There are many programs and incentives across the country designed to help you install, generate revenue and recoup money from your solar project. Many homeowners are eligible for more than one program, and some of the programs have expiration dates or other conditions attached to them. When you begin your research on the incentives that apply to you, you may run into a lot of confusing technical language. This guide is designed as an introduction to the categories of incentives that may apply to you. For more specific information, please refer to the solar incentives available to you in your state.
Programs to Help You Buy Your Solar Panels
The following programs are designed to help homeowners finance their solar projects. These programs will lower the price of your new solar panels to make them more affordable.
Grant Program: Provides financial assistance from the government for ideas and projects that either provide a service or boost the economy. This includes solar panels, as their Return On Investment (ROI) can improve the economy over time.
Rebate Program: A program that will refund a portion of your purchase within a certain period of time after it has been paid.
Leasing Program: A contract where a solar company agrees to fund solar panel installation and then charges you a monthly fee for using solar panels.
Loan Program: A contract where a solar manufacturer or installer agrees to loan the amount that the system and installation costs and then you pay it off over time.
Payment Plans: Many Installers offer their own financing programs to help you finance your project.
Bank Loans: Many financial installers offer loans specific to clean energy projects. Because these loans are structured around an asset acquisition, they often offer very competitive terms. You may be able to claim the interest on these loans to reduce your tax burden.
PACE Financing
Property Assessed Clean Energy (PACE) programs are available in many states. Essentially, PACE financing is a loan that the government makes to homeowners in order for them to invest in clean energy or energy-saving measures. The loans are repaid over a period of 5 to 25 years through an annual increase in the homeowner's property tax. The goal of PACE is to allow the homeowner to benefit from the money generated by their solar panels before having to pay back the cost of the loan.
PACE financing varies between states. To understand how it applies to you, check out the incentives for your state.
Using Solar Power to Save Money
Once your solar panels are installed many States and utilities have programs in place that will allow you to save some of your hard earned money by offering generous rebates and incentives. The more electricity your solar panels generate, the more money you'll save. It's a win for the environment and a win for your bank account!
- Feed-In Tariff or Performance-Based Incentive: Paying a lower amount per kilo-watt.
You may see terminology like "before the meter", "behind the meter" and "net metering". These refer to the optimal system set up to reflect your goals. Ask your solar installer which is best for your project.
Related Content: Finding the Right Installer For Your Solar Project
There may be additional ways to take advantage of programs offered by your local utility. For example, many utilities’ electricity pricing varies with demand, with the highest prices typically during late day and early evening, with lower prices starting around 8 pm. Solar panels generate electricity throughout the day which can then be stored in your homes solar battery. This allows you to access additional energy which can then be used during peak hours. Other utilities offer discounted rates for homes with solar panels to buy supplemental energy or will buy green energy at a premium.
Tax-Related Incentives for Solar Panels
These incentives come into play during tax season, reducing your tax burden.
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Personal Tax Credit: The amount of money you subtract from taxes owed to the government to reduce your actual amount.
- Personal Tax Deduction: An income reduction that was previously taxed from expenses.
- Personal Tax Exemption: The amount you're entitled to as a deduction against personal income from both taxable and federal income tax rate.
- Property Tax Incentive and Sales Tax Incentive: Deductions/exemptions from property tax liability and sales tax liability.
While you'll wait to receive the financial benefits from tax credits, they're still beneficial for your family’s long-term financial health.
Incentive Stacking
Many homeowners are eligible for multiple programs, from several levels of government. This is called stacking.
For example, if you live in Springfield, Illinois, you may qualify for the following:
Afterwards, the percentage slowly declines until it disappears in 2022.
Hopefully, this guide helps you understand the programs and incentives available to you as you consider your solar project. For specific information, be sure to check your state, municipality and local utility. The programs and incentives vary widely in value, application deadlines and other details, but they have one thing in common: all are designed to get your solar project off the ground and onto your roof!
