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Due to increased regulatory pressure and volatility in the energy sector, many Canadian businesses are being forced to find new ways of saving energy and reducing expenses while protecting their bottom line.
Fortunately, working with commercial solar companies to generate solar energy has become even more attractive thanks to federal, provincial, and municipal incentives designed to aid Canadian businesses in overcoming financial hurdles.
Here are some of the most compelling tax incentives that could help you switch to solar energy cost-effectively:
Commercial solar incentives: FEDERAL
Clean Technology Investment Tax Credit
Launched in June 2024, this valuable tax credit reduces the cost of your investment in clean energy technologies, including solar systems, by a whopping 30%. It applies to eligible capital costs and covers expenses such as the solar panels, inverters, batteries, and installation costs. To qualify for this credit, your business must meet these criteria:
- The project’s commencement must be after the 28th of March, 2023, and before 2035.
- The solar system must be brand new.
- The system must be owned by the business, or a lease agreement with specific terms must be in place.
Note that this tax can be retroactively applied to eligible equipment that was put into use in March of 2023.
Accelerated Capital Cost Allowance (ACCA)
This tax credit allows businesses to accelerate the depreciation of eligible clean energy equipment, allowing a larger deduction of costs in the early years rather than spreading it over the equipment’s useful life. What this essentially translates to is an increase in tax deductions and an enhanced flow of cash.
Targeting solar PV systems specifically, currently, the ACCA allows a depreciation rate of 50% in the first year, followed by a rate of 30-50% in the years following until full depreciation is achieved. This can help reduce a Canadian business’s taxable income significantly in the first years and free up capital that can be used for reinvestment or other purposes.
Commercial Solar Incentives: PROVINCIAL & TERRITORIAL
Varying from region to region, here are some of the most popular incentives in Canada’s biggest provinces:
Ontario
Several solar incentives exist in the province, but by far the most popular is the net metering program, which allows businesses to obtain credits for excess energy produced and fed back to the grid.
Alberta
The Clean Energy Improvement Program, or CEIP, offers businesses in Alberta installing solar energy systems through reputable commercial solar installers low-interest loans. With the repayments integrated into property taxes, the program can help business owners upgrade solar systems while saving energy on a long-term basis.
British Columbia
There are incentives for commercial solar through the CleanBC program, such as rebates for upgrades that are energy efficient and for solar system installations. Other programs specifically targeting solar energy may also exist at a municipal level.
It’s important to note that these are just a few of the many commercial solar incentives in place throughout Canada today. For more details about any of the government incentives listed here, or to find out about others that you may be eligible for, you can check the government’s website or with a reputable commercial solar installer.
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