Getting solar panels put on your roof to produce electricity has not always been cheap. In fact early installations were more a novelty than a way to save on energy bills. However, the landscape of residential solar installations is changing dramatically.
The cost of going solar has dropped by almost 70% since 2006. This is because the materials needed to produce panels have become less costly. Solar panels themselves have also become more efficient. This means that panels now produce more electricity than they did before which allows them to deliver a greater return on investment.
Lastly, the state and federal governments have grownmore supportive of homeowners going solar. Their support has come in the form of various state based incentives for producing solar electricity, and a large federal tax credit for having solar panels installed on your home.
The financial incentives offered to homeowners and business owners for going solar vary greatly between states. This should come as no surprise as location, sun exposure, and weather play a roll in a states ability to use solar technology.
These differences can also be looked at as a reflection of a states environmental policies and or a by-product of the states energy economy. For example West Virginia produces much of the coal used to create electricity. Thus electricity has been cheap so there has been little need for solar incentives. Hawaii has very high electricity costs and thus encourages homeowners to go solar through incentives as a means to lessen the burden.
To learn more about the incentives speak to one of our solar professionals, or enter your zip code or city to see the incentives available in your state.
The solar investment tax credit is a product of The Energy Policy Act of 2005. Under this act a federal investment tax credit (ITC) worth up to 30% of the costs associated with going solar was created.
This tax credit is available for homeowners and businesses to claim if they opt to place solar panels on their home or office. The credit was created to offset the costs of buying solar panels, and paying for an installation.
The solar investment tax credit represents our government’s support of clean energy as well as a reward for those individuals and groups that take steps become early adopters and produce solar electricity.
In some states home solar systems are eligible for net metering. Net metering is a process by which solar electricity produced by a home system can be fed back into their utility providers energy grid.
Net metering allows a homeowner to pay off their own regular electricity bill, or lower it, by selling extra solar electricity back to their provider to be dispersed to other customers.
Net metering gives solar system owners the ability to not only consume clean energy, but to produce and sell it as well. The shift to a bi-directional consumer/producer energy relationship represents a new dawn for the energy industry because it shakes up the industries long standing foundation.
The initial cost of financing a home solar system and installation can be steep. Even with state and federal incentives in place some homeowners still worry about the upfront costs.
Although not available in every state, many companies offer solar leasing programs or solar power purchase agreements (Solar PPA) to homeowners and businesses seeking to go solar. These leases often start out as low as $0 down.
In these cases a system can be leased from a solar provider so that the provider pays for the installation and maintenance of the panels while the homeowner only pays a reduced electricity bill to the provider, or for the solar electricity they used from the leased system.
The growth of third party solar financing has allowed many more homeowners to go solar with little to no upfront investment. However, even though these plans offer a faster return on investment, they do not offer the long-term payouts that purchasing does, and homeowners who lease are often unable to receive state and federal incentives.
Solar Renewable Energy Credits (SRECs) are an environmental commodity that can be bought, traded, and sold on the open market. An SREC is essentially a fluid representation of the value of 1000 kilowatt-hours of solar energy generated by an approved solar system.
In order to meet clean energy production goals without building solar energy plants, utility providers are often required to purchase a certain number of SREC’s each year or pay a fine. SREC’s allow homeowners and businesses that have solar installations an opportunity to generate and sell or trade these credits.
The value of an SREC is based on several factors. The first is the state’s clean energy production goals and in contrast the value of the state’s fine for falling short of those goals. The value of an SREC also depends on supply and demand for SRECs in the state where it was produced. A states clean energy goal is often referred to as its Renewable Portfolio Standard, or RPS.
Residential energy costs have risen annually by almost 3% year over year. That means each year Americans have been paying more for electricity than they were the previous year.
The majority of US electricity is generated by fossil fuels with coal being the largest contributor. Coal is a finite resource, meaning that there is a limited amount on earth. This means that as we produce electricity we are using up the very resource we depend on to produce that electricity. Thus as we use more coal generated electricity we drive up the price of our electricity by reducing the amount of available coal.
America needs an alternative way to produce electricity or a reduction in our current consumption to halt rising costs. Roof top solar installations offer homeowners a chance to reduce the impact of rising energy costs and possibly offset the current trend.
There are certain groups and entities that are against the mass adoption of home solar. These groups may have interests in fossil fuel related businesses and or traditional utility providers.
As was mentioned earlier home solar may shake up the utility industry. Many utility providers are afraid they may lose out because their customer now has an option to not pay for their services around the clock, and can even sell them solar electricity back. These fears have caused those invested to lobby against pro home solar policies.
While not all utility companies are against home solar, some utility companies and their partners have tried stall or change state and federal legislation that encourages residential solar adoption. For example in Arizona a push has been made to raise monthly fees on homeowners who want to net-meter their solar panels. The idea is that these fees will dissuade other homeowners from going solar.
That is right, because groups with special interests lobby against home solar adoption it is becoming harder to get incentives passed that support solar.
For a good example of how savings change one need look no further than the 30% Federal Investment Tax Credit. The tax credit has been extended twice, most recently when it was set to expire in 2016. As the time approached for it to be renewed there was no shortage of debate. Luckily, in light of a renewed interest in the state of our environment the extension passed. The extension will now allow homeowners to take advantage of the 30% tax credit through 2019. After that the credit will decline to 26%, 22%, and lastly to 10% by 2022.
The fact that the credit is set to decline means that homeowners may not be able to receive the same savings down the road that are available now. Without being able to predict how the savings landscape will look the future of the solar incentives cannot be guaranteed.
When homeowners go solar it reinforces the purpose of state and federal incentives. It further reduces our energy dependence on fossil fuels, and encourages solar advocates to continue to push for more savings and investments in technological advancements.
Navigating the incentives, laws, and tax credits surrounding solar can be confusing. However, you do not have to do it alone. At 123Solar Power we have professionals working around the clock to make sure you know the facts before going solar. We can connect you with local professionals free of charge.
Interested in learning more, call one of our reps at (800) 294-2397 or chat with them online. Curious about savings, try our solar savings calculator to get an estimate of how much you could be saving. To compare solar installers in your city and receive free quotes visit our homepage.