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How do solar rebates work?

Avatar for Ben Zientara
Published on 03/21/2016 in
Updated 08/30/2019

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When you hear the word “rebate,” you might think about getting money off when you buy a washer and dryer or waiting for a $2 check in the mail after you send in some cereal box tops. Solar rebates are kind of like that, but as you might imagine, solar is such a big purchase that its rebates are a little more complicated than attaching some cardboard to a receipt and popping it in the mail.

The main advantage of solar rebates for homeowners is that, unlike tax credits, they don’t require you to have income to claim them. They are money off your purchase—money that goes directly into your pocket. But there is a lot more to learn about rebates.

Important facts to know up front:

  • You can only get a rebate if you pay up front with cash or a loan—No rebates for you if you lease solar panels
  • Not all states or electric companies offer rebates for solar, in fact, rebates are disappearing all over the country
  • Rebates vary widely in amount and how they’re paid to you:
    • Some rebates take money off your up-front costs
    • Some pay you back after you’ve put the money down
    • And some pay you over time, by paying you for each kilowatt-hour (kWh) your panels produce, up to the rebate amount

Let’s break that down in a little more detail:

States with rebates

Not all states offer solar rebates, and in many states, only one or two utilities do. Back in 2010 when we did our first ranking of all 50 states for their solar friendliness, we gave 20 states grades of A and B for their rebates. For 2016, that list included just 11 states.

In total, 26 states have some kind of rebates on offer. Below is a list of all of them. Higher grades generally mean bigger rebates that are fairly widespread, but lower grades can mean either smaller, widespread rebates or good rebates that are isolated to relatively small geographical areas within a state (or both!). Click on a state name to go to a page with more information.

StateGradeRebate Specifics
ConnecticutAUp to $9,400
OregonAUp to $9,500
MissouriBLocally available – $500/kW
MontanaB$2,000 per system, 2-kW minimum
New HampshireB$750/kW statewide,
plus $250/kW for NHEC customers
New YorkB$700-$1,400 per kW
PennsylvaniaB10% of costs
Washington DCB$250/kW
WisconsinB$600/kW, up to $2,400
ArizonaCVaries by utility
CaliforniaCVaries by utility
ColoradoCVaries by utility
MarylandC$1,000 for systems up to 20kW
MassachusettsCVaries by locale
NevadaC$147.50/kW up to 25kW
New JerseyCVaries, New Construction Only
South CarolinaC$1/watt, Duke Energy Progress only
UtahC$1,100/kW up to $4,400 – RMP only
FloridaDCity of Longwood: 10% of costs up to $500
NebraskaDLES only, $375-$475/kW
WashingtonD$300/kW Snohomish cty only

How do I get money back from solar rebates?

I’ll take that, thank you.

Like we said above, solar rebates are complicated. Some take money off your up-front cost by paying the rebate directly to your installer. Some send you money as a lump sum after you’ve completed installation and inspection of a new solar system. And some let you recoup the total amount over time, as your system produces solar electricity.

The good news is your installer is an expert on making sure you get every cent possible in incentives for your solar panels. Connect with an installer near you today to see how much you can save.

Let’s look at an example of each payment method:

Rebate Type 1: Reducing the cost of installation

New York State offers an excellent rebate program called “NY-Sun,” which allows residential solar buyers to earn $500 off for every kilowatt (kW) of system size ($1,000/kW for low-income qualifiers). A typical 5-kW installation will cover about half of the average home’s energy usage, and will cost about $22,500 without incentives.

The NY-Sun rebates must be applied for and reserved, and are paid directly to the installer during the construction process. So for a typical homeowner, the 5-kW system will be reduced by $2,500 (5x$500), or a little more than 10% of the cost, up front. Thanks New York!

Rebate Type 2: Disbursed after inspection

Nebraska is kind of a tough place to go solar, considering electricity prices are low, there are no tax exemptions, and the state’s tax credit is laughable, at best saving you about $4 per year. But if you live the in the Lincoln area and are served by the Lincoln Electric System (LES), you can get a pretty sweet rebate of between $375 and $475/kW, depending on which direction your panels face.

Just like in New York, you’ll have to apply for a rebate and wait to see if you’re improved based on the plans your installer submits with the application. But the difference here is that you’ll go though with installation, sign LES’s net metering interconnection agreement, and wait for a final inspection before you’ll receive the one-time payment for your system.

Rebate Type 3: Paid over time

Minnesota has a reputation for being cold and snowy most of the year, and hot and sticky for the four months when it’s not about to dump piles of white stuff on you. But the state has developed some great renewable energy policies, and an investment in solar in the North Star State can save you more than $20,000 over the life of your system. Not bad, Minne!

The state has several different kinds of solar incentive programs, depending on where you live, but the one that suits our purposes here can be found in Dakota county, just south of the Twin Cities. There, Dakota Electric will pay you a rebate of $500/kW up to $4,000. The kicker is they’ll pay it out over time instead of all at once.

This gets a little complicated. Let’s say you install a 5-kw system, and are therefore entitled to a rebate of $2,500 (5x$500). Dakota electric will pay you $.08 for every kWh your system produces, up to your full rebate amount. Given the average yearly sun you’re likely to see in Dakota County, you can expect to generate 6,240 kWh in a year, or $499.20. The payments will go directly to reducing your electric bill, and it’ll take about 5 years to earn your rebate.

That’s all, folks!

Last modified: August 30, 2019

3 thoughts on “How do solar rebates work?

  1. Avatar for Michele Michele says:

    Is there any rebate or incentives for Oklahoma? We are currently with Easy Central Electric Co-operative.

  2. Avatar for Cari Cari says:

    What about Michigan? What is my benefit? What incentive do we receive? It is not on the list.

    1. Avatar for Ben Zientara Ben Zientara says:

      Unfortunately, Michigan has little in the way of solar rebates, and even less good news for solar owners. As of late 2018, the state is taking a step back when it comes to good solar policy. Read more about home solar power in Michigan.

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