If you’re over age 40, you may remember solar panels as being expensive back when they first became a big thing. Today, however, the price has dropped dramatically – yet there are still many regional and federal governments giving HUGE rebates and incentives to those who switch to solar. If you haven’t looked at how much you can save by going solar in awhile, the results might seriously shock you!
Solar energy is now more accessible than ever, and it likely will get even cheaper as time goes on. In 2019, the cost of solar system installation was 20% less than in 2018 and 70% less than in 2010 .
In 2020 in the United States, the average price per watt ranged from $2.51 to $3.31 , and in other countries it can range dramatically, depending on a multitude of factors.
Now, this might seem costly, but the wonderful thing about solar energy is that it provides you with access to a number of incentives and rebates. These vary considerably from state to state as well. Going solar could be enormously costly in one state, while in another it could literally require 0$ out of pocket! It all just depends on what state- and even what zip code– your home is in.
The only way to know for sure if there are any programs in your area is to check online!
What Kind Of Incentives Can You Get With Solar Panels?
To encourage homeowners and businesses to adopt solar technology, governments and utility companies offer cost-saving programs and several options for financing, cutting installation costs by as much as 50%, sometimes even more.
The availability of programs and the amount of savings depends on where you are. In the United States, for example, among common forms of solar energy incentives are :
- Investment solar tax credit.
- State tax credits.
- Cash rebates.
- Solar renewable energy certificates (SRECs).
- Performance-based incentives.
Let’s have a look at these slightly more in-depth.
Investment solar tax credit
The federal government provides a solar tax credit to homeowners and businesses. The tax credit amount is set to decrease with time and as of this article’s writing was to expire in 2022 for residential solar energy systems.
Here’s what the timeline of solar tax credit looks like :
- 2016 to 2019: 30% of the cost of the system.
- 2020: 26%.
- 2021: 22%.
- 2022 onwards: 10% for commercial solar energy systems, no credit for residential systems.
Before 2016, the investment solar tax credit had been extended multiple times, so Congress may again extend the policy.
State tax credits
Some states may offer their own tax credits for residential and commercial solar systems. Tax credits vary significantly from state to state, so make sure to check out local incentive programs.
Some states, municipalities, or utility companies may be offering cash rebates as well to promote solar energy. Rebates could help you reduce your system installation costs by 10 to 20%. But keep in mind that cash rebates are generally available for a limited amount of time and end once you install a certain amount of solar.
Solar renewable energy certificates (SRECs)
Some states require that utilities generate a certain percentage of energy from solar power. In these states, your solar system will generate solar renewable energy certificates, or SRECs, for the amount of energy it produces.
Utilities buy SRECs to be able to count your generated solar power in their solar energy output. Your income from SRECs could amount to hundreds or even thousands of dollars annually, depending on your state’s SREC market.
Performance-based incentives (PBIs)
If your state or utility company offers performance-based incentives (PBIs), you will be paid a per kilowatt-hour credit for the amount of energy your system produces. To be able to make use of PBIs, your solar system needs to have metering equipment to measure energy output.
Net Metering Policies Can Help You Save After Solar Panel Installation
Net metering policies are available across most of the United States, and they allow you to get rewarded for generated electricity that you don’t need.
These policies allow you to receive utility bill credits for excess energy produced by your system. If your solar system produces more energy than you actually need, you may sell the excess electricity to a utility company. In exchange, you will receive credit toward your future payments.
As mentioned earlier, the availability of incentives varies from state to state. Check out local programs to find out how exactly you can save money with solar energy.
How Much Do Solar Panels Really Save?
How much money solar panels will allow you to save depends on electricity rates in your area, as well as your electricity use patterns.
According to EnergySage, the estimated 20-year savings with solar power in California are $39,277, which is on the higher end of the spectrum . In states like Washington, 20-year savings are a “modest” $12,822. The higher the electricity rate in your state, the higher the potential for savings will be.
To offset your electricity costs and save in the long run, you need to accurately size your solar panel system. There are many resources online that can help you with that. Solar panel providers should be able to assist you with estimating the size of your solar system as well.
In addition, many solar programs now allow you to lease or finance solar panels with 0$ down, meaning you start saving money from day one, and your return on investment is theoretically infinite.
Do you qualify for one of these programs? The only way to know for sure is to check!
“Utility-Scale Solar”, Electricity Markets & Policy, https://emp.lbl.gov/utility-scale-solar.
“How much do solar panels cost in the U.S. in 2020”, EnergySage, https://news.energysage.com/how-much-does-the-average-solar-panel-installation-cost-in-the-u-s/.
“Solar panel incentives, rebates & tax breaks”, EnergySage, https://www.energysage.com/solar/cost-benefit/solar-incentives-and-rebates/.
“Investment tax credit for solar power”, EnergySage, https://www.energysage.com/solar/cost-benefit/solar-investment-tax-credit/.
“Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics”, U.S. Department of Energy, https://www.energy.gov/sites/prod/files/2020/01/f70/Guide%20to%20Federal%20Tax%20Credit%20for%20Residential%20Solar%20PV.pdf.
“How much do solar panels save?”, EnergySage, https://news.energysage.com/much-solar-panels-save/.