What are Solar Incentives and How Can You Use Them to Save on Solar?

The solar industry does a lot of good. Not just for the environment but for the economy as well. The solar industry provides more jobs than any other energy source in the United States.

The United States government and utilities is encouraging people to go solar by offering solar incentives and tax breaks to give more people access to solar power for their homes. Right now you can reduce the cost of your solar system by 30 to 50 percent with theses incentives and tax breaks.

There are a few different incentives available to homeowners and businesses.

Investment tax credit for solar

This tax credit is known as the investment tax credit (ITC) and is provided by the federal government. This tax gives home and business owners the allowance to deduct some of their solar costs from their taxes.

Both the businesses and homeowners are able to qualify for a tax credit that can come out to up to 30% of the costs of their solar panels.

State Tax Credit 

Certain states offer added tax credits for installing a solar system. On top of the deductions from federal taxes, with the state tax credit you can also deduct some of the case from your state taxes. Depending on the state is how much you are able to deduct.

Let's Talk Net Metering

Net energy metering (NEM) is necessarily a billing arrangement that allows organizations are generating their electricity to deliver unused energy back to the grid and be charged at the retail energy rate. In most instances, these credits are utilized to your monthly electric utility bill or rolled over month-to-month until they’re used up. You can even be compensated for any excess energy you produce. It can be a highly effective way to reduce the overall price of solar panels for business.

It’s necessary to know that NEM policies can vary widely depending on your utility and state. So be certain to do your homework to find out if net metering is currently an alternative in your state. The Database of State Incentives for Renewables & Efficiency (DSIRE), which is supported by the U.S. Department of Energy, is a comprehensive place to find out.

Cash Rebates

Some states offer cash rebates. These rebates are offered to you by your state, municipality, utility company and other organizations that wish to promote solar energy.

These rebates are usually only offered for a certain amount of time and once the area has had a certain amount of solar installed they usually end the rebate.

Depending on the rebates that are offered, they can help you reduce the cost of your solar system by 10-20%.

Solar renewable energy certificates (SRECs) 

Considered the currency of renewable energy, Solar Renewable Energy Credits (SRECs) allows organizations to track, and potentially profit from, the volume of clean, renewable energy produced by a commercial solar system. The more electricity generated, the more SRECs created. Many organizations choose to sell these credits to help offset the cost of installing modern solar panels.

While SRECs can be traded immediately, most organizations choose to use a third-party aggregator to sell their SRECs. As with NEM, SREC policies and markets vary extensively by state and are not in place everywhere. Check DSIRE to find out whether certain innovative credits are available to you.

There are legislation in some states that require a certain percentage of their electricity to come from solar power. The residents of theses states will have to have their system generate SRECs for the amount of electricity that is produced by their solar panels.

Like most businesses, you probably pay two kinds of charges on your monthly utility bill: usage charges (based on real kilowatt-hours used), which can vary by time of day, and demand charges, which are estimated based on your maximum kilowatt usage in a month (typically measured in 15-minute intervals).

Knowing how your utility structures these rates, and their impact on your monthly energy prices, could save you thousands of dollars every month. Getting those details will help you decide how to manage your usage better and whether investing in solutions like industrial solar and solar battery storage may make economic senses.

Electric meters and your utility rate arrangement contribute to the actual cost of solar panels for business knowing what fetches what, and when: utility rate structure  

Performance based incentive (PBIs) 

There are some states that give performance-based incentives (PBIs), that pay solar system owners that offer a per kilowatt-hour credit for the electricity that their system produces. Some programs require that you install equipment manufactured in your state to qualify.

They differ from SRECs because PBIs do not have to be sold through a market. These rates are determined when the system is installed and may replace or even co-exist with net metering policies.

Accelerated Depreciation

Businesses are able to write off the value of their solar system through the modified Accelerated Cost Recovery System (MACRS). MACRS helps in reducing businesses’ tax burdens and accelerates the return on their solar investments.

Accelerated depreciation helps reduce net system cost by an additional 30 percent. Over a five year period certain qualified solar energy equipment is eligible for a cost recovery period.

Subsidized loans 

Some homeowners are eligible to finance their solar panel system by using a subsidized solar loan that has a reduced interest rate.These loans are offered by the homeowners state, a non-government organization or their utility company. These loans are usually only available for a limited time.

Tax exemptions

There are certain states and towns that do not have the value of solar panel included in the property tax assessments. Meaning, that even though the value of your property has increased because of your addition of a solar power system, your property tax does not increase.

Your solar system may be exempt from state sales taxes, which may result in a huge amount of savings. The amount of savings depends on your state’s sales tax rate.   

Reduce Your Costs

An ever-growing number of businesses are taking a closer look at the potential of battery storage to lower their monthly power bills, especially when paired with a commercial solar system. These refrigerator-sized batteries can offer a extremely effective way to reduce demand charges by discharging their stored energy when needed to offset spikes in demand—potentially leading to substantial savings.

Solar And Battery

Battery storage systems can be bought outright or leased from your solar provider, which helps eliminate up-front and ongoing maintenance costs. Combined solar and battery storage systems qualify for the solar ITC, and there may also be state rebates available with the buying or lease of a storage system.  Ask your provider or an independent energy authority to analyze your load profile. They can help you estimate whether solar energy storage is a good fit for your business.

People thinking about how many solar panels for business cost taking advantage of policies and rebates near you: state and local incentives

Promoting the growth and proliferation of clean, sustainable energy in business isn’t just a federal interest—many state and local governments offer support, rebates, and other incentives, too. And that can mean additional ways to offset the cost of installing industrial solar panels.

As previously stated, the Database of State Incentives for Renewables & Efficiency is an excellent site to find federal, state and local renewable energy initiatives, including solar, in your area. Search by city, state or ZIP code for the latest policy and incentive information, and compare their Other Resources page for links to state and local clean energy organizations that could provide even further info and money-saving tips.