As commercial poultry growers have improved housing insulation and tightened up old leaky houses, heating efficiency has improved, and fuel costs have declined. However, as overall bird size has increased across the U.S., keeping larger birds properly ventilated and cool with exhaust fans has driven electricity costs up. The short-term forecast for electricity may be positive, but the overall trend is increasing prices. Small scale solar has also increased across the country and is one of the ways poultry growers have explored to lower their power bill by offsetting utility grid power usage. Currently there are significant federal incentive programs that make solar on poultry farms more attractive. Some solar components have decreased in price as well. However, as with many things, buyers should do their research.
Current solar incentives have the potential to pay for a large percentage of a solar project. The most impactful incentive is the USDA’s current Rural Energy for America Program, commonly known as a REAP grant. Currently, the REAP program offers up to 50% of the installation cost of a qualifying project to be covered by the grant. It is important to understand that these grants are competitive, and the funding is limited. They are also not funded up-front but are reimbursement grants. Go to https://www.rd.usda.gov/programs-services/energy-programs/rural-energy-america-program-renewable-energy-systems-energy-efficiency-improvement-guaranteed-loans for more information. The REAP grant is by far the most available opportunity for poultry growers to obtain assistance for their solar project. It is advised that a grower obtain the services of an experienced grant writer or technical service provider (TSP) to help complete the grant application. Oftentimes a solar installation company will have secured the services of a grant writer or have someone skilled to do so on staff. These services usually carry a fee that is often not charged unless a grant is secured.
Next to consider is the Federal Income Tax Credit (FITC) available for qualifying solar energy projects. Currently the FITC is set for 30% of the installation cost taken off owed taxes. The tax liability can be taken forward 22 years and look back 3 years. There are additional discounts added if certain system criteria are met. There is an additional 10% tax credit applied based on the use of qualifying U.S. made materials. If the system is being installed in a historically “low income” area, an additional 10% credit is applied. The problem for many poultry growers is that they typically do not have high tax liability until later in the farm’s life after depreciation is used up. Then this usually coincides with the need for equipment replacement and heavy maintenance requirements, which often require refinancing or additional loans. This is one reason the FITC incentive portion of the solar option may be more fitting for farms that have paid off their houses and are expecting to incur increasing tax liabilities. However, there is now an opportunity for growers to sell the unused tax credits at a reduced cash value as part of the Clean Energy Tax Credit program passed under The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169, 136 Stat. 1818 (2022)).
The final thing to discuss here, but the most important to consider with the solar option, is what kind of solar deal a grower has with their current utility company. If you have anything less than one to one net metering, then it is most likely that a system that offsets less than 100% of your total power usage will be best suited to a poultry farm. Due to the irregular usage patterns of poultry houses, large systems have the potential to put a lot of power back into the grid for low prices buy-back to the grower. In most situations examined where there is something less than full net metering, poultry farms optimally achieve 60% or less power offset, depending on the cost of the electricity and the price given to the grower for excess power. Therefore, growers should not think of the incentives as a way to offset more power by installing larger systems but use the incentives to pay off an optimized system sooner rather than later.
