Your 2019 guide to getting solar panels for your home in Missouri
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Missouri home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
** What's new for 2019 **
It’s been years since Missourians voted to adopt a renewable energy standard, which means there's an opportunity for some legislative leadership to spur further growth. But there's some good news for homeowners in the state: The cost to install solar is lower than ever, and there are great rebates out there through June of 2019 to further bring down costs, for folks served by KCP&L, Columbia Water & Light, or Empire District.
You can save thousands of dollars off the up-front cost of solar, combine that with another big cash windfall in the federal solar tax credit, and use electricity bill savings to quickly pay back your net costs. The average homeowner will save thousands over the 25-year operating life of their solar panels, and benefit from increased home value and environmental benefits, to boot!
Questions? There's a lot to lean about home solar on Missouri, and the best way is to speak to a local solar expert. Simply sign up for personalized assistance on our special solar deals page, and we'll have a solar expert reach out to assist you.
The Solar Strategy section is focused on the 3 ways of paying for solar in Missouri, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.
The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Missouri. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.
Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Missouri.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Missouri Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Missouri|
|Solar Loans in Missouri|
|Solar PPAs in Missouri|
|Solar Purchase Payback Time in Missouri|
|Missouri Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Missouri
Figuring out the best way to go solar in Missouri can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
How to pay for solar panels in Missouri
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or Power-Purchase Agreement (PPA). As you can see, the purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a solar loan or Home Equity Line of Credit (HELOC—the orange bars) and paying for the system over time means you'll actually spend less of your own money over time, while reaping a big financial benefit in year 1.
That's because you take a loan for the system, but you still get a 30% federal tax credit based on the entire cost. You'll start out ahead, so your payments over 15 years will have less impact on you than plunking down a big pile of money up front. All you need is equity or great credit.
Lastly, take a look at the blue bars. They represent a solar Power-Purchase Agreement (PPA), which is also called third-party ownership. With a PPA, you put $0 down on a rooftop solar system and make monthly payments that are little bit less than what you had been paying the utility company or their dirty energy. You still accumulate savings, because the PPA cost will rise by less than the electric company's annual rate hikes. Third-party ownership is an excellent option if you don't have any equity or cash to put down, and it still saves you money!
Where we get our numbers
All these estimates are based on the average home in Missouri, which according to the U.S. Energy Information Administration (EIA) needs just about 12,500 kilowatt-hours (kWh), and the homeowner (that's you!) has to pay approximately $1,375 for the pleasure of receiving that dirty energy from the utility company. To make enough electricity to offset that bill, the home would need a 10-kW solar system made up of thirty-one 325-watt panels, with an up-front cost of $26,500 after the state's rebates. Don't worry about that price, though—the rest of the availabel incentives and energy bill savings will take care of a big chunk of it after just 1 year!
Ready to learn more about paying for a home solar system in Missouri? Read on!
Option 1: Paying cash for solar
An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true, but based on percent return for the money, a loan is a better option.
If you've got cash and you prefer to pay up front, you'll have to plunk down $26,500, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced more than $30,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you about $1,375 in year 1, and it just goes up from there. As the electric company raises rates, you save more and more, and more...
Here’s how the numbers work for a 10-kW rooftop solar system in Missouri:
- Installing a typical 10-kW solar system should start at about $26,500 after the 2019 Missouri solar rebates. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
- The Federal government offers a great tax credit worth 30% of system costs after the rebate. So take 30% of $26,500, and you've got $7,950 you won't be paying to Uncle Sam next year. That brings your first-year investment down to $18,550.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be $1,375. That reduces your cost after the first year to only $17,175.
- Those electricity savings will quickly make your money back, and your system will pay for itself in 11 years. That means free electricity until at least the end of your panels' 25-year warranty. We're talking $30,000 in savings over 25 years! The internal rate of return for this investment is not too shabby at 9%, but it likely isn't as good as if you just put the money into a mutual fund.
- And here's a nice bonus to consider: your home's value just increased by more than $18,550, too (your expected cost after incentives).
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 208 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Missouri. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 2: Using a loan to pay for solar
You don't need $27,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.
That’s because, in Missouri, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break. That's right: a HUGE tax break!. You'll come out thousands ahead this year, and you'll still see a handsome profit over the 25-year life of your system.
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can get a solar loan or home equity line of credit (HELOC) for $26,500, with a fixed rate of 4.5% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
- You love making money without much risk.
Here’s how the numbers pencil out for an Missouri homeowner who makes a solar purchase with a loan:
- Installing a typical 10-kW solar system should start at about $26,500 after instant rebates. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $1,375, but your annual loan payments will be $2,435, meaning you would spend $1,060 on solar this year, but...
- You'll also see a huge tax break! The Feds give you 30% of the cost of your system back as an income tax credit, which in this case means $7,950. You'll be paying over time but getting the benefits up front!
- All those incentives mean you'll come out $6,890 ahead after year 1. Your loan payments will be about $88/month more than your energy bill savings, but that difference will get smaller as the utility company raises rates every year.
- By the time you've paid off your loan in 2033, you'll see yearly savings of over $2,000, and they'll keep getting larger as the utility raises rates. After 25 years, your total profit will be over $20,000!
- On top of the green that will stay in your pocket, your system will mean green for the environment, too—208 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Missouri. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)
A PPA is a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. With thrid-party solar like this, it's possible to get solar panels for $0-down and see big savings over 20 or 25 years!
As for PPAs in Missouri: the electricity costs here a little below the national average. That means a PPA doesn't save you much right away, but it will bank you about $250 this year, so you're able to save the planet and make a little cash doing it!
Now that might not sound like a huge amount of money right now, but as the utility company raises rates, you will start to see greater annual savings. Over 25 years, our estimate shows a total savings of about $9,250. The panels will be installed and maintained by professionals, and all you have to do is brag to the Joneses down the street about your green habits!
How a PPA saves you money
Unlike a loan or cash purchase, a PPA means you don't own the panels on your roof. Instead, the solar company fronts the money for the installation, claiming all the available government incentives for themselves. Then over a term of 20 years (plus a 5-year renewal, in our estimate), they sell you the electricity produced by the panels, starting out a little cheaper than the fossil-fuel energy you had been buying from the utility company. Of course you'll still be hooked in to the grid to ensure you have power both when the sun is shining and when it's not, but the excess energy produced by the panels offsets your whole electicity bill just like it would if you own the system.
If you can get a good initial rate and a low escalator clause (the amount the PPA price increases per year), a PPA can truly be a win-win-win; for you, the solar company, and the environment. Of course, if you have the cash, equity, or credit, a solar loan is the best option. But for those without those things, a Missouri solar PPA can be a great option.
Keep in mind, the numbers above are based on an average home in Missouri. If you're ready for a custom quote for a solar PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Missouri Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Missouri:
15% by 2021
A Renewables Portfolio Standard (“RPS”) is a law that basically says a certain percentage of a state’s energy production must come from renewable sources by a target date. Many states have passed such standards, with goals as high as 30%, even 40% renewable production in the not-so-distant future.
Missouri has an adequate but not spectacular RPS, mandating 15% renewable energy by 2021. The renewable energy target will be phased in via intermediate goals slowly over time, until arriving at the 15% total by the end of 2021.
Missouri’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If they don't hit their RPS numbers, they have to pay large fees back to the state.
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.
RPS solar carve out
.3% by 2021
A solar carve out means that, of the total amount of energy that must come from renewable power, a certain percentage must come from solar panels. Missouri has a solar carve out, albeit a tiny one, of 2% of the RPS (which means only 0.3% of all electricity generated in the state. That’s not very high, and it doesn’t set the bar very high for electric utilities, giving them little incentive to help homeowners install solar panels. Considering the original RPS in Missouri was brought into being by the voters in 2008 through Proposition C, it may be time to push for a new ballot initiative, something that didn’t happen back in 2012.
What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Missouri Electricity Prices
Missourians pay an average of 11 cents per kilowatt-hour (“kWh”) of electricity; just under 3 cents cheaper than the national average. Cheap, but not as cheap is it used to be. Higher electricity prices mean you’re probably already feeling a little strain in your pocketbook. Just don’t forget why electricity is so cheap.
That’s right, fossil fuels. Lots and lots of fossil fuels. Whatever your opinion of the environmental impacts of fossil fuels, one thing is certain: the financial cost of using them is only going up, up, up for the future. When that happens you’re going to be really happy you switched early to all that efficient, clean solar power that will be in high demand.
In the meantime, solar power will still save you a chunk of change here. We’ll go over just how much in a minute.
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
Missouri Net Metering
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus.
Missouri requires all utilities to offer net metering to customers with solar power systems up to 100kW. Net excess generation is credited to your next bill at a minimum of the utility’s avoided cost rate.
Now, "avoided cost rate" is short for "how much it would have cost us to burn more coal and make electricity at one of our plants," and as you may guess, it's pretty cheap. Like, you pay $.12/kWh for electricity from them, but they'll only pay you $.03/kWh for excess that yo send back to the grid. That's why it's imperative that you size your system so you don't produce more electricity than you use. Talk to an installer near you to determine the best system size for your home.
We’d like to see the law amended to ensure that you get credit for your net excess generation, even if you run a surplus every month. And right now, all credit not used after 12 months reverts back to the utility without compensation. We think the utility should cut you a check for all that surplus instead.
What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
Missouri Interconnection Rules
Interconnection in Missouri falls into the same solid but not spectacular range. You shouldn’t have any trouble getting on the grid due to circuit capacity limits – the most important first step. Also of note, all systems under 10kW (e.g., almost all residential systems) are exempt from any additional insurance requirements. Unfortunately you may still be required, at the utility’s discretion, to install a redundant external disconnect switch. We’d also like to see the 100kW system size limitation removed to allow commercial and industrial customers meet all on-site generation needs, but that doesn’t affect you and your residential system at all.
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Solar Incentives in Missouri
Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.
These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 30% of your costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.
Let's see how Missouri measures up:
Missouri Solar Power Rebates
Many utilities offer
Missouri has what basically amounts to a statewide rebate program for solar installations, becauase several of the state's largest electric utility companies offer rebates for their customers. Here's what's available for homeowners in Missouri:
|Ameren||$500/kW, probably||Program appilications begin 11/1/18|
|Columbia Water & Light||$500/kW, up to $5,000, then $400/kW up to 100kW (far larger than home systems)||Must meet warranty and certification requirements.|
|Empire District Electric||$500/kW in 2016-2018||Must meet warranty and siting requirements|
|Kansas City Power & Light||$500/kW in 2016-2018||Must meet warranty and certification requirements; funds nearly exhausted|
How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
Missouri Solar Power Tax Credits
Missouri does not offer any tax credits for solar power. Overall the statewide picture is pretty weak so far as solar incentives go. A tax credit would be an easy way to make solar cheaper for you without actually removing any money from the state’s coffers.
However, you can still take advantage of the 30% federal solar tax credit (more on that in the 5kw example below).
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
Solar Power Performance Payments
A solar power performance payment is essentially a bonus paid to homeowners with solar panels connected to the grid at a rate slightly above the going rate for electricity. Ameren used to offer such a program, through which it purchased the Solar Renewable Energy Credits (SRECs) that homeowners accrued based on their system’s performance. Sadly, that program has ended, and now Missouri has no performance payment agreement. The good news is your system’s performance still gets you SRECs, which you can sell if and when there is a better economic climate for them.
Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
We've got a great article if you like to read more about what SRECs are and how to earn them.
Property Tax Exemption
A solar panel installation on your home adds value to it. We’re talking thousands of dollars of value, based on all that electricity you won’t be paying for in the next few decades. Luckily, Missouri realizes that a good way to encourage homeowners to go solar is to exempt all that additional value from property taxes. That’s right, you will not pay a dime in taxes on all that added value!
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Some argue that solar power adds approximately 20 times your annual electricity bill savings (if you own the system and are not leasing). Other studies seem to indicate a home price premium about equal to solar panel cost, minus any incentives like the federal solar tax credit.
For many average-sized solar power systems on a house, that can mean adding $20,000 to your home value. And if you don't believe us, believe the bean counters: Many banks and solar financing companies now offer traditional style equity-based home loans for installing solar. An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was sourced from the Database of State Incentives for Renewables and Energy Efficiency. Grades in this category are basically all-or-nothing. Either you got it or you don't. Thankfully, many states have "got it.".
Sales Tax Exemption
Unfortunately, Missouri is not up to par on the other side of the tax-burden coin. One of the simplest ways for the Missouri state legislature to encourage small scale clean energy adoption is to declare solar panel equipment exempt from state sales taxes as many other progressive states have done. Sadly, there is no such declaration and will have to pay sales tax on the installation of solar panels for your home.
What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
In 2019, Missourians can cash in on big utility-backed solar power rebates, saving thousands up-front and reducing payback time to just 11 years. The state still gets a “C” for policy, because we’d like to see a better RPS with solar carve-out, as well as a sales tax exemption.
Still, with solar prices lower than ever and the federal tax credit being reduced over the next few years, now is an excellent time for home solar in Missouri.