Solar energy experienced its largest boom in the United States last year, and it’s poised to gain additional ground as more businesses and agriculture operations adopt these practices. Many operations are using solar energy to offset their daily energy costs or utilizing solar panels as a retirement opportunity. North Carolina ranks as one of the top five solar leaders in the United States.
Mathis Farms in Wilkes County, N.C., recently joined the trend, incorporating solar energy harvesting on their farm through the leasing program that Carolina Farm Credit offers. Mathis Farms is a fourth-generation family-owned business scattered throughout a 90-mile radius. The farm includes 15 broiler houses, customer crop farming for large dairies throughout North Carolina, 2,000 acres of shelled corn and a trucking business.
Farm owners found that their energy costs have been increasing by 4 percent annually over the last 45 years. With the cost of energy rising, they decided to install two acres of solar panels to harvest and utilize energy for their operation with an estimated cost of $550,000. However, when it came time to finance the solar panels, farm owners were presented with an alternative to a traditional loan or purchasing the panels with cash.
Loan Officer, Marsha Williams from the Wilkesboro Branch had the opportunity to introduce leasing Manager, Ron Joines to the farming family. In addition to the energy benefits to the farm, there are also tax incentives associated with leasing solar panels. The true lease allows Mathis Farms a 100 percent tax write-off. There are also tax incentives for installing solar panels. Through Farm Credit, the leasing program offers a negative interest rate for leasing solar panels in exchange for the additional solar tax incentives. With the two acres of solar panels installed on their operation, they are now producing 80 percent of their own electricity needs on the farm. This program allowed Mathis Farms to lease the panels at a negative interest rate, (not repaying what the system cost), and capitalize on traditional leasing tax incentives. The farm was able to capture all of their savings over several years through this program versus one large payment and write-off. Luke Mathis, C.F.O, of Mathis Farms, stated “leasing provided an option to expand without taking on traditional debt.” Leasing provides not only a tax incentive, but it also frees up working capital.
Aside from the solar panel lease, Mathis Farms also has leased trucks for their trucking business and entered into a building lease on their new office building. While they were hesitant to take on more debt, the tax burden relief was a tremendous incentive for these purchases. For the new office building, it proved to be more valuable to expense lease payments 100 percent than to depreciate the building over 39 years.
Luke was pleased to choose leasing for their solar project stating that, “It just made sense with Carolina Farm Credit and we’ve worked with you in the past and find you trustworthy.” He also stated, “I would recommend leasing and solar energy when it makes sense for your operation and your business model.” Between a negative interest rate that offset his total cost for solar panels, the tax incentive for leasing, and conserving cash for more income-producing ventures, this was a lucrative option for Mathis Farms.
More farms with significant power bills are beginning to examine the solar option. For details about how leasing might be a good fit for financing a solar project, or leasing buildings or equipment, call Lease Manager Ron Joines at 800-521-9952, ext. 2840. For details about Solar Farming and Clean Energy in North Carolina, visit www.energync.org.
To read more about Carolina Farm Credit, our members and the ag industry, check out issues of our Leader magazine—you can read them online.
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