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A Guide to Residential Solar Incentives

Posted by AllEarth Renewables on February 22, 2017 in Going Solar, Residential Solar, Consumer

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When it comes to going solar, choosing the right system to meet your energy needs is only one part of the equation. Cost is a big factor for many individuals, and the reality is that most people will need to take advantage of the wide variety of solar incentives available at the national, state, and local levels to help make their solar system a worthy investment. Not sure where to start? Here's an overview of some of the key incentives to look into.

The Federal Income Tax Credit

Currently, the federal government offers a 30% tax credit for the cost of a solar installation. That means that 30% of the total cost of your solar system can be directly deducted from your tax bill. For example, let’s say that the total cost of your system (hardware, site-work, labor, permitting) is $25,000. You would then be able to deduct $7,500 directly from your total tax bill, reducing the real cost of your system by 30%. The good news? This credit is available nationwide and was extended for several more years at the end of 2015, meaning you have plenty of time to take advantage of it.

State Tax Credits and Rebates

Across the country, there are a full range of state rebates, tax credits, and programs to help offset the cost of going solar, depending on your location. These will vary widely by state, so it's important to do research into your own state's policies (or find a dealer/installer with expertise in this area to help guide you through your options). However, when available, these credits, rebates and incentives can offer direct savings off the initial out-of-pocket cost of the system, and can knock an additional 5-10% off the total price.

Although it might seem like a challenge to figure out exactly what incentives you qualify for, there are a number of sources to help you find out what is available in a particular state, such as Dsire, the Database of State Incentives for Renewables & Efficiency.

Net Metering

In over 43 states, utilities are required by law to accept any excess energy from solar systems back onto the grid and credit the customer at a mandated price. Through this process, known as net metering, whenever a solar system is creating more power than is actually being used, the excess energy will flow back into the grid and the homeowner will actually sell it back to the utility. Their meter will actually spin backwards, and the customer will be billed for the net electric energy they purhcase--that is, the difference between their electrical demand from the utility, minus the amount of power that their solar system generated and returned to the grid. Customers will typically receive a credit on their bill representing this net figure.

For the customer, net metering provides a financial gain for the energy their system produces but that the household doesn’t need to use. This approach is also beneficial in areas where the retail price of utility power is very high, as customers can rely on their own solar power and can purchase less from the utility. Net metering rules and regulations vary by state, and the process of finding out the details for your area is similar to the research you might undertake to learn more about state tax credits and local incentives for your town. The DSIRE website, your local utility, and/or your local solar dealer/installer will all be excellent resources. 

Though the process of figuring out what solar incentives you qualify for, and how to access them, might feel overwhelming, they're less complicated than they may seem. A little research into state policies and finding a dealer who understands local rules and regulations and can help you reduce the cost of your system will be key to ensuring that you go solar affordably. 

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