Here’s this year’s solar incentive summary breakdown by state. The incentives portion of the report is worth 50% of the total overall report card grade (See the green sections of the weighted pie chart).
The graded sections are described in detail here and the weights used for scoring are in parenthesis. Aside from the years to payback column which we covered in Part 1, each of the following will be covered in more detail later.
Years to Payback (25% of total summary grade) The question so many homeowners ask themselves first when considering an investment in solar energy, “How long is it gonna be before I see a return on my investment?” That answer was calculated for each of the 50 states. The assumptions were a resident in each state installed a 5kW system at $7/watt (or $35,000 total) on a south facing roof with no trenching or extensive racking required.
We then calculated the amount of time it would take the homeowner to recoup 100% of the costs by using amount of electricity generated by the 5kW system, the average cost of electricity in the state, the 30% federal tax credit, SREC or feed-in tariff payments for the electricity generated, available state and utility rebates, and state tax credits. The calculations did not take into account immediate property value increases, which would have created immediate payback in many states.
If you don’t know what an SREC is, or how they work, check out this great SREC video.
Rebates (5% of total summary grade) 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.
For more information on how state rebates compare, check out Part 6.
Personal Tax Credits (4% of total summary grade) 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.
You can view our detailed grades and calculations and tax credits for a 5kW solar energy system by state below.
Property Tax Exemption (3% of total summary grade) Property tax exemption status is a pretty big factor when putting together your investment considerations. Solar will add approximately twenty times your annual electricity bill savings immediately to the value of your home upon installation. for many 5kW systems, that amounts to about $20,000. 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. The stronger the tax exemption, the higher the grade.
For detailed descriptions of state property tax exemptions by state, use the report card navigation below.
Loans (2% of total summary grade) State loan availability for solar energy differs wildly by state, but are an important component to consider, especially since many homeowners don’t have thousands of dollars lying around to put on their roofs. The availability of a state loan options for residential solar energy was sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the loan program, the higher the grade.
For the details behind the state loan programs, click here (published later).
Sales Tax Exemption (1% of total summary grade) 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).