Solar Incentives And Rebates
Solar can be a terrific long-term investment, but often it comes with a high initial cost. Click on your state to learn about some of the programs that can help you save money - both on the initial install and over the life of the system.
Make sure to check our Federal page too. Make your investment back sooner, and make a greater profit over the life of our solar power system!
The 3 Types of Solar
“Going Solar” can mean a lot of things. Even narrowing it down to just photovoltaics (think traditional solar panels) there are three main options. Each has its own advantages, drawbacks, and variants.
Off-Grid systems use batteries to store the energy produced by the solar panels until it is needed. Energy collected during the daylight hours can be used at night. These types of systems are very popular today to power remote locations where grid power is not readily available.
A grid-tied system is still a part of the utility grid. Some of the home’s power is supplied by solar panels, and some by the grid. Often the homeowner can “sell” excess power generated during the day to the grid, credited against the bill for their draw from the grid at night or on cloudy days.
A grid-tie system has no batteries. This means a much lower cost in parts, installation, and maintenance, than other types of systems. On the other hand, in a power outage a grid-tied home will also lose power, even if the panels are fine, in order to keep from sending power to the lines on which maintenance crews are working.
Sometimes referred to as hybrid, this type of system is similar to off-grid, with solar panels and batteries to power the system. Also like grid-tie, the system is connected to the power grid.
This type of system is fairly new, using intelligent inverters that can allow the utility company to tap into the energy stored in the consumer’s batteries during peak loads. Battery storage ensures that the energy is available regardless of time of day and current sun conditions. WIth the right type of inverter, you can even isolate your house from the grid and keep the lights on in a power outage!
With batteries and a smart inverter, grid-tied+storage costs much more than grid-tied. Depending on the size of the battery bank, it generally costs less than a comparable off-grid system, even with the smarter inverter. You do get what you pay for though - the savings of grid-tie and the self-sufficiency of off-grid!
Just The Batteries?
Maybe your home or business is connected to the grid, but the grid is unreliable. What if the location doesn't have enough sun-hours, or the cost of a full system is too high? You may want to look at wind power, but maybe all you need is a battery bank to power your critical loads for a few hours or days at a time.
How much power can I produce?
Questions like this are deceptively challenging. A well-designed system balances physics, economics, and local and state laws to meet your needs.
Another thing to consider is peak sun-hours. A peak sun-hour is any hour in which the intensity of sunlight is 1,000 watts per square meter or greater. Factors include the angle of the array to the Sun (time of day, latitude, and season), the number of daylight hours (latitude and season), average cloud cover. Remember, even though solar panels produce more power at lower temperatures, the shorter days of winter offset any benefit from the lower temperature.
Most of the mainland US averages between 3 and 5 peak sun-hours, generally more in the summer and less in the winter. When planning your system, check our library of insolation maps for an estimate of how much solar energy, on average, your state receives during the darkest month each year.
How much power do I need?
An easier question overall, here's what to keep in mind. What is the purpose of your solar power system? Will you sell power to your utility, power your home, or both?
If your system will power appliances in your home, you must size your system. Basically you need to know how many kilowatt-hours (kWh) of power your household uses in a year, and how that usage changes each year (it's probably growing). Any reduction in your household power consumption can help keep your system small, and your costs down. This could also be a good exercise if you're just looking to reduce your power bill!
When sizing your system, enter all your critical (e.g. water, refrigerator) and non-critical loads (e.g. lights, general-purpose electrical sockets) in our Load Calculator.
For more information, check out our Solar Calculators Page. Completing the appropriate calculators will give you and your Technical Sales Rep a clear starting point for sizing the perfect system for you. Make sure to check out our Incentives Calculator as well.
A Great Long-Term Investment
Keep in mind that with a little TLC and load management, you can extend the life of your system well beyond the warranty’s expiration date, often 25 years. We'll be using a 25-year example scenario on each state page for simplicity, but you may continue saving for decades beyond that.
Incentive Types
All incentives vary by state, so make sure to check your state page by clicking the link above. Here's a quick overview of the main incentive types:
Investment Tax Credit (ITC)
This tax credit can be claimed on federal income taxes, for up to 26% of the cost of a solar photovoltaic (PV) system which enters service during the tax year. Be aware, this credit is stepping down annually, leveling off at 10% for commercial installations in 2023, and expiring for residential installs in 2022 unless renewed by Congress. For more information, read the Residential ITC Guide or Commercial ITC Guide from the US Office of Energy Efficiency and Renewable Energy (EERE).
State Tax Credits
Many states offer tax credits for installing a PV system, in addition to deductions from federal taxes. Programs vary greatly by state, so click your state's name above to learn more.
Tax Exemptions
Some states and municipalities not only exempt PV systems from state sales taxes, but also exclude the value of renewable energy systems in property tax assessments. Click your state's name above to learn more.
Accelerated Depreciation
The Modified Accelerated Cost Recovery System (MACRS) allows eligible businesses to write off the value of their solar energy system over a five-year cost recovery period. This can reduce the net cost of a system by up to 30% - learn more directly from the IRS here.
Solar Renewable Energy Certificates (SRECs)
Some states set legislative requirements for a certain portion of their electricity - produced or consumed - to come from solar power. Based on these requirements, if your system is interconnected you may be able to earn one SREC for every 1mWh you send to the grid. The value of an SREC varies by state, but generally a utility would pay a few hundred to a few thousand dollars per SREC.
Performance-Based Incentives (PBIs)
Another way to pay PV system owners for electricity they send to the grid. Usually credits are metered by the kilowatt-hour. Unlike SRECs, PBIs generally are not sold through a market, and the value per credit is set when the system is installed.
Net Metering
In a net metering system, a PV system owner is charged for electricity consumed from the grid, credited for electricity they add to the grid, and billed for their net usage.
Cash Rebates
Cash rebates may be offered by your state, municipality, utility, or other organizations promoting PV installs. They are often "limited-time offers," in effect for some period of time or until some regional goal is met. Rebates vary greatly, but generally they can offset an additional ten to twenty percent of system costs.
Subsidized Loans
Low-interest, subsidized solar loans may be offered by your state, municipality, utility, or other organizations promoting PV installs. They are often "limited-time offers," in effect for some period of time or until some regional goal is met.
How Do I Pay for Solar?
After incentives, the next biggest influence on returns from a solar power system is how you pay for it. Here are the three main ways you can finance your home solar power system:
Out-Of-Pocket
This option is the simplest - you cover the full cost of purchasing and installing your system yourself. Generally this is the fastest way to start seeing returns on your solar investment, yielding the greatest returns over the life of the system.
Solar Loan
Whether or not you can afford the up-front cost of an install, you may want to consider a Home Equity Line of Credit (HELOC). With equity in your home, or good credit, you may qualify for a 15-year solar HELOC with fixed rate of 4% or lower
Regardless of which financing option you choose, over time your profit will be less than if you paid for the system out-of-pocket. Basically, some of your energy savings will be used to pay off the loan, which of course includes interest. You can still see an excellent return in this way, it will just take a little longer for the system to pay for itself.
Power Purchase Agreement
With a Power-Purchase Agreement (PPA) the homeowner leases their roof to an outside party, usually a power company. The cost of installation, repair, and maintenance to the homeowner is usually $0.00. Generally PPAs feature a fixed price per kWh, with either a fixed term or an annual escalator. While you can expect lower returns with PPA than out-of-pocket or a loan, with no overhead the returns would be infinite, technically.
