Powerwall 2: SGIP/Incentives

[MP3Mike]

So it would be 70% of the cost not covered by SGIP. So (100%-46%)*70%=37.8%.

 

[NinjaVece]

I also used Swell Energy. One problem I have is that they represent that you can take the 30% ITC on their entire invoiced amount. According to my tax accountant, that is not proper. He says that I will only get a tax credit of 30% of my final net cost. This is a well established procedure from the days when there were State rebates for solar panels as well. It's the same tax code, so the procedure is the same. You don't have to believe me, but please consult a tax professional on this issue before filing your 2018 taxes.

Not the information I have received when reviewing IRS rulings regarding this. The CA incentive payment (NOT a rebate - but an 'incentive') is separate and alone from the amount that you spent for the installation of the PW2. What Swell invoiced you for your PW2 installation IS the amount that you should state on IRS form 5695.

Again, what the State decides to provide you has nothing to do with what you apply toward Federal taxes.

 

[NinjaVece]

I also went with Swell Energy for my PW install. When I called Tesla in December of 2016 and tried to talk to them about the SGIP program and Powerwall's they told me that the SGIP didn't apply to residential users. I went with Swell instead despite the extra price. With Stage 1 SGIP and ITC it was like 75% of my cost was covered and to me it seemed almost to good to be true. Finally got my two PW's installed earlier this year. The SGIP inspection has been completed and now just waiting for my check.

Good for you. We're both in the same boat - and it is the reason I went with SGIP because of the CA 'incentive' payment offered. The incentive is payment for you to use your PW2 in a certain way - the requirment is a minimum a full discharge into the grid a minimum of 52 days a year (687 kWh to be exact). This can easily be accomplished even with usage 5 days a week at only 3 kWh a pop during Peak periods for TOU. You likely will discharge much more if your Reserve is set to 50-60%.

Thus, you are providing California a service for the 'incentive' amount - which is then an 'in kind' payment for your services. Thus, you will also be able to apply your full Swell invoice toward the ITC Federal tax credit. This does equate to a 75% discount on the actual cost of your PW2 installation as you stated (76% in my case).

 

[wwhitney]

Not the information I have received when reviewing IRS rulings regarding this. The CA incentive payment (NOT a rebate - but an 'incentive') is separate and alone from the amount that you spent for the installation of the PW2. What Swell invoiced you for your PW2 installation IS the amount that you should state on IRS form 5695.

See Powerwall 2: SGIP/Incentives earlier in this thread. US Code Title 26 Section 136 clearly states that you don't have to count the SGIP incentive as part of your income (section a), but that you have to reduce the basis of the property (upon which the tax credit is computed) by the amount excluded (section b).

Cheers, Wayne

 

[NinjaVece]

+1

If the SGIP is 46% of the total cost, then the ITC is 30% * (100% - 46%) = 16.2% of the total cost.

Cheers, Wayne

Wayne, not my understanding. Remember, the SGIP amount is considered an 'incentive' to act in a specific way with your PW2 (or other battery type). It REQUIRES that you discharge your full battery 52 times a year or 687 kWh (13.2 * 52 = 687 - the 13.2 kWh value is their calc). You can do this 52 times at full discharge or break it up any way you like (like during Peak periods under TOU) but you MUST discharge this amount to get the SGIP incentive amount.

Thus it isn't a 'rebate' that is discounted from the cost of your PW2 installation before being applied to IRS form 5695. Because you must provide a service to the State of California to acquire the SGIP incentive in the form of using your PW2 a certain way, the incentive payment is more akin to an 'in kind' payment for services.

Thus, you would apply the full cost of the installation to any ITC Federal tax credit calculations. The Federal tax credit would actually be 30% of your invoiced cost of installation. Combine this with as much 'incentive' the State will provide you from the various Stages you may be in, and your actual discount toward a PW2 installation which follows the SGIP rules can be as much as 75% (SGIP incentive + ITC Federal tax credit considered).

 

[NinjaVece]

See Powerwall 2: SGIP/Incentives earlier in this thread. US Code Title 26 Section 136 clearly states that you don't have to count the SGIP incentive as part of your income (section a), but that you have to reduce the basis of the property (upon which the tax credit is computed) by the amount excluded (section b).

Cheers, Wayne

Wayne, the SGIP amount is neither a credit or a rebate. The SGIP amount is clearly stated as an 'incentive'. There is a reason that the State of California does not describe the SGIP amount as a rebate. This is because the amount requires you to take a certain action other than simply acquiring the PW2 itself. You MUST use the PW2 in a certain way that satisfies the SGIP needs to get the incentive.

Again, the SGIP amount is NOT a rebate or a credit. It is also not a subsidy. It is an incentive to use your PW2 as they require.

 

[wwhitney]

Again, the SGIP amount is NOT a rebate or a credit. It is also not a subsidy. It is an incentive to use your PW2 as they require.

Whether you call it a rebate, a credit, a subsidy or an incentive, it would be income that you would have to pay tax on, were it not for US Code Title 26 Section 136. You can read the text here: 26 U.S. Code § 136 - Energy conservation subsidies provided by public utilities

That section both excludes the incentive from income (subsection a) and tells you that for the purpose of other deductions or credits you need to reduce the basis of the equipment by the amount excluded from income (subsection b).

Cheers, Wayne

 

[NinjaVece]

See Powerwall 2: SGIP/Incentives earlier in this thread. US Code Title 26 Section 136 clearly states that you don't have to count the SGIP incentive as part of your income (section a), but that you have to reduce the basis of the property (upon which the tax credit is computed) by the amount excluded (section b).

Cheers, Wayne

Wayne, I'll explain this a bit further. If you acquire solar panels, there are CA rebates administered through the utilities to do so (SGIP is one). However, the State is not requiring you to use the power from those panels in any special way. If your house uses power equal to the panel's output, you are free to use it completely internally. If not, you can export it to the grid operator whenever you you like. You can disable your solar panels and re-enable them (through a breaker box) whenever you want. You have total autonomy with them.

Thus solar panels DO fall under the Denial of Double Benefit rule because there is nothing the State of California is asking you to do special with your solar output in any way. The rebate is there simply for you to ACQUIRE the panels.

The SGIP incentive for battery storage is different. The State is not providing an incentive for you to simply ACQUIRE the battery, but instead is providing the incentive for you to USE the battery in a certain way. You are REQUIRED to expend the battery a certain length of time into the grid to apply for this incentive. This is an 'in kind' service that you are providing to the State of California for which it is providing you an incentive to do so.

Thus it would not apply as a subsidy, rebate or credit.

 

[wwhitney]

OK, so in your interpretation, the SGIP "incentive" for that "service" would be taxable income. Unless your total marginal tax rate is under 30%, your tax bill will be higher than if you took advantage of Section 136. [Even if your total marginal tax rate is under 30%, your tax bill could still be higher due to all of the phaseouts linked to AGI, which I find hard to keep track of.]

Cheers, Wayne

 

[Az_Rael]

Whether you call it a rebate, a credit, a subsidy or an incentive, it would be income that you would have to pay tax on, were it not for US Code Title 26 Section 136. You can read the text here: 26 U.S. Code § 136 - Energy conservation subsidies provided by public utilities

That section both excludes the incentive from income (subsection a) and tells you that for the purpose of other deductions or credits you need to reduce the basis of the equipment by the amount excluded from income (subsection b).

Cheers, Wayne

So in my situation (filing for the federal solar rebate on my 2018 taxes, but not getting my SGIP until 2019 if I get it), I will probably file for the whole tax credit value and then record the SGIP as income if I manage to snag a Step 5 spot.

No way I am reducing my federal tax credit by an incentive amount I may not even get at this point.

 

[wwhitney]

If your total marginal tax rate is more than 30%, you could report it as an ITC recapture of 30% of the SGIP incentive, rather than including the SGIP in your income.

Cheers, Wayne

 

[NinjaVece]

OK, so in your interpretation, the SGIP "incentive" for that "service" would be taxable income. Unless your total marginal tax rate is under 30%, your tax bill will be higher than if you took advantage of Section 136. [Even if your total marginal tax rate is under 30%, your tax bill could still be higher due to all of the phaseouts linked to AGI, which I find hard to keep track of.]

Cheers, Wayne

Wayne, incorrect. You’re confusing a deduction with a credit. Let’s say the CA SGIP incentive was $5000. You would need to pay Federal taxes taxes on that amount as income. Let’s say your tax rate is 35% for that income. You would owe $1750 for that income.

BUT, because the ITC amount is a credit, not a deduction, you would receive the full $5000 (as part of the total installation cost invoiced) as a tax credit - or gain $3250 through it after the taxable income is subtracted from it even at 35%.

The key is that the ITC amount is a full credit, not a deduction, where the taxable income has taxes deducted at a percentage.

 

[wwhitney]

Let’s say the CA SGIP incentive was $5000. You would need to pay Federal taxes taxes on that amount as income. Let’s say your tax rate is 35% for that income. You would owe $1750 for that income.

Right. [The tax rate here is the combined federal and state rates.]

BUT, because the ITC amount is a credit, not a deduction, you would receive the full $5000 (as part of the total installation cost invoiced) as a tax credit - or gain $3250 through it after the taxable income is subtracted from it even at 35%.

Except the ITC is not a 100% credit, it is a 30% credit. So you gain 30% of the $5000, or $1,500, and the net is a $250 loss. Plus the secondary effects tied to having your AGI raised by $5,000.

Cheers, Wayne

 

[Az_Rael]

Does anyone who has been through the process with SCE know if you get an email from SCE once Tesla has submitted your SGIP application? I would like to know if there is some secondary notification system as my experience with Tesla Energy having their proverbial stuff together is not good.

I know with my interconnect, I did get notices from SCE in addition to Tesla, so that was a nice backup to verify what was going on.

 

[cr0ntab]

Does anyone who has been through the process with SCE know if you get an email from SCE once Tesla has submitted your SGIP application? I would like to know if there is some secondary notification system as my experience with Tesla Energy having their proverbial stuff together is not good.

I know with my interconnect, I did get notices from SCE in addition to Tesla, so that was a nice backup to verify what was going on.

I'm on SCE and these are the subject lines for all the emails I got regarding them and sgip:

SGIP Application Selected Notification - 03/24/18
SGIP RRF Review Receipt - 03/28/18
SGIP Confirmed Reservation Letter - 04/11/18
SGIP ICF Receipt - 08/27/18
SGIP ICF Approval - 09/19/18

They all contained my Project ID in the form of "SCE-SGIP-2018-XXXX"

Most were sent from "[email protected]"

Hopefully that helps

 

[wwhitney]

So my self-developer SGIP work is almost done. [I declined the latest offer from Tesla/PG&E for Tesla to take over as developer, on the basis that the project is basically done, and I ended up doing more of the development work than Tesla.] The last remaining hurdle is uploading one week's worth of 15 minute interval energy data from my system.

Has anyone been successful in getting Tesla to provide this data? The app really should have an "export to spreadsheet" option.

Otherwise, I guess I need to set up a computer to poll the gateway webserver for a week.

Cheers, Wayne

 

[dhu1]

So my self-developer SGIP work is almost done. [I declined the latest offer from Tesla/PG&E for Tesla to take over as developer, on the basis that the project is basically done, and I ended up doing more of the development work than Tesla.] The last remaining hurdle is uploading one week's worth of 15 minute interval energy data from my system.

Has anyone been successful in getting Tesla to provide this data? The app really should have an "export to spreadsheet" option.

Otherwise, I guess I need to set up a computer to poll the gateway webserver for a week.

Cheers, Wayne

A bit of late question, but what is the benefit of taking over as developer in the SGIP process. I just went through the entire process (got my check for step 3 last week) and as tedious as it was, Tesla folks did 90% of the paperwork. Do you get qualify for different rebates as a developer?

 

[wwhitney]

By the time I got around to applying, Tesla had hit its developer cap in SGIP Step 2, and SGIP Step 2 was stalled in PG&E land. I figured out that if I actually did more than half of the development work (in my case, the system design, half the install, the SGIP application, and the interconnection application), I could be the developer and wouldn't be subject to Tesla's developer cap. The CPUC supports this option, but both Tesla and PG&E are trying to make it as difficult as possible.

Cheers, Wayne

 

[dhu1]

Got it....best of luck to you.

 

[Kren]

Wayne, sorry, since I have gotten my check I don't keep up with this forum so much. I have a program that creates the data you need. PM me if you still need it.