What you should know about the Clean Technology Investment Tax Credit 

By Jeff McAloon

On June 19, 2024, Bill C-59 was passed into law, which included the implementation of the Clean Technology Investment Tax Credit (ITC) – news that we have been waiting for here at The Smart Energy Company. 

What is the Clean Technology ITC?

The Clean Technology ITC allows a corporate entity in Canada to claim between 20-30% of the full capital cost of their renewable energy project as a refundable tax credit. That means if the full cost of a solar energy installation or solar energy storage or battery installation was $100,000, the business could be eligible for $20,000 to $30,000 on their tax return.  

What Equipment Qualifies for the Clean Technology ITC?

Qualifying “clean technology property” under the Clean Technology ITC includes renewable energy systems like: 

• Electricity-generating equipment such as solar panels
• Electricity storage equipment such as batteries 

The installation of a NOREASTER® solar energy system as well as clean energy storage, such as the Generac® battery energy system, are eligible for the Clean Technology ITC. This means that installing solar on your farm is much more attainable.

Why This Tax Credit is Better Than Traditional Grants

Many farmers and business owners have struggled with the complexities of government grant applications—which can be time-consuming and uncertain. Unlike many grant programs, this incentive is part of the tax code, meaning:

• No lengthy applications or waiting months for approval
• The credit is refundable, meaning even if your business operates at a loss, you can still receive a cash refund
• Immediate improvement to cash flow at tax time

All you need to do is work with your tax professional to include it in your corporate year-end. 

One of the great frustrations we’ve heard in the past from our customers is around grants. While grants are fantastic programs, receiving them can be rare. Grant applications take time to complete – time away from your business – and the process can be quite onerous. Once submitted, a decision can take months, and many times, the decision is no. The reason could be that the money has been spent, the funding cap was reached, or the funding agency received too many applications. In that time, you would still be paying for your utilities instead of generating your own solar power. 

Tax Benefits for Farmers & Agricultural Businesses

Farmers are already familiar with depreciation tax incentives, but these programs only reduce taxable income and are not refundable. However, with a clean energy project, farmers can:

• Depreciate 75% of the total solar installation cost in the first year
• Carry forward the tax credit for future use
• Still receive a cash refund through the Clean Technology ITC

Time-Sensitive Opportunity: Act Now

The Clean Technology ITC applies to renewable energy equipment acquired between March 27, 2023, and 2034. The credit decreases between 2033 and 2035 before the program ends entirely in 2035.

With electricity costs rising across Canada, now is the perfect time to invest in solar power. When a similar program was introduced in the United States, it led to a surge in renewable energy adoption—and we expect the same in Canada. 

The Smart Energy Company manufactures the NOREASTER system right here in Canada. Demand for renewable energy is also a big reason why we keep a good inventory of NOREASTERs on hand. We know that as soon as a customer is interested, we want to be able to deliver. You shouldn’t have to wait once you’ve decided to start making your own energy. 

Get Started with Solar Energy and The Clean Technology ITC

The Clean Technology ITC is an exciting new program, and we recommend that you speak with your trusted tax professional about how to take advantage of this opportunity on your farm. Our Smart Energy consultants can guide you through the process, helping you reduce or eliminate electricity costs. We can help you better understand how you can generate your own power, and the solar energy financing options or incentives available to you.

Ready to learn more about generating energy independence through solar energy while taking advantage of available financial incentives? Contact our team today.