Welcome to the Ultimate Guide to Solar Panels 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 2020 **
Utah continues to be a truly sunny place with a few problems when it comes to home solar: The state has a voluntary Renewable Portfolio Standard, there are no solar tax incentives, and lawmakers just allowed Rocky Mountain Power to kill net metering (more on why that's important below). If it weren't for all the abundant sunshine, Utah may not be such a great place to install home solar. Read on to learn all you need to know about how much you can save with solar here.
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.
What you'll find on this page:
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.
Generate an accurate online solar estimate for your home
|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.
How much can solar panels on roof save you?
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.
Calculate solar panel cost and savings for your specific home
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:
Utah's Renewable Portfolio Standard
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.
Utah's Solar carve-out and SRECs
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.
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!
Utah Net Metering
Rocky Mountain Power will enact a permanent rate for surplus power delivered to the utility in 2020. Before that happens, current net-metering customers will continue to receive credits from Rocky Mountain Power for surplus power as they currently do, through 2035. Therefore, now might be the best time to go solar in Utah, especially if you’re a Rocky Mountain Power customer.
Utah law currently requires RMP 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. That’s plenty of solar for a home’s needs, even if you have a few families under your roof.
Other net metering programs vary depending on your utility. Rocky Mountain Power customers are credited for surplus on your next month’s bill at the 9.2 cents per kilowatt-hour, not quite full retail.
A couple municipal utilities, which fall outside of the above legislation’s jurisdiction, have voluntarily enacted net metering policies as well:
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.
Utah Solar Incentives
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 26% of your total system 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:
The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.
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?"
Utah Solar 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 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!
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.
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.
Low-income Solar Programs
Grade: FLearn more about low-income solar programs available in the U.S.
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.