Going solar is good for the environment, says Thomas Neyhart. Its positive impact makes the government interested in supporting homeowners that switch to solar energy. Most times, the benefits of solar energy to the environment and reduced utility bills take the spotlight. But solar incentives make going green a more attractive investment.
The Federal and (some) State governments offer financial incentives that help residents save more when switching to solar energy. In this article, he explains some incentives available for going solar and which states offer them.
Thomas Neyhart on Federal Solar Incentives
The United States federal government offers a tax credit for switching to solar energy. Those eligible receive a 26% credit of the total cost of the solar system applied to their federal taxes; and an additional solar battery. This offer, says Thomas Neyhart, is available for both homeowners and business owners. But to be eligible, some requirements need to be met. Some of these requirements are:
- You must own (not lease) the solar system
- These incentives only cover systems in the United States
- You must install the system at your home, a secondary house in the United States, or a community solar project off-site.
Thomas Neyhart emphasized that this tax credit is non-refundable. In other words, residents who own solar systems won’t get a refund if the solar tax credit exceeds their tax liability (due). The tax incentives offered by the Federal government benefit homeowners who go solar he says. But the Solar Federal Tax credit is expected to drop to 22% for residential in 2023. And by 2024, the government will renew or terminate it.
The incentive was initially implemented in 2006 as part of the Energy Policy Act. According to the Solar Energy Industries Association (SEIA), it has helped the solar energy sector grow by more than 10,000 percent.
State Solar Incentives
Many states and Puerto Rico offer incentives in addition to the federal tax incentive. The requirements and incentives vary between states, says Thomas Neyhart. The varying conditions between states make consulting a qualified solar energy specialist necessary. The feedback from the specialist serves as a guide to know which incentives will save you more money.
To help consumers understand what incentives are available, Thomas Neyhart explains the types of solar incentives and their implications.
State Tax Credit
State solar tax credits are similar to Federal solar tax credits, except the state government handles them. Building owners are able to deduct this from their taxes a year after they install solar panels. The amount varies from state to state, he says. So it is advisable to consult a solar energy expert who understands the ins and outs of the industry.
Property Tax Exemption
Installing a solar panel system increases the value of a building. But as a homeowner, the tax implication of a solar installation might interest you. Property tax exemption means your property tax will not increase when you install a solar panel system.
This incentive is crucial because it helps consumers recoup part of the cost of the system over time. According to Thomas Neyhart, it’s a win-win. The value of your home goes up with a solar power system, and the solar upgrade is tax-free for the next half-decade. Some of the states that offer this are Texas, Florida, and Arizona.
Sales Tax Exemption
In states like Texas, Florida, California, and New Mexico, residents pay zero sales tax on the purchase of solar panels and equipment. Depending on the size of the system, the sales tax exemption can amount to a substantial discount. According to Thomas Neyhart, this exemption reduces the upfront cost of purchasing a solar panel.
Solar Renewable Energy Credits (SREC)
Solar Renewable Energy Credits, or SRECs, are offerings for residents with solar power within a state. This incentive is a certificate for the green benefits provided by residents with a solar system. Thomas Neyhart explains SRECs as performance-based solar incentives. As a homeowner, he says you can earn additional income by generating solar power. For every megawatt-hour (MWh) of solar energy your solar panel system generates, you earn one SREC. You can then monetize your SRECs by selling them to brokers.
Utility firms acquire SRECs in states that utilize them under their Renewable Portfolio Standards (RPS). These regulations mandate them to generate a portion of their energy from renewable sources, says Thomas Neyhart. The state government determines these regulations, so it varies from state to state. Some states that offer SRECs listed by Thomas Neyhart include New Jersey, Massachusetts, Pennsylvania, Maryland, Washington D.C, Delaware, and Ohio.
Net Metering for Solar Power
Net metering allows residents to receive credit from their utility company for sending unused energy back to the grid. It’s like “selling” the excess energy produced by your solar panels, says Thomas Neyhart. The money equivalent of the power their utility company receives will be credited to their account. This cuts your monthly bill even further, allowing you to keep more of your money.
He points out that new net metering rules in places like Mississippi. These rules aim to broaden their net metering program and boost solar customers’ total compensation rates. The new rules will concentrate on solar adoption for low-to-moderate(LMI) income customers. This plan is in line with the mission of PosiGen, he says, and hopefully, more states will follow.
State Government Rebates
Some states use rebates applied to their investment in solar panels to encourage residents to switch to solar. With rebates, explains Thomas Neyhart, you pay the full price for the solar system; and at a later date, the government refunds part of the amount.
Most of the states offering rebates make it available for a limited amount of time. The time frame often depends on the annual budget allocated by the state. In his expert opinion, Thomas Neyhart advises residents to research rebates in their state and apply early to get in front of the crowd.
Solar Rights Laws
Solar Rights laws protect solar consumers by preventing or restricting limitations on solar energy installation. Thomas Neyhart adds that these laws address common concerns among homeowners. Concerns like shade coverage limiting the size, placement or production, and solar restrictions. In other words, the laws disband any local agreement, groundless limitation, or property deed that makes using or producing solar energy difficult.
The Local and State government designed these laws to encourage homeowners to invest in clean energy by supporting and defending their interests. It’s good to see country lawmakers move to protect property owners’ solar access rights, says Thomas Neyhart.
Conclusion
There are many solar incentives building owners can benefit from that improve their savings even more. The best way to find out which incentives are available for you is to consult an expert. They take into account every available incentive and help residents maximize their savings.