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Capital Based Incentive

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Capital based incentives apply to the capital cost of the components. This could either be a tax deduction or a credit or both. In HOMER Grid, you can apply a capital based incentive to the following components: solar, storage, and wind.

Below is an explanation of the various inputs in a capital-based incentive template: 



Percent deduction (%)

Tax deduction as a percent of the capital cost

Maximum deduction

Maximum deduction limit

Percent credit (%)

Tax credit as a percent of the capital cost

Credit per kW (per kWh for storage)

Additional credit per kW (or kWh) of installed capacity

Maximum credit

Maximum credit allowed

Eligible percent (%)

Portion of capital cost eligible for incentive

Marginal tax percent (%)

The percent of tax applicable

Credit is taxable

Select this option if the credit is reduced by the marginal tax rate

Reduces tax basis

Select this option if deduction and credit reduces the tax basis (cost basis)

Applies to

The components that this incentive applies to



capital based incentive


See also


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