Your 2019 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 2019 **
New York solar is going strong in 2018, 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.
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 ou'll be paying ove time for the system, but you still get all the benefits of paying up front. In New York, that means a 30% 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—with rebates and tax credits, solar costs less than ever before, and the electricity savings in New York are so good that a solar installation pays itself off in just a few short years. But if you're interested in solar as an investment, taking a loan to pay for the system is a better option.
With a loan, you can make monthly payments instead of putting $15,500 down on a solar system, which means you save money on electricity as you pay down the cost of your panels. If you have equity in your home or can get a large loan with an interest rate of 4% or less, a loan is the option to go with. 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 $15,500, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced over $23,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you $995 in year 1—and it just goes up from there. As the electric company raises rates, you save more and more, and more...
Net Present Value: $8,182
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and New York's $8,182 NPV on a 5-kW solar system means you'd be that much better off investing your money in solar over 25 years than in, say, stocks. With investment return like that, you'll be padding your wallet while you save the planet. Good job! But check out what happens to NPV if you buy the same system with a loan that you can pay back over time.
Here’s how the numbers work for a 5-kW rooftop solar system in New York:
- Installing a typical 5-kW solar system should start at about $15,500 after New York's excellent 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 income tax credit of 30% of system costs. That's $4,650 you won't be paying to Uncle Sam this year, and it brings your first-year investment down to $10,850.
- Then, the Empire State helps you out with its own excellent tax credit. That's another 25% of the system cost, or $3,875, that you'll get to keep at tax time.
- After those tax credits, we subtract your first year’s energy savings, which we estimate to be $995. That reduces your cost after the first year to only $5,980—a savings of 61% of the post-rebate cost of your system. That's the best first-year cost in the nation.
- Those electricity savings will quickly make your money back, and your system will pay for itself in just 7 years. You'll see a total net profit of $23,379 by the end of your panels' 25-year warranty. The internal rate of return for this investment is an amazing 18%. That's more than twice the return of an investment in index funds, and it's more reliable, too!
- And here's a nice bonus to consider: your home's value just increased by $23,000, too (your expected electricity savings over 20 years).
- 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 97 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.
Net Present Value: $9,442
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and New York's $9,442 NPV on a solar loan means you'd be that much better off investing your money in solar over 25 years than in, say, stocks. That's a huge number, and it shows how getting a loan for solar is so much better than the alternatives. You can rest easy with a solar loan knowing you're doing right for your bank account at the same time as you're doing right by the planet!
Here’s how the numbers pencil out for a New York homeowner who makes a solar purchase with a loan:
- Installing a typical 5-kW solar system should start at about $15,500 after New York's rebate. 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 $995, but your annual loan payments will be $1,376, meaning you would spend $381 on solar this year, but...
- You'll get TWO huge tax breaks! Uncle Sam will give you 30% of the post-rebate cost of your system back as an income tax credit, which in this case means $4,650 you won't be paying the Feds this year, and New York offers another 25% off your state tax bill, up to $5,000. Our example here would earn you a cool $3,875 off the amount on your IT-201.
- All those incentives mean you'll come out $8,144 ahead after year 1, and it's clear skies from then on out. You'll end up with a net payment of $367 in year 2, but that will get smaller for every year after, as New York raises utility rates, but your loan payments stay they same.
- By the time you've paid off your loan in 2031, you'll see yearly savings of over $1,250. After 25 years, your total profit will be $18,241!
- On top of the green that will stay in your pocket, your system will mean green for the environment, too—97 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. It's possible to get solar panels for $0 down and see big savings over 20 years!
As for PPAs in New York: the electricity costs here are pretty high—over 33% higher than the national average. That means you save money starting on day 1! For now, the payments on for electricity on a PPA with a 5-kW solar system should be around $665 per year, but that much electricity would have cost you $995 per year. That's $330 you get to keep in your pocket this year, just for saying yes to solar!
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 20 years, our estimate shows a total savings of $9,473. And the best part is the panels will be owned and maintained by the installation company, so all you have to do is brag to the Joneses down the street about your green habits!
Net Present Value: $5,071
Net Present Value (NPV) measures how good of an investment something is, compared to the best alternative. We use a 6% return to evaluate all solar investments, and New York's $5,071 NPV on a solar PPA means you'd be that much better off investing your money in solar over 25 years than in, say, stocks. That number is pretty huge for a $0-down investment, so you can rest easy with a PPA knowing you're doing right for your pocketbook at the same time as you're doing right by the planet!
Here's a little more about how a New York solar PPA works:
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:
50% by 2030
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.
New York has set an ambitious renewable portfolio standard that's among the best in the nation. After expanding their goal in 2015, the New York Public Service Commission established a requirement to derive at least 50% of it’s electricity from renewable sources by the year 2030. Not only is this a hefty percentage, but they’ve set an aggressive deadline, 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.
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
Sadly, along with the new RPS came the end of a wonderful solar carve-out. There is no longer a requirement that any of the RPS energy come from solar specifically. Instead, there's a requirement that a certain percentage come from "new" sources. That dinged New York's reputation a little, but there is still so much to be happy about here, from laws to incentives, that we really can't complain (too much).
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!
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.
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.
New York 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.
In New York, utility companies are 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?
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.
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.
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 New York
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 New York measures up:
New York Solar Power Rebates
$350-$400 per kW
Through the NY-Sun PV Incentive Program, New York residents statewide are looking at rebate rates of $300-$400 per kW on solar installations up to 25 kW. That means you can expect a rebate of $1,500-$2,000 on a 5-kW system. Be aware, however, that these numbers are on the decline as state solar capacity goals are met. The above rates are current through the end of 2016. Don’t be late to the awesome incentives party!
And especially don't be late if you live in a low-moderate income household. In October of 2015, New York passed new rules to make solar more affordable for households that make up to 80% of their county's median income. The state's Affordable Solar program provides double the rebate money for these solar buyers.
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.
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.
New York Solar Power 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 you are installing a 5-kW system for $25,000, you’ll be due back $5,000 from the state.
All solar installations are eligible for a 30% tax credit from the Feds as well. You need to calculate your expenses after rebates for this one, so for our hypothetical 5kW system priced at $25,000, you can expect back $6,750 (subtract the state solar power rebate of $2,500 to arrive at $22,500… then take your 30% federal tax credit for $6,750).
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
While there are no ongoing solar performance payments to report (commonly referred to as SRECs), there are significant state solar power rebates and tax credits to take advantage of as a homeowner in New York.
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
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 $22,932 (20 times your annual electricity savings of $1,147).
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
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.
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).
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!