Temporary Full Expensing for Solar Projects

In response to the COVID-19 pandemic the Australian authorities introduced an incentive to advertise enterprise exercise which significantly improves the ROI for photo voltaic tasks.

Basically photo voltaic tasks will be expensed in yr 1, that means you’ll be able to declare your complete challenge towards your FY22/23 tax invoice. Historically the ATO ruling on photo voltaic tasks is that they need to be depreciated over 20 years – nearer to the anticipated lifetime of the asset.

To make the most of this incentive the photo voltaic system have to be put in and commissioned by June 30 2023. Meaning for tasks as much as 1MW the time to take a look at making a choice and contracting these methods is true now.

To provide an instance of the money flows see under:

100kW Photo voltaic Undertaking earlier than incentive launched (20-year straight-line depreciation)

100kW Photo voltaic Undertaking utilizing incentive (Absolutely Expensed)

The non permanent full expensing incentive shaves nearly 2 years of the payback interval for the challenge.

Vitality costs are growing to file ranges

With upcoming scheduled closure of the 2GW Liddell Coal Energy Station in April and the extraordinary fuel costs ensuing from the boycott of Russian fuel, the wholesale power worth in Australia soared in 2022. The Australian treasury is forecasting a 20% enhance this yr and a 30% enhance subsequent yr. This hasn’t but been felt on many power payments as many corporations have locked in contracts which mounted their pricing for a time frame.

Supply: Australian Vitality Regulator – wholesale electrical energy market costs

On account of the above 2 components within the Australian market – it’s trying very possible that there’s a 6 month window in which you’ll be able to set up photo voltaic with a considerably improved return on funding.