A few months ago, we wrote a scary blog about how solar incentives are disappearing. It’s true! Many of the best solar rebate and tax credit programs of the past have gone away, because solar prices have gotten so low that the discounts (other than the Federal 30% tax credit) are no longer necessary to make solar a good deal in most states.
But the best news out of all this is there are still places where incentives can save you thousands of dollars of the costs of a shiny new solar installation. Here’s a beautiful infographic with more information:
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Let’s dig deeper into these incentives.
First, a little terminology:
- SRECs is an acronym that stands for “Solar Renewable Energy Certificates.” They’re like proof that your panels generate renewable energy, and they’re very valuable, because utilities in some states will pay big money for that proof, in order to avoid fines for not producing enough electricity from solar. These states have markets where you can sell your SRECs through a broker and take home a tidy sum every time your system generates a megawatt-hour (MWh) of electricity.
- Performance payments and feed-in tariffs are kinda the same thing and kinda not. In this case, the state or a utility company is paying you directly for each kilowatt-hour of juice your panels pump out. Performance payments are paid on top of your bill savings, and feed-in tariffs are paid instead of your bill savings. That means a feed-in tariff price can be set lower than the cost of electricity from the utility, but the good ones—like in Rhode Island—are more like triple retail.
- State Solar Tax credits are pretty straightforward. They’re money you get back at tax time for doing something the government likes enough to subsidize, like having kids or putting money away for retirement. The thing you have to watch out for is how you get that money back. Some places only allow you to take out what you already owe. That makes a place like Louisiana—where you can get the full amount back whether you owe any taxes or not—a really special place.
- Rebates for home solar systems don’t really make an appearance on our list of the top 5 state incentives, because they’ve mostly gotten so small that none rises to the, well… “top.” States that are serious about solar have SREC markets, and rebates are mostly around one or two thousand dollars on a 5-kW system.
And now, the top five states!
1. Massachusetts – SRECs
- Value: About $250/SREC
- Paid: Through 2025
- NPV @4%: $11,971
A typical 5-kW solar system on your Massachusetts roof will earn close to 6 SRECs in a year, which can be sold for about $285 apiece, meaning about $1,700 a year. Every. Year. But know this: The fines levied on utility companies for not producing enough solar (Solar Alternative Compliance Payment, or SACP) will start to go down, and so will SREC sale prices. About $12 per year in the next 10 years.
The best news of all is that SRECs contracts are written for a decade, so, your 5.85 SRECs per year will end up netting you $14,561 during your contract. Can you say “cha-ching!?” To get more information about how this all works, we strongly recommend connecting with our network of experts who can help get you a customized quote, free home evaluation, discounts, and even system financing. Just fill out our contact form and we’ll be in touch.
2. Washington- Performance Payments
- Value: $.54/kWh
- Paid: Until June 2020
- NPV @4%: $11,489
Washington has a special kind of solar program that will pay you for every kilowatt-hour (kWh) of solar energy you produce through 2020 (though that may be extended). It’s called the Renewable Energy Cost Recovery Incentive program, and it’s intended to reward solar system owners for the benefits their clean energy give to the state of Washington.
Payments under the program are capped at a maximum of $5,000 per year, and they can be combined with net metering. The base incentive rate is $0.15/kWh, which increases depending on project type, technology type, and where the equipment was manufactured. For example, if you use panels and an inverter made in Washington state, you qualify for payments of $0.54/kWh, which can mean almost $3,000 for a typical home system.
Here’s how those multipliers work:
- For electricity produced using solar modules manufactured in Washington state: 2.4x (or $0.36/kWh)
- For electricity produced using an inverter manufactured in Washington state: 1.2x (or $0.18/kWh)
- For electricity produced using both solar modules and an inverter manufactured in Washington state: 3.6x (or $0.54/kWh)
That’s pretty huge, and from what we hear, the $.54/kWh payments are not hard to come by. So if you like in Washington, definitely take a look at this program.
3. New Jersey – SRECs
- Value: About $170/SREC
- Paid: Through 2030
- NPV @4%: $11,057
For New Jersey solar panels, the ratio of SRECs produced per year to system size in kilowatts is about 1.15 to 1. So if you’ve got a 5-kW solar system (a solid average for a single-family home), you will generate a little less than 6 SRECs a year.
SRECs are traded on an open exchange, so their value will vary from year to year. However, in New Jersey, their value is strongly correlated to the Solar Alternative Compliance Payment (SACP) the utility would incur for not meeting their requirement to source some of their electricity from the sun.
As of 2016, the SACP has dropped to $323, leaving SREC prices hovering between $180 and $240. The SACP will be slowly decreasing to $239 by 2028. Recent SREC market prices can be found at the New Jersey Clean Energy website. This is a whole lot of money, paid straight to you every year! SREC prices should continue to track the SACP, meaning you figure to bank nearly $1,000 a year.
4. Louisiana- Tax Credit
- Value: $2,000 per kW of solar installed
- Paid: Tax time after installation – Expires after 12/31/2017
- NPV @4%: $10,000
In short, Louisiana has the best state solar power tax credit in the nation. They give you $2,000/kW back as a tax credit, which with current prices, ends up at about half the cost. Wow. Even Brad Pitt is all over it.
That’s $2,000/kW based on the size of your system, with a maximum of $10,000. If you don’t owe that much in state tax you get a CHECK. Also, the $10,000 cap is PER SYSTEM so you could duplicate it if you have multiple meters to solar up. This single incentive is better than most states’ rebates and tax credits combined.
5. Rhode Island – Performance Payment
- Value: $38/kWh
- Paid: Through 2030
- NPV @4%: $9,051
Rhode Island has an amazing performance payment program, which started in 2015. Called the Renewable Energy Growth Program, it succeeds (where a previous program failed) by offering direct incentive payments for small scale solar projects (up to 25 kW).
Aiming to install 3 MW of small scale solar per year for the first four years, this program means business, and it puts money in your pocket if you own solar. The program pays solar energy producers 37.75 cents for every kilowatt-hour their panels send to the grid, for 20 years.
A long-term price for your electricity generation is a dream come true for solar owners. You’re guaranteed to get paid this amount, so if your system produces to its capacity (which is virtually guaranteed, since the panel warranty extends for 25 years), you’ll end up getting paid $12,735 over the 20-year contract term.
That. Is. Huge.
There are other places in the country that have great incentives that didn’t quite make it to the top 5. Here’s a quick rundown of what you can expect with a 5-kW install in some of those places:
- Washington D.C. – SRECs – Paid through 2023 – NPV @4% of $9,033
- Oregon – Rebate & Tax Credit – Paid within 1-4 years of install – NPV @4% of $9,023
- New York – Rebate & Tax Credit – Paid within 1 year – est. $7,938
- Maryland – SRECs and rebates – Paid over 25 years – NPV @4% of $5,086
- Hawaii – Tax Credit – Paid within 1 year – $5,000
Last modified: October 23, 2018