system would bring in at least $60,000. It could cover up to half of the cost for market-rate properties and up to two-thirds of the cost for affordable properties.
“New York State incentives are currently very high,” Wistar-Jones says, “but we expect them to drop fairly soon, possibly in the next few months. We’re advocating very hard to get the state to keep them high.”
National Green Bank. The IRA sets aside $27 billion to create a national green bank, which will make loans for projects that reduce greenhouse gas emissions. State, local and Tribal governments are eligible to apply for green bank funds.
“It’s kind of hard to figure out how that will work for us,” Wistar-Jones says. “Different green banks do different things. The best outcome would be if the federal green bank results in easy, low-interest funding for clean-energy projects in the city.”
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