Your 2020 guide to getting solar panels for your home in New York
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your New York 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 2020 **
New York is now the state we consider to be the best in the country to go solar. It earned first place in our 2020 solar rankings on the strength of its new RPS with solar carve out. The addition of our new low income solar ratings criteria also helps here. However, the state’s net metering is slated to be replaced by the VDER “value stack”, which may wind up making the returns on home solar installations a little less juicy in the future.
New York solar is going strong, with a history of success (800% increase in solar between 2011 and 2016) and a bright future. Solar rebates are still available for upstate homeowners and those served by Con Edison.
Between the state rebates and federal tax incentives, you could save 40% off the up-front cost of solar, and your panels will pay themselves off in just a few short years, leaving you with free electricity for the next few decades!
To learn more about these incentives and see if you qualify, connect with a New York solar expert today.
What you'll find on this page:
The Solar Strategy section is focused on the 3 ways of paying for solar in New York, 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 New York. 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 New York.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your New York Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in New York|
|Solar Loans in New York|
|Solar PPAs in New York|
|Solar Purchase Payback Time in New York|
|New York Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in New York
Figuring out the best way to go solar in New York 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 New York
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). One thing it's important to note is: solar makes you a lot of money in New York. Yes, we said "makes!" You see, New York's electricity prices are so high, going solar starts paying off right away. And with great rebates and tax credits, solar has never been cheaper.
Now let's discuss that chart above. As you can see, the cash purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a solar loan or Home Equity Loan or Line of Credit (HELOC—the orange bars) and paying for the system over time means you'll actually spend zero dollars of your own money over time, while reaping a big financial benefit in year 1.
That's because you take a loan for you'll be paying over time for the system, but you still get all the benefits of paying up front. In New York, that means a 26% federal tax credit, 25% state tax credit, and big annual energy savings. With those huge tax credits, you'll actually come out way ahead after the first year. And even though you'll be making loan payments for 15 years, the net cost will be so low that you'll never actually spend that first year's windfall.
Finally, take a look at the blue bars. They represent a solar Power-Purchase Agreement (PPA), which is also called third-party ownership. With a lease or PPA, the solar installation company puts panels on your roof at no cost to you, and you buy the electricity they produce for cheaper than you would have paid the utility company. Your savings start small but finish big, because the cost of the PPA energy 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!
Read more below about each of three very good options for solar in New York.
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. You'll see a net return of almost $34,200 in 25 years if you pay up front. But it requires a significant up-front investment.
If you have equity in your home or good credit, you can get a solar loan or HELOC with an interest rate of 4% or less. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.
If you've got cash and you prefer to pay up front, you'll have to plunk down $19,840. 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 about $34,200 in income. The reason this works is that electricity in New York is EXPENSIVE. Solar offsets enough of it to save you about $1,483 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 pencil out when you pay up front for a 6.2-kW rooftop solar system:
- Installing a typical 6.2-kW solar system should start at about $19,840 after a rebate from ConEd. If you're not a ConEd customer, you can tack on another $1,860 to that price. Don’t worry if that seems like a huge sum for solar, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
- The Feds calculate their incentive based on actual out of pocket costs, so take 26% of $19,840, for a tax credit of $5,158. Your total investment is now down to just $14,682.
- Next comes the New York solar tax credit of 25% of costs, up to $5,000. 25% of the $19,840 cost of this system earns a NY state tax credit of $4,713, leaving only $9,969 after tax breaks!
- After the tax credits we subtract your first year’s energy savings, which we estimate to be $1,483. That reduces your cost after the first year to only $8,485. That's right; these incentives leave you on the hook for just 43% of the total cost of the system after just 1 year!
- Your system will pay for itself in just 6 years, and over its 25-year life, you'll see a total net profit of $34,208. The internal rate of return for this investment is a stupendous 18.6%!
- And don't forget... your home's value just increased by around $16,300, too. That's the net present value of 20 years of energy bill savings!
- 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 66 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in New York. 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 $18,000 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 New York, 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. Wait... TWO tax breaks! You'll come out thousands ahead this year, and you'll still see a spectacular profit over the 25-year life of your system. The reason this works so well is that you're paying over time, but reaping all the benefits now. Your yearly energy savings will nearly offset the loan payments, which might sound like it's too good to be true... so let's take a look at the numbers.
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can qualify for a solar loan or home-equity line of credit (HELOC) for $15,500, with a fixed rate of 4% 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 a New York solar purchase with a loan:
- Installing a typical 6.2-kW solar system should start at about $19,840. 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 $1,483, but your annual loan payments will be $1,821, meaning you would spend $338 on solar this year, but...
- You'll also see two huge tax breaks! The Feds give you 26% of the cost of your system back as a tax credit, which in this case is $5,158. Then add the 25% New York State Tax Credit to the mix for an additional $4,713 off. You'll be paying over time but getting all the benefits up front!
- Those benefits add up to a net gain of $9,533 in your fisrt year as a solar owner. How about that?
- The electricity savings will continue for 25 years, while your loan payments will last only 15. By the end of the 25-year life of your panels, you'll come out $26,728 ahead.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 66 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in New York. 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 New York: the electricity costs here a high as heck. That means a PPA can save you a good deal of money in the first year. The average homeowner will bank about $436 this year, meaning you can save the planet and make a little cash doing it!
Over time 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 $14,455. 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 New York solar PPA can be a great option.
Keep in mind, the numbers above are based on an average home in New York. 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.
New York 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 New York:
New York's Renewable Portfolio Standard
100% by 2050
New York has set an ambitious renewable portfolio standard that's among the best in the nation. In 2019, New York lawmakers established a requirement to derive at least 100% of its electricity from renewable sources by the year 2050. Not only is this a hefty percentage, but they’ve set an aggressive interim deadline of 50% by 2030, making New York’s RPS worthy of applause!
New York’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.
New York's Solar carve-out and SRECs
6GW by 2025
In 2019, New York passed its new Renewable Portfolio Standard and saw fit to add a requirement of 6 gigawatts of solar generation by 2025. That's a HUGE goal, and very laudable, but the devil is in the detials. The new law gives the state until 2024 to craft a plan to meet that mandate. Uh, they're gonna need to work a little more quickly than that.
Regardless of the late deadline to draft a plan, New York is going to try to meet that goal. As of the beginning of 2020, the state had exceeded 2 GW of installed solar, and with some carrots-and-sticks coming (hopefully) soon, will get to work on supporting the installation of the remaining 4 GW. It's not going to be easy, but it might just work.
If NYSERDA can come up with some good ways to support the goal, we'll raise the mandate's grade from a B to an A+!
New York Electricity Prices
New Yorkers pay quite a bit more than the national average for electricity, and those rates are rising. New York’s average electricity price is 19 cents/kWh -- almost 40% more than the national average of 13.6 cents/kWh. That means while you currently see larger bills, with solar, you'll be seeing bigger savings!
Higher electricity prices means greater opportunity to save money by producing your own clean, earth-friendly solar power. Not to mention the fact that the rising environmental costs and dwindling supply of fossil fuels is going to lead to even faster increases in energy prices, likely sooner rather than later. When energy prices start going up and up (and up), you’re going to be saving more and more (and more) money for making the switch to solar now. Just remember to thank us later.
New York Net Metering
In New York, utility companies are currently required to provide net metering services for residential systems up to 25kW. Any net excess electricity generation is generally credited to your next bill at retail rate. However, for residential solar in New York, excess generation is reconciled annually at the avoided-cost rate. A recent update to the policy requires utility companies to give you the opportunity (when you first install and connect your system) to choose when this pay period ends to avoid cashing out at a disadvantageous time. Pretty sweet, huh?
In 2017, the New York Public Service Commission issued an order regarding the future of net metering in the state. The order outlines the move from traditional net metering into a Value of Distributed Energy Resource (VDER) tariff that accurately values and compensates distributed energy resources. You’ll get to avoid VDER for another year, as the deadline to net meter for the next 20 years has been extended for solar installations which are completed before January, 2021.
After 2020, expect a 20 year contract, where your Net Excess Generation (NEG) accrues until the end of an annual period, then at the end of each annual billing cycle you’ll be paid at the utility's avoided-cost rate for any unused NEG. This will be lower than full retail net metering, so we strongly recommend going solar in 2020 here to lock in your net metering agreement!
New York Interconnection Rules
New York has been doing well to promote solar with a fair approach to net-metering and making connections to the grid go smoothly without a bunch of bureaucratic headaches. Their interconnection standards address customer responsibility for equipment costs, but these treatments vary by customer type and system size. Speak to your local installer for interconnection information specific to your new solar project.
New York Solar Incentives
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 26% of your total system 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 New York measures up:
The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.
New York Solar Power Rebates
$300-$350 per kW
Through the NY-Sun PV Incentive Program, New York residents statewide are looking at rebate rates of $300-$350 per kW on solar installations up to 25 kW. That means you can expect a rebate of $1,500-$1,750 on a 5-kW system. Be aware, however, that these numbers are on the decline as state solar capacity goals are met. Long Island is already out of funding, so don’t be late to the awesome incentives party if you live in other areas of New York!
Especially don't be late if you live in a low-moderate income household. New York’s affordable solar program passed new rules to make solar more affordable for households that make up to 80% of their county's median income.
For example, in Westchester County, a family of 4 with an income of less than $84,560 will get $800 per kilowatt off the cost of their solar system, which is a huge deal! There are even low-interest solar loans available to help you pay for solar over time.
More funding and an extensions through 2025 have been requested for the program. We’ve reached out to our contacts at NYSERDA for more information, we’ll provide an update here when we get it.
New York Solar Tax Credits
25% up to $5,000
Next up is the sizable New York solar tax credit. You simply take 25% of your total installation cost and file this handy New York tax form IT-255 to receive the credit. Be mindful, there’s a cap of $5,000 on this. So, if your cost is more than $20,000, you won't get a tax credit bigger than $5,000 back from the state.
All solar installations are eligible for a tax credit from the Feds as well. You need to calculate your expenses after rebates for this one, so for our hypothetical 6.2-kW system priced at around $22,000, you can expect back $5,720 (26% of the up-front cost). Add that to the $5,000 back from the state and you're already almost 50% of the way to paying off your system!
Property Tax Exemption
Lawmakers in New York have been doing their best to make going solar easier for residents. In addition to the above solar power rebates and tax credits, the addition of solar panels to your home is exempt from property tax increases for a solid fifteen years, despite the fact that you’ll be adding roughly 20 times your annual electricity bill savings to your property value. In the case of our 5kW example, that adds up to about $23,000 (~20 times your annual electricity savings of $1,200).
Sales Tax Exemption
Contrary to other home improvements like a new kitchen or bathroom, with solar panels in New York, you will not have to pay any sales taxes on your system! That's a bunch of cash you're saving right upfront.
Low-income Solar Programs
Grade: ALearn more about low-income solar programs available in the U.S.
The final word of New York Solar Incentives and Policy
New York Solar solar power rebates and incentives rock! Hopefully, New York’s leaders will continue their fine work and keep incentive programs and good laws alive for homeowners who want to go solar. For now, the state earns its “A” grade with flying colors!