Funding Solar Power Projects: What Now?

With recent legislative changes, federal solar tax credits now have a looming expiration date.

The One Big Beautiful Bill Act, extends the 30% Investment Tax Credit (ITC) first introduced in the Inflation Reduction Act of 2022, meaning companies can continue to benefit from significant savings on qualified energy storage investments for a limited time.

However, the timeline for projects that include solar panels or wind turbines is much shorter. To qualify for the energy efficient commercial buildings deduction, these projects must be in service by Dec. 31, 2027, or construction on them must begin before June 30, 2026.

But while some federal incentives are ending, other clean energy funding options are available in many states, and some utility districts offer credits for adding renewables.

Even without tax credits, solar is still a strong investment, but it makes sense to maximize the potential of your projects by moving forward now. Pairing your solar setup with an energy storage solution, such as the R3Di^® System, improves energy resilience and financing options.

Here's what federal credits are still available for solar projects, state and utility incentives, a few real-world project examples, and a checklist of practical steps you can take this quarter to jump-start your solar power project.

Move Fast, But Don't Rush: Current Federal Solar Credits in Plain English

With federal clean energy credits set to expire soon, it's tempting to take a hasty approach to your solar power project. But you need to take time to develop a solid plan that works for your business. That starts with understanding the current federal credit landscape and how they work:

Business credits include:

• Clean Electricity Investment Credit (ITC, §48/48E)
  The U.S. Inflation Reduction Act (IRA) provides generous Investment Tax Credits (ITCs) for renewable energy and battery storage projects. Depending on where a project is built and how it's structured, organizations can offset 30–50% of their initial costs. Many states layer on additional incentives such as grants, rebates, or tax breaks to make distributed energy even more affordable, particularly for energy-intensive industries like oil and gas.

• Production Tax Credit (PTC§45/45Y)
  This credit provides a tax benefit based on the amount of electricity a system produces, measured in kilowatt-hours, from solar and other eligible technologies during its first 10 years of operation. The credit lowers federal income tax obligations and is indexed each year to account for inflation.

Bonus credits that can stack:

• Domestic Content
  This adds a 10% ITC bonus when at least 40% of steel, iron, and other manufactured products are made in the U.S.

• Energy Communities
  This bonus adds a 10% ITC credit if the project is installed at a brownfield, coal closure county, or an area with high unemployment rates and high employment rates in the fossil fuel industry.

Don't Leave Money on the Table: State & Utility Incentives That Stack

Beyond the federal credits, many state and utility programs add grants, rebates, or Renewable Energy Certificate (REC) payments that can lower the net cost of your solar project. For example, here are a few state programs that illustrate the breadth of what's available:

• New York – NY-Sun
  The State of New York's NY-Sun program offers several incentives and tax breaks for businesses planning solar projects. If you integrate energy storage in your solar project, your business could also be eligible for state-based energy storage incentives.

• California – SGIP
  The State of California offers rebates for non-residential storage through its Self-Generation Incentive Program (SGIP), which can reduce battery-related capital expenses. The rebates are especially compelling in high-demand-charge territories.

• Illinois – Illinois Shines
  Illinois offers REC payments (via Illinois Shines) to support new solar projects. For developers and system owners, the program offers a consistent revenue stream. It's a valuable non-tax incentive for distributed generation and community solar projects.

• C-PACE financing
  Available in many jurisdictions across the U.S., the EPA's Commercial Property Assessed Clean Energy (C-PACE) financing program offers fixed-rate capital for solar projects that can be repaid via property tax assessment. Taking advantage of C-PACE financing reduces your upfront cash investment and can be paired with federal and state tax credits and other bonuses.

For more details on the solar tax credits and incentives available in your area, check out the Database of State Incentives for Renewables & Efficiency^® (DSIRE).

Why Solar + Storage Wins With Finance Teams

Investors and lenders prefer projects that can shape load, ride through outages, and generate predictable value streams.

When you add a battery energy storage system (BESS) and energy management system to your solar project, you're setting a course toward energy resilience and reliability. Storage keeps critical operations online — and onsite energy management ensures uninterrupted power every time the grid goes out.

Energy storage and management also enables businesses to generate value in other ways, such as reducing demand charges during peak times, storing energy when rates are low, and discharging when rates are high (known as Time-of-Use, or TOU arbitrage).

Storage systems also now qualify for a federal investment tax credit (ITC), maximizing the ROI of your project when you pursue both a BESS and a solar setup.

The R3Di^® System and Grove365 combine battery storage, on-site power generation, and energy management into a single solution known as Virtual Utility^®. This creates a turnkey microgrid that assures operational continuity while appealing to investors and lenders because it qualifies for federal ITCs and incentives.

Real-World Funding Paths

What does funding your solar power project look like in the real world? Let's consider a few potential scenarios:

• Northeast Distribution Center (NY)
  A distribution center based in New York wants to install 1.5MW rooftop solar setup along with paired storage. This project qualifies for the 30% federal ITC along with the NY-Sun nonresidential incentive, and a potential energy community bonus if sited appropriately. The results? Lower net capex and improved internal rate of return (IRR), while battery storage reduces peak demand and provides backup for cold storage operations.
• California Food Processor (CA)
  A food processing plant decides to install 1MW of solar and 2MWh of storage. This project also qualifies for the 30% federal ITC on both assets and a SGIP rebate for batteries. There's also potential to utilize C-PACE to spread the remaining capital expenses over long-term, low-cost debt. The business will save on demand charges and gain energy resilience and efficiency along with financial returns.
• Midwest Manufacturing Campus (IL)
  A manufacturing facility in the Midwest U.S. opts to develop a 3MW community-eligible solar array. The business calculates the value of the ITC vs. the PTC and decides on the PTC before stacking Illinois Shines REC payments. These returns provide a steady income stream of non-tax incentive revenue. The company lacks sufficient tax appetite, so it uses transferability provisions to sell tax credits and capture value upfront. With all these measures in place, they improve cash flow and bankability, making their project more attractive to both investors and lenders.

Build Your Capital Stack: Financing Options Beyond Credits

There are other ways to help finance your solar power project. For example, in a Power Purchase Agreement (PPA), a third-party developer installs and manages your onsite energy system. There's no upfront cost, but you buy the energy from them, and you are still able to apply for tax credits such as ITC or PTC.

Green bonds are another avenue for funding. Earmarked for environmentally beneficial projects, such as solar power generation and storage, green bonds represent a growing number of investors who are seeking green assets, often because they align with ESG and climate commitments. In 2023, the market for green bonds surpassed $500 billion globally.

Project developers looking to issue or partner on a green bond can gain lower-cost, long-term financing. Check out the Climate Bonds Initiative for more on how to verify your project.

What To Do This Quarter

If you're ready to move forward with a solar power project, here's a checklist outlining what to do this quarter to kickstart your venture.

1. Confirm eligibility
   Start by comparing ITC with PTC to determine which will maximize your savings. Ensure that your budget complies with the prevailing wage and apprenticeship (PWA) requirements, and look at how your project could qualify for bonus credits for domestic content and/or energy communities.
2. Map stackable incentives
   Run a DSIRE search to identify any state and utility programs your project could qualify for, such as NY-Sun, SGIP, Illinois Shines, and locally available rebates.
3. Decide a monetization route
   Determine whether your organization has the internal tax appetite to apply tax credits directly. If not, plan to take advantage of the IRS's transferability provision, which lets you sell tax credits to third parties and convert them to cash. Either way, starting the pre-filing process is important because the IRS documentation requirements can be time-consuming.
4. Choose a financing wrapper
   Once you've mapped out incentives, decide how you will finance the remaining project costs. Some possibilities include power purchase agreements (PPAs), C-PACE financing, or — for organizations with strong cash positions — direct ownership.
5. Engineer for resilience
   Adding battery storage to your stack allows you to capture multiple streams of tax savings and maximize your uptime value. The R3Di^® System provides the optimal combination of power generation, storage, and energy management that works in tandem with your solar project, fortifying your organization's energy resilience and reliability. R3Di^® also qualifies for multiple tax incentives, including ITC and the domestic content bonus credit.

A Bright Future for Solar

While there's urgency to pursue your solar project while tax credits are still available, there are still funding pathways and incentives, from federal energy storage credits and bonuses to state and utility incentives, tax credit transferability, PPAs, and C-PACE.

Right now, solar projects that include a BESS are a win-win: more financeable, and they position your organization for long-term energy resilience.

At e2Companies, we handle your entire project, from engineering to procurement, permitting, and servicing agreements, eliminating the need for lengthy engineering analyses or complex interconnection contracts. This allows you to take advantage of available renewable energy tax incentives before they expire.

Schedule a discovery call to see how we can help your solar power project succeed.