Your 2019 guide to getting solar panels for your home in Utah
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Utah 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 **
Ah, the “Greatest Snow on Earth.” Not a skier? Utah is also home to Moab, Zion & Arches National Parks, Bryce Canyon, the north rim of the Grand Canyon, Lake Powell, and hmmm what else? Oh yeah, the Great Salt Lake too. With all of those great things to see outdoors, Utah needs renewable solar power to keep looking good. What has the Utah legislature done so far to promote solar progress? Have a look…
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Utah solar incentives you see below.
The Solar Strategy section is focused on the 3 ways of paying for solar in Utah, 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 Utah. 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 Utah.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Utah Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Utah|
|Solar Loans in Utah|
|Solar PPAs in Utah|
|Solar Purchase Payback Time in Utah|
|Utah Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Utah
Figuring out the best way to go solar in Utah 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 Utah
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 lease. One thing it's important to note is: solar makes you a lot of money in Utah. Yes, we said "makes!" You see, Utah gets so much sun, its relatively low electricity prices are no match for the awesome energy-generating ability of solar panels. Going solar in Utah starts paying off right away, and with great state and federal tax credits, solar has never been cheaper.
Now let's discuss that chart above. We've examined three scenarios for going solar in Utah, including a solar lease, buying solar with a home equity line of credit (HELOC), or buying solar with cash. As you can see, the cash purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a HELOC and paying for the system over time (the orange bars) means you'll spend thousands of dollars less over time, while reaping a big financial benefit in year 1.
That's because you take a loan for the system, but you still get all the benefits of paying up front. In Utah, that means state and federal tax credits, and big annual energy savings. With those incentives, you'll actually come out way ahead after the first year. And even though you'll be making loan payments for 15 years, the first-year windfall is so big, you'll only begin spending your own money in year 9.
Finally, take a look at the blue bars. They represent a solar lease or Power-Purchase Agreement (PPA), which are 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 make monthly payments that save you about $10 per month from what you had been paying the utility company for their dirty energy. Leases in Utah are awesome, because the state's high electricity prices mean you start saving money right away. Your savings will start small but finish big, because the lease cost will rise by less than the electric company's annual rate hikes. Third-party ownership is an excellent option even if you have equity or cash to put down, because it can save you tons of money!
Read more below about each of three very good options for solar in Utah.
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 lower equipment costs and big Federal and state tax credits, solar costs less than ever before, and a solar installation pays itself off in 9 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 $20,000 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 5% 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 $20,000, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced almost $21,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you $815 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 work for a 5-kW rooftop solar system in Utah:
- Installing a typical 5-kW solar system should start at about $20,000. 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.
- If you get your ducks in a row early in the year, you'll snag one of Rocky Mountain Power's excellent $1,100/kW rebates. That's $4,400 off your cost for solar.
- Next, the Federal government offers a great income tax credit of 30% of post-rebate system costs. That's $4,680 you won't be paying to Uncle Sam this year, and it brings your first-year investment down to $10,920.
- Then there's Utah's tax credit, which counts for 25% of costs, but maxes out at $2,000. Your system will qualify you for all of that, and you can take it over up to 5 years if your income doesn't warrant $2,000 in taxes this year.
- After those tax credits, we subtract your first year’s energy savings, which we estimate to be $815. That reduces your cost after the first year to only $8,105—a savings of nearly 60% off the cost of your system. That's a huge cost reduction!
- Those electricity savings will quickly pile up, and your system will pay for itself in year 9. But your panels carry 25-year warranties, and they'll likely keep on kicking out kilowatts for a few decades or more. You'll see a total net profit of $22,828 by the end of that warranty. The internal rate of return for this investment is an amazing 12.5%. That's more than 50% better than the return of an investment in stock market index funds, and it's more reliable, too!
- And here's a nice bonus to consider: your home's value just increased by $16,302, 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 134 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Utah. 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 $20,000 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 Utah, 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!. You'll come out thousands ahead this year, and you'll 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.
In Utah, those benefits include energy savings, Rocky Mountain Power's $4,400 rebate, and two tax credits. Those energy savings will offset most of the cost of the loan payments, too, 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 get a home-equity line of credit (HELOC) for $15,600, with a fixed rate of 5% 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 Utah homeowner who makes a solar purchase with a HELOC:
- Installing a typical 5-kW solar system should start at about $15,600 after RMP's $4,400 rebate. That's how big your loan will need to be to cover the system cost.
- The electricity you'll save in the first year of operation would have cost $815, but your annual loan payments will be $1,480, meaning you would spend $665 on solar this year, but...
- You'll get two huge tax breaks! Uncle Sam will give you 30% of the cost of your system back as an income tax credit, which in this case means $4,680 you won't be paying the Feds this year, and on top of that, the state will give you a $2,000 reprieve on tax-paying this year.
- Getting those tax credits means you'll come out $6,015 ahead after year 1, and it's smooth sailing from then on out. Your yearly net cost (electricity savings minus loan payments) for solar will be $637 (about $53 per month) in year 2, and will shrink as the cost of electricity rises but your loan payments don't.
- By the time you've paid off your loan in 2030, you'll see yearly savings of over $1,350. After 25 years, your total profit will be $16,223! Really awesome for a $0-down investment.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too—134 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Utah. 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)
Leasing is a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. With a lease, it's possible to get solar panels for $0 down and see big savings over 20 years!
As for leases in Utah: the electricity costs here aren't very high—we're actually almost 15% less than the national average—but the sun shines bright enough here to make solar power really profitable! That means a lease saves you money starting on day 1. For now, the payments on a leased 5-kW solar system should be around $712 per year, but the energy the panels generate will save you $815 per year. That's $103 you get to keep in your pocket this year, just for saying yes to solar!
And those savings will only get larger over time. As the utility company raises rates, your lease costs will go up by a smaller amount, meaning you'll see greater annual savings. Over 20 years, our estimate shows a total savings of $4,874. 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!
Here's a little more about how a Utah solar lease works:
Keep in mind, the numbers above are based on an average home in Utah. 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.
Utah 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 Utah:
20% by 2025 (voluntary)
A Renewables Portfolio Standard (“RPS”) is a law requiring a certain percentage of a state's energy production comes from renewable resources by a target date in the future. Utah’s law is probably better described as setting renewable energy goals.
>Utah’s RPS only requires utilities to implement renewable energy to the extent it is “cost-effective.” What do they mean by that? The guidelines for determining the cost-effectiveness of acquiring an energy source are up to the Utah Public Service Commission (PSC) and based on the cost of the electricity, as well as long-term and short-term impacts, risks, reliability, financial impacts on the affected utility, etc. Basically, to the extent that the PSC finds renewable energy cost-effective, the goal here is to generate 20% of our electricity from renewable resources by 2025.
Usually there is a pretty direct link between the strength of an RPS and the number and size of incentives available for solar power. 20% by 2025 would be a solid RPS if those targets were mandatory rather than conditional. Given the “if cost-effective” condition of Utah’s RPS, it’s hard to judge just how effective it will be over the long-term. So far it’s generated a few decent incentives for future solar-power system owners, but nothing to write home about.
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
Within their voluntary RPS, Utah has not carved out any specified amount for either solar power or distributed generation technologies (i.e. residential production). However, other incentive programs in Utah have been created to help encourage the growth of residential solar in particular in the Beehive State.
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!
Utah Electricity Prices
Utahns pay an average of 11 cents per kilowatt-hour of electricity. That’s almost two cents below the national average of 13 cents/kWh. We get it. You like paying less. Just don’t forget why electricity is cheap right now. Psst... because it’s generated using tons (billions of them, literally) of fossil fuels. Dirty burning, smog-spewing, greenhouse gas-emitting, earth-killing fossil fuels.
Soon or sooner, all those fossil fuels will start to bite us in the butt, run low, or both. Then electricity rates are really going to rise fast. When that happens you’re going to be really, really happy you switched early to all that efficient, clean solar power that will be in high demand.
In the meantime, you can still save a chunk of change with solar panels in Utah. We’ll go over just how much in a minute. Read on!
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.
Utah Net Metering
Many utilities offer
Net metering requires your utility to monitor how much energy your solar power system produces, how much energy you actually consume, and to make sure you get credit for the surplus. Utah law requires Rocky Mountain Power (RMP), the only investor-owned utility in the state, and almost all electric co-ops to offer net metering for solar panels. Under this policy, net metering is available for residential systems up to 25 kilowatts (kW) in capacity and non-residential systems up to two megawatts (MW) in capacity.
Net metering programs vary depending on your utility. Rocky Mountain Power customers are credited for surplus on your next month’s bill at the full retail rate. Customers of electric cooperatives receive credits at the wholesale rate.
A couple municipal utilities, which fall outside of the above legislation’s jurisdiction, have voluntarily enacted net metering policies as well:
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.
Utah Interconnection Rules
Interconnection policy (how easy it is to connect your panels to the grid) is strong here as well. Your Utah solar panels qualify for the simplest application procedures. Even better, your small residential system is exempt from any insurance coverage requirement and from installing a redundant external disconnect switch (if your system is less than 10kW), both of which save you money.
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 Utah
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 Utah measures up:
Utah Solar Power Rebates
There used to be a couple of strong utility rebates available for Utah solar panels... but the funding was exhausted for both of them a while ago.
Wanna hear the good news? Incentives like the Utah Solar Incentives Program did their job, rapidly expanding adoption of solar power around the world, leading to a great decrease in the installed costs of solar power. We know you might not want to hear "there are no solar rebates in Utah," but how about "installing solar panels on your Utah home is 40% cheaper than it was 5 years ago?"
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.
Utah Solar Power Tax Credits
25% up to $2,000
Whether or not you’re getting any utility rebates, everyone in Utah is eligible to take a personal tax credit when installing solar panels. The tax credit for a residential system is 25% of the purchase and installation costs up to a maximum of $2,000. Dolla dolla bill y’all.
And of course, Utahns also benefit from the 30% Federal Solar Tax Credit. There's no cap on the federal tax credit and you'll deduct that after you subtract your rebate. Sample calculations follow below -- keep scrolling!
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
A strong performance payment incentive is one of the best ways to bring down the payback time on your investment in solar power. Many states with strong mandatory RPS’s have a performance incentive that pays you for every kilowatt hour (kWh) of solar electricity that you produce. Unfortunately, there are no such incentives available in Utah.
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
There’s no property tax exemption for solar panels installations in Utah. If we had to pick one piece of legislation for lawmakers to implement for residential customers here, it would definitely be a property tax exemption. It’s a simple way to encourage solar growth, especially since solar homes appreciate by a multiple of twenty times annual electricity bill savings. That property value increase should be tax exempt, because you’re doing a lot of good for the community, economy, and environment.
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 are owning the system and not leasing). Other studies seem to indicate a home price premium about equal to the cost of installing the system, 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
Lawmakers in Salt Lake City have also passed a sales tax exemption for Utah solar panels. Sadly, however, to qualify for the exemption you have to purchase a system with a capacity of 2 MW or greater (that’s 2000 kW -- yikes!). This rules out residential solar panel systems.
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).
The consensus on Utah solar power rebates and incentives
The solar outlook here is good, but far from the best we’ve seen. Legislators have done a nice job balancing utility and state-backed rebates, even based on a voluntary Renewable Portfolio Standard. Good on you, Utah. That’s brought the cost after year 1 to very reasonable levels. While payback time and investment returns are getting more impressive for a state with as much sun as Utah, there’s still more policy work that could be done to spur on solar growth even further. Make the Utah RPS mandatory instead of voluntary, Improve the solar carve out in the state’s RPS, and enact meaningful tax exemptions on the purchase of residential solar panel systems. Without those changes, Utah is stuck in “D” territory.