“What’s in a name? That which we call a Solar Incentive, by any other name, would smell as sweet.”
–Solar Fred with apologies to Bill Shakespeare
It’s a beautiful crazy solar world, and that’s why we’re here at SolarPowerRocks. We’re trying to make sense of solar technology, as well as all of the incentives that make it so affordable these days.
Sadly, there’s a different incentive program for every State. In fact, there are different solar incentive programs WITHIN every State. So, over the years we’ve compiled that handy list to your right, where we’ve tried to dumb down those incentives so that you can actually understand them. If it seems like it’s been a while since we’ve re-visited your state, it’s not because we don’t love you. (We don’t; we have our own families.) Nevertheless, the reason we haven’t updated is not because we don’t love you, but because each state keeps changing the damn incentive programs, and it’s a pain in the tush to keep up. But we’ll get to them all, even you, Nebraska. Of course, you can always get it from the horse’s mouth by getting a free quote from a local dealer.
In the mean time, I want to go over all the types of subsidies that may or may not apply to your solar dreams.
The Feds: The first incentive that everyone qualifies for, whether you’re in San Diego California or Baltimore, Maryland, is the 30% Federal Investment Tax Credit (ITC). What’s this mean to you? It means that even if you don’t get any rebates from your city, state, or utility, you’re gonna get somethin’. Things to keep in mind:
- A Tax Credit is not exactly cash. I like to think of a tax credit as a gift card from the IRS. Should I owe $3,000 in taxes on April 15th, I’ll be able to apply my solar ITC credit towards my bill. So, if I lived in San Diego, and bought $15,000 worth of solar panels after the Southern California Edison incentive, I’d get an additional tax credit of $4,500 to use towards my tax bill on April 15th.
- If I had say $3,000 to pay, that would leave me $1,500 towards next year.
- Keep in mind that businesses may also benefit from this credit, but in different ways.
- Typically if you finance through a solar lease or solar PPA (Power Purchase Agreement) you are NOT allowed to take this credit or any rebate, since they actually own the equipment. Supposedly, these companies work it into the price. You will save with these programs, but they will even admit that you’re always financially better off buying solar if you can swing it through a home equity loan.
- If you file under the alternative minimum tax (AMT), you still should be able to get this.
- I’m not tax attorney and I’m not married to one either. So check with tax person about all of this, but you can also read this lovely FAQ from the Feds about this ITC to clarify, as well as our simple explanation of how to calculate it here.
States: As mentioned, each state has its own policies toward solar. Just because you have a lot of sun, it doesn’t mean your state is a solar friendly State. (I’m looking at you Mississippi and Alabama.)
- Like the Feds, some states offer tax credits that can be applied to any state income taxes. For example, Louisiana will give you 50%, yes, 50% towards your system. And unlike the Feds, you can actually get a tax refund (cash!) if you don’t owe taxes. That’s pretty exceptional, so other than hurricanes, floods, tornadoes, and hang overs after Mardi Gras, it’s a great reason to move to Louisiana.
Utilities Rebates: Often, your State will provide subsidies through your local utility, who will administer these subsidies in different ways.
- For example, the California rebate is based on a certain dollar amount per watt. In fact, as I write this, in the PG&E utility territory in San Francisco, the rebate is at Step 5 or $1.55/watt. That means for an average 5000 watt (5kW) solar system, you’ll get 5000 watts x $1.55 = $7,750 off your system.
- However, if you live in San Diego in Southern California Edison Territory (SCE) that rebate is at Step 4, or $1.90/watt x 5,000 watts = $9,500.
- There are also Performance Based Incentives, similar to Feed-in-Tariff. (See below.) These are often for large, commercial solar installations.
- Keep in mind that these are the maximum rebates. If your home has a lot of shade or has its solar panels facing North or other non ideal conditions for solar, they penalize you and you get less of a rebate. Go figure. That’s another reason why it’s important for a qualified installer to assess your home to get the correct rebate.
- Most often, you can sign paper work to have the installer directly receive the rebate, so you don’t have to finance that portion of the cost (and also don’t have to fill out the complicated paperwork).
City Rebates: Some cities think the Feds and the State aren’t doing enough to encourage solar, so they pass their own rebates that are in addition to the others. For example:
- May the solar gods bless San Francisco for its up to $3000 rebate and Marin County for its $500 kick back . So if you live in one of these cities, buy solar, toast your local lawmakers, and try to forget the other nonsense they pass.
- In addition, some cities like Boulder, Colorado have an income based grants to help middle and low income people go solar.
S-REC/Green Tags: I just wrote a post on these. Please, Lord, don’t make me explain it again. Brain hurt. Just do Solar Fred a favor and re-read this S-REC post, and be sure to read the comments section too for more information from an informed commenter. Thank you, informed commenters.
State and Local Sales Tax Exemptions: In many states, you will benefit from not having to pay any sales tax on your solar installation. But this is not always the case, so check with your installer or local government. For sure, California is tax free, but again, this is more common than uncommon.
Property Tax Exemptions: Usually if you do some kind of home improvement, like install a new addition or a bathroom or a pool, the local tax assessor says, “How nice. Your home is now worth more, and you now owe so many extra property tax dollars. Please pay the clerk or we shall repo your children.”
- However, by law in many states, the Tax Man cannot cometh. Your solar cannot and will not be included in any reassessment of your property taxes.
- I believe this is called an “Accelerated Depreciated Asset.” But don’t quote me on that. I ain’t a tax dude.
- Interestingly, the tax man won’t charge you more if you put a plastic Gnome on your lawn. I don’t think that’s fair, do you? Call your lawmaker about a Gnome tax disincentive. But I digress.
Feed-in-Tariff (Fit). Some states and cities will offer a Feed-in-Tariff (FiT) as an incentive instead of the rebate. What’s the difference?
- A rebate gives you cash off the top. You buy solar and get a few thousand dollars off the price of your system.
- With a Feed-in-Tariff, you don’t get anything off the top. Yyou pay for the entire system, but you also get paid by the utility for every watt you produce. Usually that price is 3 or 4 times the regular electric rate, so you get a lot of money over the 20 years you sign up for the program. Generally, this pays off your loan pretty fast and then you start literally making money for the remainder of the FiT. See a full explanation of the FiT here.
- Vermont just passed a Feed-in-Tariff that will be in effect starting in January 2010.
- Other states, and in fact, the Feds are considering an FiT, in the upcoming Cap & Trade legislation being debated in Congress right now.
Net Metering, Time of Use, and Tiered Rates are somewhat indirect incentives, but I can tell your attention span is now incentivizing you to walk to the refrigerator and see what’s for lunch. Scotch and a Pita Pocket again, eh?
So, let’s not go revisit those now indirect incentives now. Just click on the above relevant links, or just submit our form, and a local installer will explain all of those terms to you as well.
Last modified: April 24, 2020