Solar power adoption has increased significantly over the last decade. More than 1.2 million households in the United States have adopted solar panel systems, and the number is growing every day. Supporting this growth are numerous incentives at various levels of government - federal, state and local.
Federal Investment Tax Credit: The federal government provides an Investment Tax Credit (ITC) equal to 30% of the cost of the solar power system. The tax credit is a dollar-for-dollar reduction in the income taxes that you would pay the federal government in the tax year you install your solar system. The tax credit is available only to the owners of the solar power system. For example, if you purchase a system for $22,000 you can offset $6,600 dollars that would normally go the IRS. Who doesn’t like to get fat tax refund checks from the federal government? If you lease the solar panels or sign a Power Purchase Agreement (PPA) with a solar company, the solar company would own the solar power system and therefore, they would be the ones who would be collect the tax refund. They may pass on those benefits to you through a reduced lease payment or solar power rate*.
State Income Tax Credit: Many states provide a tax credit that is a dollar-for-dollar reduction in the income tax that you would pay to the state government. As an example, New York’s Solar Equipment Tax Credit (SETC) offers a tax credit that equals 25% of the cost of the solar system or $5,000, whichever is lower*. You can claim the NY’s SETC whether you own or lease the solar system. When you lease the solar system, your SETC is 25% of the solar lease payments until you reach the cumulative cap of $5,000. When you own the solar system, the SETC is 25% of the upfront cost of the solar system.
State Rebates: Some states also provide additional upfront rebates that further reduce the cost of solar panels. Under the NY-Sun Program, New York offers an upfront rebate $400 per kW of solar panels if you are in the Con-Ed region or in upstate New York. For a typical household that requires 6 kW of panels, this incentive translates to a reduction in upfront costs of $2,400.
Solar Renewable Energy Certificates (SRECs): Some states, including Massachusetts and New Jersey, have a program where the owners of solar panels receive solar renewable energy certificates (SRECs) representing the environmental benefits ofthe electricity (1 certificate per 1000 kWh produced) that those solar panels produce. These certificates can then be sold, making the savings from solar panels even bigger. The prices of these SRECs can vary by region and the supply and demand for these certificates. Depending on the state, certificates are provided for up to 15 years of solar electricity production. There are also special programs that allow the consumers to lock-in the price of these certificates upfront, or customers may sell the SRECs into the state run market.
Household Income-based Incentives: To increase the adoption of solar power and to make it more affordable, there are many programs that offer incentives based on household income. For example in New York, under the Affordable Solar program, a homeowner can receive additional incentives if their household income is less than 80% of the median state income or the median area income, whichever is greater.
With so many incentive programs available, it can be confusing to understand which ones a homeowner qualifies for. PowerScout has taken the hassle out of the incentive process with our Solar Calculator. We qualify you only for the incentives you are eligible for, and also analyze your roof to determine whether it is a good fit for rooftop solar. We provide an instant estimate of how much you could save by switching to solar power.
*Note: we’re a technology company, not tax experts, so please check with a reputable accountant to make sure you qualify!