Cost-segregation and ITC eligible-basis studies identify which costs of a solar or storage project qualify for the Investment Tax Credit and how its assets can be depreciated. Best Energy Partners prepares the engineering-based analysis and financial model that quantify these benefits for developers, owners, and investors. Our team has delivered cost-segregation studies that captured millions in additional tax benefits.
What do the cost-segregation and ITC studies deliver?
| Deliverable | Who uses it | Project stage |
|---|---|---|
| Eligible-basis appraisal | Owners, investors, tax advisors | Pre-financing and post-construction |
| Cost-segregation study | Owners, tax advisors | Post-construction, or as costs are incurred |
| Financial model of ITC and depreciation value | Investors, lenders, owners | Pre-financing |
How does a cost-segregation or ITC study work?
- 1.Review: Review project cost records, equipment lists, and design documents to identify qualifying assets.
- 2.Appraise: Build the eligible-basis appraisal and the cost-segregation classification for each asset group.
- 3.Model: Quantify the ITC and depreciation benefit in the project financial model, with the tradeoffs shown.
What does the study change for the project?
- It documents the eligible basis so the tax benefit can be tied to specific, supportable costs.
- It shows the cash value of the ITC and depreciation timing inside the same model used for financing.
Frequently asked questions
What is an ITC eligible-basis study?
An eligible-basis study identifies which costs of a renewable energy project qualify for the Investment Tax Credit and quantifies the credit they support. It turns project costs into a documented, supportable basis for the tax benefit.
What is cost segregation?
Cost segregation is an IRS-aligned engineering and accounting methodology used to evaluate solar PV, standalone storage, and solar-plus-storage assets. The study line-itemizes EPC cost breakdowns, civil work, and interconnection expenses to classify qualified generation and storage equipment, including major components such as battery enclosures, switchgear, step-up transformers, and SCADA/DAS monitoring, into 5-year MACRS recovery schedules. This precise allocation substantiates ITC-eligible basis, accounts for the 50% ITC basis reduction, and front-loads depreciation to maximize net present value (NPV).
Does this replace my tax advisor?
No. Best Energy Partners prepares the engineering-based analysis and financial model. Your tax advisor or counsel should review the conclusions and file the tax position.
Which projects does this apply to?
Solar and battery storage assets are the focus. The studies apply to projects where the ITC or depreciation benefit is part of the investment case.
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