Your 2019 guide to getting solar panels for your home in Delaware
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Delaware 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 **
Delaware, our very first state! With that title, you should know there’s a ton of important history to protect in Delaware. With some of the most beautiful parts of the Atlantic coast, Delaware takes its natural environment seriously too. Using green power like nice, clean solar energy will help the state take care of both its natural and cultural heritage so that we can enjoy it for many more generations. Delaware has made tremendous strides in promoting solar power recently, and is now one of the best places in the country to make the switch to solar.
Recently, Delaware has cleaned up its incentive offerings, sadly removing a good one in the SREC buying program (more on that below), and streamlining the GreenGrant program that offers direct grant payments for the up-front cost of installing solar panels. The latter was seeing wait times of up to 18 months for payments, but it sounds like the state is working to get that whittled down now, and 2019 is looking good for solar power in Delaware!
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Delaware solar incentives you see below.
The Solar Strategy section is focused on the 3 ways of paying for solar in Delaware, 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 Delaware. 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 Delaware.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Delaware Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Delaware|
|Solar Loans in Delaware|
|Solar PPAs in Delaware|
|Solar Purchase Payback Time in Delaware|
|Delaware Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Delaware
Figuring out the best way to go solar in Delaware 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 Delaware
According to the U.S. Energy Information Administration, the average home in Delaware needs over 11,000 kWh per year, and for the privilege of that energy, you'll pay somewhere around $1,475. That's a ton of money! If you design a home solar system to produce that much electricity, you'd need thirty 325-watt solar panels, for a total system size of 9.8 kW. The cost of your system would be just about $27,000 up front, but solar incentives in Delaware and the U.S. will take care of a huge chunk of that. You can pay your system off in just 11 years with savings on electricity, and enjoy another 14+ years with free energy from your solar panels.
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 PPA. The cash purchase option leads to the highest dollar-amount returns over time, but it also requires a big up-front investment. If you take a solar loan or home equity line of credit (HELOC), though, your payments over 15 years will be only a little more than your savings, and you'll still come out tens of thousands ahead in the end. The option with the smallest savings is a Power-Purchase Agreement (PPA), which means you put $0 down on a rooftop solar system and pay monthly while you accumulate electricity bill savings over time. PPAs are an excellent option if you don't have any equity or cash to put down.
Read on to find out more about each option for going solar in Delaware.
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 best dollar-for-dollar returns. The reason it's so great is that you own the system from day one and reap all the benefits. The Federal solar tax credit and state rebate programs combine with electricity savings to bring your first-year costs way down.
In our example, you put down $27,000 up front, but by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced nearly $32,000 in income.
But even though that sounds huge, look into the solar loan option too, because taking a loan to buy an income-generating asset means you'll be making money as you pay for it.
Here’s how the numbers pencil out when you pay up front for a 9.8-kW rooftop solar system in Delaware:
- Installing an average-sized (9.8-kW) solar system should start at about $27,000 after Delaware's $3,000 soalr rebate. Don’t worry! With tax incentives and energy bill savings, your first-year costs will be considerably less than that.
- Next comes the federal solar tax credit, which gets you 30% of the post-rebate cost of your system off your tax bill next year. That's $8,100, for a net cost of $18,900.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be about $1,475. That reduces your first-year costs to only $17,425.
- Your system will pay itself back in 11 years, and over its 25-year life, you'll see a total net profit of $31,500, after the system pays for itself. That's an internal rate of return of 9.4%. Huge!
- And don't forget... your home's value just increased by more than $19,000, too (your 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 191 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Delaware. 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
Don't have $25,000 sitting around to pay for solar? No sweat! 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 still the best option when it comes to percentage return on investment.
That’s because using a loan to pay for solar is like investing in a really sweet IRA. Making your loan payments almost like funding an investment account, because the solar panels on your roof produce income (returns). Once the loan is paid off (fully vested), you're making over $2,100/year in profits, netting thousands 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 $27,000, with a fixed rate of 4.5% or lower and a 15-year repayment period.
- You love making money without much risk
The reason this works so well is that you don’t have to put any money down, but you still get all of the incentives that go along with buying solar. You'll get the 30% federal tax credit in year 1, and the energy bill savings will start right away. Like we mentioned above, your loan payments will be a tiny bit higher than those energy bill savings, so you'll end up spending about $83/month for solar in the first year. That difference will come down each year as electricity prices rise, but your system will keep on producing about the same amount of electricity.
Here’s how the numbers pencil out for a Delaware solar purchase with a solar loan:
- Installing a typical 9.8-kW solar system should start at about $27,000 after Deleware's GreenGrant program payment of $3,000. 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 $1,500, but your loan payments will total $2,500, for a difference of $1,000, or about $83 per month.
- That's not so bad when you consider your federal tax savings for the year will be $8,100 (30% of the cost of your system). You'll come out $7,100 ahead in year 1, which eliminates the burden of loan payments for the whole loan.
- The benefits of that early tax break are so great that you'll never begin spending your own money. And after the loan is paid off, your profits stack up just like if you bought the system outright. You'll end up with $21,400 in profits over our 25-year example.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 191 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Delaware. 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)
Delaware residents have long enjoyed the ability to get solar from a third-party company and pay monthly, and PPAs are still a great way to go. The state legislature and public utilities commission are way into getting ordinary homeowners into solar, so there isn't much reason to worry that utility companies will start trying to impose monthly fees on solar homeowners like they have in some less-progressive states.
For now, a PPA for a 9.8-kW solar system can save you about $20 per month, which might not seem like much, but adds up to big money over the 25-year life of the PPA. We're talking $9,000 over the long term.
How a solar PPA works
If you don't have a lot of equity, income, or cash, solar PPAs can be a good option. They work because the solar company can take advantage of incentives offered by state and federal governments to bring their costs down. The solar company fronts the money for the system, installs it on your roof for free, and sells you the energy for a set amount over the long term to recoup their costs and make a profit. It's a win-win, because you save a bit compared to the utility price of electricity.
For Delaware solar PPAs, we estimate the starting price per kWh of electricity will be $0.11, compared to an average retail electricity price of $0.13. PPA contracts include an "escalator clause," which raisies that price by a certain amount every year, and our calculations account for a 2% annual increase, while the average utility price increase over time is closer to 3.2%. That means you save a tiny bit more each year (on average) than the previous year, and your savings grow and grow. For more information, read our article about solar PPAs.
Keep in mind, the numbers above are based on an average home in Delaware. 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.
Delaware 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 Delaware:
25% by 2027
A Renewables Portfolio Standard (RPS) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.
Delaware has a strong RPS, mandating 25% renewable energy by 2025-2026 (compliance years run from June to May). The current minimum level of renewable energy is 11.50% of total retail electric sales. That requirement will raise by 1.5% per year through 2019-2020, and then by 1% per year through 2025-2026.
Delaware’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 the utilities 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
3.5% by 2027
The RPS also includes a specific carve out for Delaware’s solar power. Currently 0.80% of total retail electric sales must come from solar power. That minimum will rise by 0.2% per year through 2015-2016, and 0.25% a year through 2025-2026, for a final solar requirement of 3.5% of total electric sales. 3.5% may not sound like a lot, but when you consider how much energy the millions of residents here consume (more than 18 billion kilowatt-hours (kWh) per year), it adds up. 3.5% is also one of the strongest solar-specific carve-outs we’ve seen. Kudos to the legislature for recognizing the value of solar, even amongst other renewable energy options.
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!
Delaware Electricity Prices
Delaware pays an average of 13 cents/kWh of electricity. That’s just slightly below the national average of 13.6 cents per kWh. Yes, we know those dimes and pennies add up. Yes, we know you hate that monthly electric bill. But that’s only until you’ve made the switch to solar power! Those pennies per kWh do indeed add up. Right now they add up to higher bills, but once you’ve made the switch to solar, they create more savings!
Not to mention, electricity costs are only going to rise. Currently, far too much of our energy comes from nonrenewable, dirty fossil fuels. As the long-term costs associated with fossil fuels start to really kick in, standard electricity prices are going to skyrocket. When that happens, you’re going to look like a modern-day Einstein for having made the early switch to producing your own power.
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.
Delaware Net Metering
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume to make sure you get credit for the surplus.
Delaware’s net metering law is straightforward and pretty much perfect. Any net excess generation (i.e. any surplus electricity) you produce is applied to your next bill as a credit at the full retail rate. If you run a surplus for a full 12-month period you may elect to have the electric company cut you a check for the surplus, again at the full retail rate. Note, however, that nothing in the net metering law requires you to request the check. If it’s easier for you, you can just keep the credit rolling over onto your bill indefinitely.
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.
Delaware Interconnection Rules
Delaware has standardized interconnection rules for system sizes up to 10MW, but charges fees to applicants for systems sized larger than 10-kW, which can apply to home systems for just-greater-than-average sized homes. We'd like to see fees lifted for all interconnection requests for residential systems. For the average homeowner, an interconnection request will not be too onerous a task to complete, and for those who need systems larger than 10-kW, you're looking at a minumum $60 fee, with a max of probably $75 for very large home systems. All-in-all, not too bad. Let's call it a B+ and be done with it!
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 Delaware
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 Delaware measures up:
Delaware Solar Power Rebates
Delaware utilities offer several good solar rebate programs to help offset the initial costs of installing your new solar power system. That's the good news. The bad news is that, in many cases, the programs have been so popular that there are years-long waitlists, and delays, some of which may go on indefinitely as the municipalities work out new incentive limits.
Here are the current rebate amounts as they stand:
|Delaware Electric Cooperative||$.50/watt up to 5kW||Waitlist of over 3 years, $2,500 max incentive|
|Delmarva Power||$0.50/watt, up to $3,000||Leased systems not eligible|
|DEMEC Member Utilities||$1/watt, up to 5-kW, $.50/watt greater than 5-kW||Incentives are only available for residents of Newark. Max incentive of $7,500|
Basically, unless you live in Newark you should just assume that you're not likely to see rebate money at all, and then maybe you'll be pleasantly surprised by a windfall in a few years! It's not that big of a deal, because even without rebates, Delaware has a pretty good SREC program (see Performance Payments section below).
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.
Delaware Solar Power Tax Credits
Delaware lacks any tax credits for solar power. Given the strength of the state’s performance payments and rebates, we can’t raise too much of a stink about the lack of a tax credit here. That said, every little bit does count, and we certainly wouldn’t complain if a solar tax credit were added to bring your costs down even more.
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
Performance payments most often come in the form of payments to solar owners based on how much energy their systems generate. In order to keep track of that energy, the utility company uses a special monitoring meter, and when the solar system has generated one megawatt-hour (MWh) of electricity, the system owner earns a virtual proof of that generation called a Solar Renewable Energy Certificate, or SREC.
These SRECs have value because utility companies can purchase them in lieu of generating their own solar energy. Basically it proves that the utility has "used" solar energy to power its customers' homes and businesses. SRECs have value because the alternative to buying them is for the utility to pay a fee to the state called an Alternative Compliance Payment, or ACP. SREC values are typically pretty close to the value of the ACP.
Delaware once had an excellent performance payments scheme called the SEU SREC Program, which did something a little different. Instead of buying individual SRECs, your utility company agreed to purchase the rights to the first 20 years of your SRECs for $450 per kW of installed solar. Sadly, the SEU SREC program is no longer accepting new applicants.
That said, Delaware SRECs still have value, just not a ton of value. The current going rate for Delaware SRECs is about $40, depending on the month, and the average system will earn you about 11 per year. So how do you sell them and bank that $440 next year? For now, pretty much the only game in town when it comes to selling your Delaware SRECs is the SRECDelaware Program
The SREC Delaware Program
Under this program, you sign a contract to sell you SRECs at a price you bid on. Your home system earns SRECs under a "small system tier" called "N-1," so your SRECs are considered N-1 SRECs and your bid competes against the bids of other N-1 SREC holders. For the 2018 solicitation, the average bid for an N-1 SREC was just over $38.
It gets pretty complicated, with extra benefits for systems using Delaware parts and labor among other things. The best thing to do is Connect with one of our solar experts in Delaware and discuss your options. They can help get you set up with the right meter, an account in the program, and more.
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
Delaware also lacks any tax exemptions for solar power systems. Of course, Delaware has no sales tax, so that exemption (that we see in many states) simply doesn’t apply here. What does apply, however, is the missing property tax credit. That’s kind of a big deal. And by kind of, we mean a really big deal! When you add a solar power system to your home, your home goes up in value by twenty times your annual electricity savings. That means your property taxes also go up. Passing an exemption for those property taxes is an easy way to save you money on your solar power system, making the switch easier for you without the state ever having to actually remove money from its coffers.
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
No State Sales Tax
No state sales tax means no need for a sales tax exemption, and an automatic "A" grade for Delaware!
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).
The consensus on Delaware solar power rebates and incentives
Solar power is looking sunny here, indeed! Though there is always room for improvement — (cough, cough) property tax exemption — we’re pretty happy with Delaware’s legislators. With the RPS’s built-in purchase program backing a strong SREC market and solar power rebates available across the state, Delaware boasts huge up-front discounts, low year one costs, and one of the shortest payback timeframes in the country. This is one of the easiest “A” marks we’ve ever given out.
Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!