Illinois has become the 11th state in the country to legalize the recreational use and purchase of marijuana.
Democratic Gov. J.B. Pritzker, who was elected last year, signed the bill into law on Tuesday, fulfilling a key campaign promise. The state joins 10 others and the District of Columbia in allowing recreational use. The legislation takes effect on Jan. 1, 2020.
The new law allows Illinois residents who are 21 and older to possess up to 30 grams of cannabis flower, 5 grams of concentrate and 500 milligrams of THC in products such as edibles.
It also will expunge the records of 800,000 people with criminal records as a result of purchasing or possessing 30 grams or less of marijuana. It earmarks a quarter of the tax revenue from the sale of cannabis to redevelop impoverished communities in the state and gives vendor preference to minority owners.
California has established an ambitious goal of relying entirely on zero-emission energy sources for its electricity by the year 2045.
Gov. Jerry Brown signed a bill mandating the electricity target on Monday. He also issued an executive order calling for statewide carbon neutrality — meaning California “removes as much carbon dioxide from the atmosphere as it emits” — by the same year.
“This bill and the executive order put California on a path to meet the goals of Paris and beyond,” Brown said in a statement. “It will not be easy. It will not be immediate. But it must be done.”
As the Trump administration rolls back federal efforts to combat climate change, California has actively pursued a leading role in the international fight against global warming.
The latest announcement comes shortly before Brown heads to San Francisco for the Global Climate Action Summit.
The bill specifically requires that 50 percent of California’s electricity to be powered by renewable resources by 2025 and 60 percent by 2030, while calling for a “bold path” toward 100 percent zero-carbon electricity by 2045. (“Zero-carbon” sources include nuclear power, which is not renewable.)
Previously, California had mandated 50 percent renewable electricity by 2030.
But, as KQED’s Lauren Sommer reported last year, “California uses about 30 times more electricity than Hawaii and is the fifth largest economy in the world.”
California already gets a substantial portion of its electricity from renewable resources.
The California Energy Commission estimates that 32 percent of retail energy sales were powered by renewable sources last year.
But the supply of renewable energy varies from day to day — even moment to moment.
NPR’s Planet Money reported that on a sunny day this June, nearly 50 percent of the state’s electricity came from solar energy alone.
But as Sommer reported last year, that variability means it’s tricky to get renewable energy supply to match up with electricity demand:
“The sun and wind aren’t always producing power when Californians need it most, namely, in the evening.
“The state’s other power plants, like natural gas and nuclear, aren’t as flexible as they need to be to handle those ups and downs. Hydropower offers the most flexibility but is scarce during drought years.”
Large-scale energy storage systems can help address that problem, Sommer said, as could a “better-connected transmission grid system.”
California has dramatically stepped up its climate-change policies four times in the last four years, as Capital Public Radio’s Ben Bradford reported last month.
Before the new 100 percent zero-emission goal, lawmakers approved “higher renewable energy use, tighter greenhouse gas targets, and extension of the cap-and-trade program,” he wrote.
The new bill was supported by Democrats who emphasized the damaging consequences of climate change, while opposed by state Republicans who highlighted the policy’s financial costs, Bradford reported.
California’s utilities had been on track to meet the previous goal, of 50 percent clean power by 2030, “but scientistsdebate whether cost-efficient 100 percent clean energy is feasible or if it would require new technological advances,” Bradford wrote.
“Iceland and Norway meet essentially all of their electrical needs through hydro and geothermal power, and have for years — but those countries take advantage of extraordinary geology, making the accomplishment hard to replicate.
“Several small islands are all-green, but larger countries are rare. On particularly windy days in 2015 and 2017, Denmark exceeded its electrical needs through wind power alone.
“And several times in the past few years, Costa Rica has kept on the lights through on all-renewable power for several months, fueled by heavy rains that fed into hydroelectric facilities.”
CorrectionSept. 10, 2018
A previous version of this story stated that California was setting a goal for 100 percent renewable electrical energy sources. In fact, the ultimate goal calls for zero-emissions sources, which include renewable resources as well as nuclear power, which is a non-renewable zero-carbon energy source.
This article was originally published on http://www.npr.org on Sept 10, 2018 by Camila Domonoske
Tomatoes and cucumbers appear to grow just fine—and just as healthily—in smart, solar-powered greenhouses that capture solar energy for electricity.
Scientists from the University of California, Santa Cruz, have shown how crops can grow as healthily in these new greenhouses as they do in conventional greenhouses.
“We have demonstrated that ‘smart greenhouses’ can capture solar energy for electricity without reducing plant growth, which is pretty exciting,” Michael Loik, professor of environmental studies at UCSC, said in a press release. Loik is the lead author for the paper, published in the American Geophysical Union’s journal Earth’s Future.
Solar Power Trapped by a Red Roof
Bright magenta panels cover the tops of the greenhouses, soaking up sunlight and transferring the energy to photovoltaic strips. From there, electricity is produced.
The greenhouses are able to take sunlight for energy and leave the rest, allowing plants to grow using a technology called Wavelength-Selective Photovoltaic Systems (WSPVs). The technology, developed by co-authors Sue Carter and Glenn Alers, is less expensive and more efficient than traditional photovoltaic systems.
The team tested the growth and fruit production across 20 varieties of tomatoes, cucumbers, lemons, limes, peppers, strawberries and basil at two locations at the Santa Cruz campus and one in Watsonville, California. Scientists reported that 80 percent of the plants were unaffected by the slightly darker lighting from the magenta panels, and 20 percent of the crops grew better. Tomato plants needed 5 percent less water under the magenta panels.
Reducing the energy used in greenhouses is crucial since the use of greenhouses to grow food has increased by sixfold in the past 20 years, according to Loik.
Solar-powered greenhouses are one of several developments for new ways of farming in recent years.
Smart Greenhouse Detects Infestations
Another company, NatureSweet, has outfitted its greenhouses in Arizona with artificial intelligence, reported CNN. The plants are monitored with 10 cameras installed in the greenhouse ceilings which continuously take photographs to detect insect infestations or dying plants.
The software, developed by a company called Prospera, recognizes those problem spots and sends feedback 24/7. Previously, reported CNN, NatureSweet’s employees walked through the greenhouse in order to spot issues with the plants.
Green roofs are another method of growing food in an attempt to utilize space and close gaps in access to foods in urban areas.
In Washington, D.C., Up Top Acres has opened five urban farms on the rooftops of buildings since 2015, reported Washington City Paper. Green roofs improve storm-water collection, habitat protection and energy preservation, in addition to providing food. The company’s co-founder, Kathleen O’Keefe, told the paperthat the company may not produce enough food for the city, but green roofs can change the way people think about food, in addition to utilizing unused space.
Lithium-ion batteries were first introduced to the public in a Sony camcorder in 1991. Then they revolutionized our lives. The versatile batteries now power everything from tiny medical implants and smartphones to forklifts and expensive electric cars. And yet, lithium-ion technology still isn’t powerful enough to fully displace gasoline-powered cars or cheap enough to solve the big energy-storage problem of solar and wind power.
Dave Eaglesham, the CEO of Pellion Technologies, a Massachusetts-based startup, believes his company has made the leap beyond lithium-ion that will bring the battery industry to the next stage of technological disruption. He and his colleagues have accomplished something researchers have been struggling with for decades: they’ve built a reliable rechargeable lithium-metal battery.
Though other startups have for years made various claims about lithium-metal batteries, none yet have gotten past the development or testing phases; Pellion has already been selling their battery to at least one buyer since February.
Pellion’s battery can pack nearly double the energy of a conventional lithium-ion battery, making it able to, for example, double the time a drone can spend in the air. That 100% increase in energy density is a step change compared to the annual 10% or so improvement the battery industry currently averages. If Pellion overcomes early limitations, its batteries have the potential to power a Tesla car for 800 km (500 miles) on a single charge, rather than today’s upper limits of 400 km.
The story of a pivot
The lithium-ion battery is named for its use of charged atoms—also known as “ions”—of lithium. The ions shuttle between two electrodes (the anode and the cathode) as the battery is charged and discharged.
One of the limitations of this tech is that a lithium ion carries only a single positive charge. In theory, simply using magnesium ions—which carry two positive charges—would mean packing in a lot more energy in the battery. In 2011, Robert Doe, a postdoctoral student at MIT, and his then supervising professor Gerd Ceder, founded Pellion with the goal of building a magnesium-ion battery. Within two years, Pellion had a working prototype in the lab. But it had a lot of problems. Though the battery worked, it was no match for lithium-ion batteries on simple things like charging and discharging with consistency.
That’s when Eaglesham joined as CEO. “We had the world’s best magnesium battery, but I couldn’t see how to turn it into a compelling product,” he says. However, Eaglesham noticed that in the process of building a working prototype, Pellion had solved one of the industry’s long-standing challenges for rechargeable batteries: how to put a metal on the anode safely.
Energy-rich metals like lithium and magnesium tend to be highly reactive. And a complete battery, when packed with an energy-dense electrolyte, makes the system even more dangerous. Remember the exploding Samsung Galaxy Note 7?
That’s why typical lithium-ion batteries use anodes made of graphite, a form of carbon. But graphite anodes can only store one atom of lithium for every six atoms of carbon. Replace graphite with an anode made entirely of lithium atoms—aka a lithium-metal anode—and you’ve just saved a lot of space in your cell.
In a study published in January this year, Paul Albertus, a program director at the US Advanced Research Projects Agency–Energy (ARPA-E), used this graphic to show how dramatically more energy-dense a lithium-metal battery could be:
Eaglesham made the case to his new colleagues at Pellion that, if they’d found a way to use a metal anode safely, it would be better to pivot to lithium rather than struggle with magnesium. That way, they could take advantage of more than three decades of work done on lithium-ion technology to solve the little but important problems, such as charging consistency or voltage fluctuations, while still creating an energy-dense battery and moving the needle on innovation in the industry.
Trial by fire
Scientists have long understood that a lithium-metal anode would theoretically pack in more energy. In fact, the first lithium-ion cells that oil giant Exxon developed in the 1970s contained lithium-metal anodes. (Exxon was working on batteries then because it worried that oil might run out one day.) Single-use lithium-metal batteries were commercialized about the same time and they are used even today in specialized applications, such as deep-sea drilling.
Commercializing rechargeable lithium-metal batteries is a bigger challenge. In the 1980s, Moli Energy, a Canadian startup, was the first to succeed. But some of its batteries started catching fire, and the company had to issue a recall. The incident led to legal action and Moli Energy was forced to declare bankruptcy.
The use of lithium metal in rechargeable batteries creates three big problems. First, it reacts with everything: water, oxygen, and even nitrogen (all of which are present in the air around us), making it more likely to catch fire.
Second, lithium’s reactivity means it suffers side reactions with the battery’s liquid electrolyte, which is itself an energy-rich medium. These undesirable reactions reduce the amount of lithium available and worsen the battery’s life with every charge-discharge cycle.
Third, when a lithium-metal battery discharges, lithium ions separate from the surface of the anode and travel to the cathode. When the battery is charged the same ions travel back and deposit onto the anode as lithium metal. But instead of forming a nice smooth coating on the anode, lithium metal has the tendency to generate “dendrites,” chains of lithium atoms growing from the surface of the anode, which look like the roots of a tree. The dendrites grow bigger with each charge-discharge cycle, eventually reaching the cathode and causing the battery to short, leading to fires.
As the industry struggled through these problems in the late 1980s, Sony invented the graphite anode. Though less energy-dense, it suddenly made lithium batteries a lot safer and more reliable. Since then, graphite anodes have remained the mainstay of the industry.
Nearly 30 years later, however, we are brushing up against the limitations of the graphite anode. Next-generation applications such as cheap electric cars and electric airplanes will need batteries that carry the same amount of energy but weigh a lot less and take up a fraction of the space of today’s batteries. A slew of companies are in a race to build the next revolutionary anode, and venture capitalists are pumping in hundreds of millions of dollars in the hope of making a winning bet.
The zero-lithium state
To counteract lithium’s high reactivity, some battery developers have tried to install additional safety equipment to keep the lithium from coming into direct contact with water, oxygen, or nitrogen inside the battery. That inevitably increases the cost of manufacturing.
Some customers, such as commercial-drone users, are willing to pay premium prices. But Eaglesham believes it also means such battery makers don’t have a business that can scale beyond niche markets.
Even if somehow the costs could be reined in, batteries with lithium metal inside are less likely to pass safety tests, according to Eaglesham. These tests are designed to put the battery in extreme, but real-life, conditions: piercing a nail into the battery (which might happen in a car accident) or heating it to more than 50°C, or 122°F (a temperature that the interiors of cars or drones can easily reach).
The industry is littered with examples of companies that tried to build a lithium-metal battery but failed. For example, Arizona-based Sion Power built a lithium-sulfur battery (where the anode is lithium metal and cathode is made of sulfur) and used it for record-setting unmanned autonomous vehicles flights. But it abandoned the technology before reaching commercial scale. (It is still trying to develop lithium-metal batteries, but this time with a different cathode.)
That’s why Pellion’s battery doesn’t start with lithium metal inside. Instead, the battery is manufactured in the exact same way as a conventional lithium-ion battery, including using a liquid electrolyte, a widely available cathode—and an anode that begins its life as a copper sheet. That’s crucial because it allows Pellion to use existing lithium-ion battery factories in Asia, where it’s much cheaper to manufacture batteries.
In its discharged state, the Pellion battery has its lithium ions sitting snugly inside the cathode. The magic happens when the battery is charged for the first time, and the lithium ions travel from the cathode and deposit as a layer of lithium metal on the copper anode. The first charge is carried out in a state when the battery is completely sealed from the outside environment, and thus the newly formed layer of lithium metal is protected. This configuration is called “zero-lithium” or “lithium-free.”
“It is quite an impressive feat,” says Venkat Viswanathan, a battery expert at Carnegie Mellon University. Another expert (who asked not to be named due to press restrictions at their lab) called it the “holy grail” of the lithium-metal battery.
Market niche to market king
Pellion’s battery does have limitations. It typically takes three hours to charge the battery fully, and it’s not cheap. While experts Quartz spoke to about Pellion’s battery were impressed by the achievement, many expressed concerns about the limited number of life cycles: it can only guarantee 50 charge-discharge life cycles.
That’s much lower than the approximately 300 life cycles needed for a battery to go in a smartphone or the 1,000 life cycles required for electric cars. Eaglesham says the company’s latest models in development can last much more than 50 charge-discharge lifecycles than the batteries it sells. But Viswanathan says that going from 50 life cycles to 500 is a much harder proposition than what Pellion has achieved so far. Steven Visco agrees. He is the CEO of PolyPlus, a California-based startup, and he thinks that using a liquid electrolyte, which Pellion’s battery does, fundamentally limits how many lifecycles a lithium-metal battery could achieve.
That said, “battery startups struggle to find customers for their early products,” says Venkat Srinivasan, a lead battery researcher at Argonne National Laboratory. “So it’s an achievement that Pellion is already shipping product.” Quartz reached out to 10 other startups working on lithium-metal batteries for comment, and got replies from six. Sion Power, PolyPlus, Solid Energy Systems, and Ion Storage Systems said they are in the validation phase, sending engineering prototypes to potential customers and third-party testers. QuantumScape and Blue Current declined to comment.
Delivery of a lithium-metal battery product is a “major breakthrough,” says Eaglesham. Pellion’s first customers are makers of commercial drones. (Quartz was shown documents confirming sales on the condition of keeping the buyer’s identity confidential.) The startup began selling its batteries in February this year, and it expects to have several million dollars in revenue by the end of the year.
“Current battery technology underserves the drone market,” says Eaglesham. “We’ve found that some users have such a hunger for longer flight times that the number of battery life cycles doesn’t matter.”
The biggest prize for battery companies right now is the electric-car market. Bloomberg New Energy Finance expects that 10% of all carssold in 2025 will be electric. To meet that demand, the battery industry will have to quintuple in size and produce some $60 billion worth of batteries annually.
Given the limitations, Eaglesham isn’t thinking about electric cars just yet. But his battery’s specifications make it a good candidate. For comparison, lithium-ion cells in electric cars like Tesla stand at 600 watt-hours per liter (Wh/l) and 220 watt-hours per kilogram (Wh/kg). Pellion’s figures are nearly double: 1,000 Wh/l and 400 Wh/kg. The promise of a leap in battery technology has allowed the startup to raise “tens of millions” of dollars, says Eaglesham, from the likes of Khosla Ventures and Motorola Solutions.
Beyond the hype
As a fast-growing industry with the potential of creating billion-dollar companies, battery inventors are known to operate in secrecy. But that means, without proper third-party verification, it’s hard to separate the truth from hype. That’s why it’s not surprising so many promising battery startups have gone bust in the past decade alone.
In 2012, for example, Envia was among the first crown jewels of the then three-year-old US advanced energy program (ARPA-E). Envia promised a lithium-ion technology that would make a leap in energy density and thus slash the cost of electric cars. It even convinced General Motors to sign a deal and invest millions of dollars. At the time, the car giant desperately needed a new battery for the next-generation Chevy Volt that was due in 2016. But after raising nearly $30 million and spending 10 years in operation, Envia fell short on delivering its magical battery and went out of business in 2017.
So Pellion’s claims need to be taken with a grain of salt. The only independent academic who has seen Pellion’s technology in action declined to comment for this story. Eaglesham says the company’s customers have validated its technology, but he declined to put Quartz in touch with them, citing confidentiality agreements.
Other experts Quartz consulted back the credentials of Eaglesham and his team. Pellion’s co-founders may have been first-time entrepreneurs; in Eaglesham, however, they have an experienced hand.
Eaglesham was previously the chief technology officer of First Solar, which proved itself a rare success in the cut-throat solar-photovoltaic-cell business. Co-founder Gerd Ceder now sits on Pellion’s board of directors, and he says that Eaglesham has been successful at Pellion because he has a handle on both commercial and technical aspects.
“Commercializing batteries is an extremely hard problem. Most startups end up in bullshit land,” Ceder says. “They are run by CEOs who are all about raising money and ratcheting up the stakes…before the crash. Pellion is different.”
One of the major reasons taxpayers are drawn to business opportunities in the solar
space are the benefits provided by solar energy tax credits. Although solar tax credits are substantial, taxpayers might not reap the full benefits unless the taxpayers have the correct tax appetite. Solar tax credits are subject to the passive loss rules under the Internal Revenue Code, which means taxpayers can only use solar tax credits to offset passive income unless the taxpayers can demonstrate material participation in the trade or business.
When solar energy property is placed in service, the taxpayers who own such property are eligible for solar tax credits. The amount of the solar tax credits is a percentage of the qualified basis of such solar property. In the case of solar property, the construction of which begins on or before Dec. 31, 2019, the solar tax credit is equal to 30% of the qualified basis of such solar property. For solar property, the construction of which begins after Dec. 31, 2019, and before Jan. 1, 2021, the solar tax credit is equal to 26% of the qualified basis of such solar property. For solar property, the construction of which begins after Dec. 31, 2020, and before Jan. 1, 2022, the solar tax credit is equal to 22% of the qualified basis of such solar property. For solar property, the construction of which begins after Dec. 31, 2021, the solar tax credit is equal to 10% of the qualified basis of such solar property.
Notwithstanding the forgoing, there will be no solar tax credit for residential solar property, the construction of which begins after Dec. 31, 2021, which is owned by the owner of the home. The solar tax credit will remain at 10% for residential solar property owned by a third party through a power purchase agreement.
Solar tax credits are subject to the passive loss rules under Code Section 469 and its regulations. “Passive activity” is defined as any activity involving the conduct of any trade or business in which the taxpayer does not materially participate. As a result, solar tax credits can only be used to offset tax liability attributable to passive income unless the taxpayer can demonstrate material participation by satisfying one of the seven material participation tests set forth in the tax regulations. “Material participation” means involvement in the operations of an activity that is “regular, continuous, and substantial.”
The seven material participation tests set forth in the regulations are as follows:
(1) Hourly safe harbor: The taxpayer participates in an activity for more than 500 hours during the current taxable year.
(2) Primary participant: The taxpayer’s participation in the activity for the current taxable year constitutes substantially all of the participation of all individuals in the activity (including individuals who are not owners of interest in the activity). As such, under Test 2, only one of the principals can satisfy the material participation test. In order for the taxpayer to satisfy Test 2, the taxpayer cannot have employees or non-employees performing most of the work. Discrete tasks, such as appropriate delegation of maintenance and servicing of solar property, or the performance of ministerial tasks, would not defeat the taxpayer’s ability to meet Test 2 so long as the taxpayer remains the primary participant and can demonstrate material participation in the trade or business. Although there is no hourly requirement to meet Test 2, the Internal Revenue Service (IRS) generally looks to see at least 100 hours of material participation from the taxpayer.
(3) Maximum participant: A taxpayer participates in the activity for more than 100 hours during the current taxable year, and such participation is not less than the participation in the activity of any other individual (including individuals who are not owners of interests in the activity). As such, if there are multiple active principals in a company owning solar property, while satisfying the 100-plus-hour requirement under Test 3, each active principal cannot participate less than anyone else, including the other active principals. There would have to be an equal division of activity across all of the active principals, at a minimum of 100-plus hours each.
(4) Significant participation activity aggregation: The activity is a significant participation activity (SPA), and the taxpayer’s aggregate participation in all SPAs during the current taxable year exceeds 500 hours. An SPA is generally an activity in which the taxpayer participates for more than 100 hours during the current taxable year but by itself does not qualify as a material participation activity otherwise.
(5) Historical participation: The taxpayer materially participated in the activity for any five years (whether or not consecutive) during the 10 years immediately preceding the current taxable year.
(6) Personal service activity: The taxpayer materially participated in a personal service activity related to the solar property (professions or trades in which capital is not an income-producing factor) for any three years (whether or not consecutive) preceding the current taxable year.
(7) Facts and circumstances: The taxpayer does not meet material participation Tests 1-6, but based on all of the facts and circumstances, the taxpayer participates in the activity on a regular, continuous and substantial basis during the taxable year. The taxpayer must participate in the activity for at least 100 hours a year under this test. Time spent managing the activity will not count towards the 100-plus hours if any individual other than the taxpayer receives compensation for managing the activity, or if another person spent more hours than the taxpayer managing the activity.
A taxpayer’s participation in an activity may be established by “any reasonable means.” These means may include “contemporaneous daily reports, logs or similar documents,” but such documents are not required if the taxpayer identifies the “services performed over a period of time and the approximate number of hours spent performing such services … based on appointment books, calendars or narrative summaries.”
For purposes of analyzing whether a taxpayer is a material participant, it is important to distinguish between work that is customarily performed by owners, which does qualify, from participation as an investor, which does not qualify.
Examples of work performed as an investor that is not treated as material participation include “studying and reviewing financial statements or reports on operations of the activity” and “preparing or compiling summaries or analyses of the finances or operations of the activity for the individual’s own use.” Taxpayers are cautioned that if they delegate to others a significant portion of the work that is required to control and operate the business, the taxpayers’ own material participation may not be considered “regular, continuous and substantial.”
The material participation of the taxpayer is not the only factor to consider when determining whether solar tax credits can be used to offset active income. The IRS also looks at the type of business entity that owns the solar property. Specifically, the IRS has taken the position that limited partners in a limited partnership and members of a limited liability company (LLC) created under state law are presumed not to materially participate in the business entities that own the solar property.
Taxpayers often enter into a business structure that involves an LLC as the holding company of the entity that owns and operates the solar property. Taxpayers may create a holding company to serve as the sole manager/member of a single member LLC that owns, installs and manages the solar property. The Internal Revenue Code provides that unless the exceptions under the tax regulations are met, “no interest in a limited partnership as a limited partner shall be treated as an interest with respect to which a taxpayer materially participates.”
Under most state laws, an LLC member has limited liability. As a result, the IRS has historically treated LLC members like limited partners to the extent that they are presumed not to materially participate in their respective trades or businesses.
The tax regulations do provide three exceptions to the general rule under the code that limited partners (or LLC members) cannot materially participate in their trade or business. The three exceptions to the general rule are when the limited partner (or LLC member) is found to meet material participation Test 1 (500-hour safe harbor), Test 5 (historical participation) or Test 6 (personal service activity).
In contrast to the position taken by the IRS, there is a line of case law that rejects the IRS’ position that LLC members are, by virtue of the limited liability provisions of state laws, equivalent to limited partners. The courts have expanded the means by which limited partners or LLC members can demonstrate material participation by allowing such taxpayers to use any one of the seven material participation tests. Although the IRS has not formally adopted the treatment of limited partners and LLC members by the courts with respect to material participation, the prevailing view is that all seven material participation tests are applicable to limited partners and LLC members.
Taxpayers with a significant appetite for the use of passive tax credits can take full advantage of solar tax credits without consideration as to whether they are materially participating in their respective trade or business. In contrast, taxpayers with an appetite to use solar tax credits to offset active income must demonstrate material participation.
Based on the prevailing case law, it is possible for LLC members to demonstrate material participation by meeting any one of the seven material participation tests. It is recommended that both the LLC operating agreement and individual business activity of the LLC member reflect that the LLC member takes part in “controlling the business.” That way, the taxpayer will be subject to the “general partner” exception under the tax regulations.
Regardless of the type of business structure that owns the solar property, all taxpayers are recommended to consider the type of income they have to offset (passive or active) and, if necessary, whether material participation can be demonstrated in order to maximize the benefits of solar tax credits.