A Comprehensive Guide to Solar Energy Incentives
By Jason Thomas of Vault Electricity
Solar energy has become increasingly popular in recent years – and for good reason. It is an affordable, renewable energy source that can help you save money on your energy bill while reducing your ecological footprint.
The good news is that there are various incentives available to homeowners considering investing in solar energy.
Let’s take a look at some of the most popular solar incentives and how they can help maximize the benefits of solar energy for your home.
What Are the Benefits of Solar Energy?
With the help of government incentives, installing solar panels has become much more affordable, making it a great option for homeowners who are looking to save money on their power bills.
One of the most obvious benefits of solar energy is that it can significantly reduce your monthly power bill. While the initial cost of installing solar panels may seem high, you will start to see a return on your investment once your system starts producing power.
Depending on how much electricity you use and how large your system is, you could potentially be saving hundreds or even thousands of dollars each year in reduced power bills.
Solar energy also offers environmental benefits. Powering your home with solar energy reduces your carbon footprint because it does not release any harmful pollutants into the atmosphere like burning fossil fuels does. This can help combat climate change and make a positive impact on our environment overall.
Plus, since there’s no need to collect fuel or transport it to generate electricity with solar power, there’s no risk of oil spills or other environmental disasters associated with traditional forms of energy production.
Finally, it’s important to reiterate that many state and local governments are offering incentives to encourage homeowners to invest in solar energy systems as part of their efforts to promote renewable sources of energy and reduce pollution levels.
These incentives can include tax credits or rebates that can help offset some or all of the costs associated with installing solar panels on your home. Be sure to check out what incentives may be available in your area before making a decision about whether or not going solar is right for you.
Is My Home Even Suitable For Solar?
Solar energy technology has rapidly advanced in recent years, making it more accessible and affordable than ever.
Whether your home is suitable for solar or not depends on a few specific factors, such as location and roof angle. You will also need to determine if you are willing to invest in the necessary equipment and additional components required for a basic setup.
Your local government may have incentives or tax breaks available for people who choose to go solar, so be sure to explore these options as well. In many cases, homeowners can realize significant financial savings over time when they make the switch to solar power.
It’s worth investing the time to do your research and find out whether it could be the right choice for you!
How Much Does it Cost to Go Solar?
Installing solar for your home is a great way to generate electricity and save money on energy costs in the long run. It can be pricey upfront, with estimates ranging from $10,000-$40,000 depending on the size of the system you need and installation costs.
Fortunately, most countries offer generous tax credits or subsidies which could offset up to 30% of total installation costs.
Plus, many power companies also offer cash incentives or discounts in exchange for connecting a solar system to the grid. We’ll detail these for you in depth below!
What Are Some Current Solar Energy Incentives to Be Aware Of?
Solar leases, solar power purchase agreements, and low-interest solar loans are all excellent options to gain access to solar energy on your property, but it is important to understand the differences between them.
A solar lease agreement is an arrangement in which you lease a system rather than own it. This can often mean lower monthly payments at the cost of missing out on rebates and tax credits that come with owning a full system outright.
A solar power purchase agreement works similarly to a leasing model in that the panels still belong to another party – usually a third-party investor – but you pay for electricity generated from those panels. These systems also do not allow you to claim incentives, since the installer still owns the system and is entitled to any credits, rebates, or incentives themselves.
Only a low-interest loan (or buying the system outright) allows you to own the system outright while also taking advantage of incentives and credits. Ultimately, choosing which model works best for you depends on your budget, desired savings level, and other factors associated with each product type.
Here are a few of the credits and incentives available to homeowners who invest in solar.
Federal Solar Investment Tax Credit
The Federal Solar Investment Tax Credit (ITC) is an important incentive program established to promote the adoption of solar energy. Provided by the U.S. Department of Treasury, the ITC offers a credit-based incentive for those that install new or used solar energy systems into their homes or businesses.
Under the Federal Solar Investment Tax Credit, which is available to all Americans who owe federal taxes, you can claim a portion of your installation costs on your tax return, which will reduce the amount you owe.
The maximum amount for taxpayers that invest in solar technology can be up to 22% of their total expenditure in 2023. This number will reset for the next tax year, so check with your accountant to get more details on how much you might be able to have taken off.
This is perhaps the biggest incentive for going solar that you can claim as an American homeowner. For a $20,000 solar project, it would put more than $5,000 back in your pocket, meaning you can pay back the costs of the system much sooner.
Further, certain state governments may offer additional incentives through rebates and financial assistance programs to encourage residents to install local solar energy resources.
It is worth noting that eligibility criteria vary across states and locations due to different economic conditions and incentives offered by nearby utilities.
Solar Incentives by State
Homeowners looking to make the switch to solar energy may be eligible for a number of federal and state-level incentives based on their geographic region. Tax credits, rebates, and other financial incentives exist across the country, providing accessible means of powering one’s home with clean energy.
Depending on the state, these incentives differ. Eligibility criteria generally require that all systems comply with relevant codes and standards while also remaining owned by the homeowner in question.
In addition to this, you should verify that you are utilizing an approved installer or contractor, in order to guarantee they are eligible for the current solar incentives available in their given location.
Solar Property Tax Relief
Solar property tax relief is a program created to help reduce the financial burden of solar energy adoption on homeowners. Homeowners who want to access this relief must meet certain eligibility criteria, such as owning the property and having a solar panel installation already in place.
It’s important to note that the way this works in most states is by exempting property owners from an increase in property tax altogether, by which the home is assessed as if it did not have a solar system installed at all (something that dramatically increases a home value, but would also increase taxes if this waiver were not in place).
Solar Renewable Energy Certificates
Solar Renewable Energy Certificates (SRECs) are an excellent incentive for homeowners to invest in solar energy, which is an increasingly attractive option due to changes in technology and the cost-saving benefits associated with adopting this type of renewable energy.
SRECs are created when a homeowner invests in photovoltaic panels and then submits evidence that their qualifying solar energy system has been installed and is actively producing electricity. The more electricity produced, the greater the number of SRECs generated by their system, typically measured by kilowatt-hours.
Homeowners with SRECs can sell their credits on a local or national market, allowing them to recoup some of their solar investment costs.
To be eligible for those incentives, federal and state governments require the installation meet safety standards and proof of ownership must be provided before tax credits or rebates are issued.
It’s important to note that SRECs are not available everywhere but only in participating states. There are certain regulations that dictate how much of a utility provider’s electricity comes from renewable sources, and if they haven’t met those quotas from buying energy from commercial suppliers, they can buy from independent producers (you!) to meet that mark. SRECs can be worth anywhere from $5 to $450 depending on the local marketplace and on supply and demand.
Alongside financial incentives such as these, innovations in solar panel design mean that homeowners now also have access to modern setups that provide clean, efficient energy with little maintenance requirements.
These incentives come in various forms, including tax credits and rebates. These financial incentives offer assistance to homeowners interested in reducing their electricity costs and protecting the environment.
Generally, they work by giving a partial refund to the homeowner after they have already purchased the system. You’ll usually need to purchase from a solar vendor, then file for a rebate with your utility company or the local government or organization that is running the program.
Solar rebates can make the transition to solar easier and more affordable, making it a great option for those looking to reduce their carbon footprint while saving money.
Solar Performance-Based Incentives
Another way to reduce your electricity costs is to consider utilizing Solar Performance-Based Incentives (SPBIs) to help pay for the installation and maintenance of a solar energy system.
Benefits range from federal and state-level incentives, such as tax credits, rebates, rate reductions, grants, or other financial incentives, that can be used to support your solar energy investment.
The criteria for these incentives vary from one jurisdiction to another, so it’s important to investigate the policies in your area. Nevertheless, SPBIs offer a unique opportunity for homeowners to access an inexpensive and renewable source of electricity for years to come.
How to Start the Process of Going Solar
After determining whether or not your home is suitable for solar, the next step is to find an installer. While doing an internet search can provide you with many options to choose from, it’s important to thoroughly review customer reviews and testimonials so that you are confident in your selection.
Solar co-ops and solarize campaigns can help you gain the knowledge needed to make informed decisions about what goes into a successful installation as well. By leveraging collective bargaining power, these groups can facilitate conversation between local installers and bring down costs while ensuring quality standards are being met.
With these resources available at your disposal, going solar has never been easier.
Making the switch to solar power is becoming increasingly affordable thanks to various government and utility company incentives that are available in many areas across the country.
From federal tax credits and state-level rebates and grants to utility company discounts and more, there’s no shortage of financial support available if you’re looking into installing a new system in your home or business.
With all these options available, now is an ideal time to start exploring what types of incentives are available near you so that you can begin taking advantage of all the benefits that come with going green!
Jason Thomas is a native Texan, and Co-Founder and Partner at Vault Electricity, a Texas electricity brokerage firm. Founded in 2009, Vault Electricity helps homeowners and businesses find the best deal on electricity by comparing electricity rates from the most trusted electricity brands in Texas.