There is a boom of renewable sources of energy in the U.S. According to the Fortune, approximately 18% of the overall electricity in the U.S. comes from a renewable sources. The federal and local governments offer attractive solar energy incentives to homeowners and businesses.
Solar panels are easy to use devices, and that’s the main reason contributing to their constant growth within the energy industry. However, local guidelines have a significant effect on the solar power industry. Unfavorable rules limit the solar panel’s viability even in places with plenty of sunlight.
But the good news is…
With favorable laws and incentives, solar energy can be more effective and viable. There are multiple solar energy incentives that you will find in every state in the U.S.
Furthermore, with proper insight on how incentive functions, you will understand how solar energy works in your area.
List of Solar Power Incentives
a) Federal Solar Tax Credit
It is also known as the ITC or the solar investment tax credit. The incentive provides that once you fix your solar panels before the year ends, you get a tax credit equal to 26% of the overall solar installation cost.
The tax credit is included in your federal income taxes and will significantly eliminate, or even reduce, everything you owe. There are two types of federal solar tax credits: commercial and residential installation incentives.
Everyone who pays for the solar panel installation, whether rooftop or ground-based, can request the solar tax credit. But for this to be successful, you must have a tax liability during the installation year. Additionally, you should own the solar panel system to help you qualify for the incentive.
The federal government will scrap off the ITC in 2022 for residential solar installations. Commercial solar panel projects will retain a permanent 10% incentives. But before that, the rate will reduce from 26% to 22% in 2021. You can install solar panels before the scrapping of the investment tax credit.
b) State Tax Credit
Some states offer solar tax credits incentives once you install the solar panels in your residential place or within the business premises. If you choose to install solar panels within the participating states, you’ll receive additional money on the state income tax bill once the year ends after you finish the installation.
The good thing with solar tax credits incentive is that you can claim the credits besides the federal government’s investment tax credit. Even though they vary in amount, they are generally the overall percentage of the total system cost.
Nearly all state tax credits feature a maximum, with current amounts ranging between $500 to $5,000. But this depends on your state.
c) Net Metering
This is one of the best solar incentives that many homeowners benefit from in the U.S. It is also known as Net Energy Metering (NEM). NEM is a utility rate system where your utility to buy the extra solar energy that your solar panel system generates.
For instance, when the solar panels generate more electricity than your home needs, the surplus power goes to the power grid. The utility pays for the expenses that each solar electricity kilowatt-hour you send to the grid. This happens in the form of the net metering credit on your electricity bill. Therefore, the credit remains the same as the overall electricity retail price.
If you have the recommended rooftop solar panels, you can generate more solar power. The power generated caters for your energy consumption the whole year. Using net metering will assist you in clearing your utility bill entirely. Furthermore, this will help you reduce your power bills every month.
d) Solar Renewable Energy Credit
These are unique types of compensation for clean energy production that many states use as a solar incentive. Even though SRECs are among the hardest solar energy incentives to understand, they can provide you with extra savings.
These are the certificates that explain to you the quantity of electricity that a solar system delivers. Additionally, they represent the environmental value needed to generate solar energy.
It’s among the solar incentives that once you apply for, you get a single SREC for 1,000 kilowatt-hours of electricity that a solar panel produces. SRECs price varies with the states, and their prices can reach up to $400.
Finding SRECs isn’t a stressor. You can get them through brokers who purchase them from solar owners in a market place. The value of SREC is tradeable like a stock and can fluctuate depending on the market demand and supply. SREC sells anywhere from $5 to about $500.
Few states offer the SREC markets, and other solar owners sell their incentives for five years from the installation time.
e) Solar Panel Rebates
Solar panel rebates are among the solar incentives in Texas and are a dollar-for-dollar reduction on the overall cost needed to install a solar panel. You can pay for many solar rebates directly to the installer, who transfer the savings to you after the installation. The state governments, solar panel manufacturers, or utility companies offer solar energy rebates. And they can reduce the total cost of solar panels. Solar panel rebates incentives are available in direct discount or as “cash back” once you think of purchasing solar panels for your home.
f) Performance Based Incentives (PBIs)
PBIs are solar incentives paid to the solar owner directly on their electricity expenses as a “bonus” amount for each electricity KWh that their solar panels supply.
You can receive the incentive payments in smaller amounts, mostly under $.30/kWh set forth on extended contracts. The PBIs require the solar owner to create a signature on their SRECs utility.
Applying a PBI incentive is useful as it motivates system owners and installers to focus on maintenance, proper installation, and efficient system performance. Its payment depends on actual energy production.
Not many states provide PBIs. The essential programs of performance-based incentives are the Rhode Island Renewable Energy Growth and Massachusetts SMART solar program.
You can apply numerous solar incentives in the U.S. With proper incentive and legislation programs, you can work with solar power, even in areas with limited sunshine. The United States Northeast is an exceptional example of this as it receives little sunlight. Still, excellent incentives and laws have developed a favorable market for solar panels.