The benefits of utilizing solar energy are plenty. Solar energy helps prevent further environmental destruction, contributes to America’s energy independence, provide jobs to more people than the oil industry, and more. But did you know that utilizing solar energy provides benefits for your wallet as well?
For starters, solar energy allows you to save money on the electricity bill in the long run. However, the government also provides you with another financial benefit in the form of tax breaks and incentives. To encourage the continued adopting of solar energy, there are many solar incentives that will help you to reduce the total cost of your solar panel system – even by 30 to 50 percent!
The various types of solar incentives (explained)
Solar Incentives can vary state by state. However, there are some solar incentives that apply nationally, meaning that they apply regardless of which state or city you’re located in.
Investment Tax Credit (ITC)
Across the board, the biggest incentive by far is the 30 percent federal tax credit, which is also known as the ITC (Investment Tax Credit). This is a federal tax credit worth a whopping 30 percent through 2019. However, this tax credit is slowly “sunsetting”. In 2020, this credit will go down to 26 percent, then 22 percent in 2021, and ultimately 10 percent (and for businesses only) in 2022 and beyond.
Net Energy Metering (NEM)
Most utility companies across the country offer some sort of net energy metering process. Net energy metering, or NEM, is an incentive that allows homeowners, such as yourself, to get credit for extra energy their solar energy system produces.
Basically, net metering allows grid-tied solar producers to put electricity that they do not use from their solar array back into the grid. When the solar produces more power than the site needs, the utility meter spins backward and the account holder will have a credit against future energy use. The solar producer is then billed for their total “net” usage at the end of the month, which is the balance between the power pulled from the grid and the power put back into the grid.
Solar Tax Exemptions
In some states and local governments, you may be able to benefit from property and sales tax exemptions. In the case of property tax exemptions, homeowners can remove the added value of their solar panels from the valuation of their home for tax purposes. This means that regardless of the value of your home rising or diminishing, you’ll always enjoy a lower tax assessment.
Sales tax exemptions are an exemption from state/sales and use tax for the purchase of your home solar system. In this case, you’re able to reduce the total upfront costs (such as sales, storage, etc.) for your solar panel installation.
Solar Renewable Energy Certificate (SREC)
Some states provide their own special incentives. For example, in the state of New Jersey, the biggest solar incentive is the Solar Renewable Energy Certificate, or SREC for short.
The SREC is quite literally a tradable certificate that represents all the clean energy benefits of electricity generated from one’s solar energy system. Every time a solar energy system produces 1,000 kilowatt-hours electricity, an SREC is given to the owner of that system. The SREC(s) can then be either sold or traded through an online SREC broker.
This SREC program is available to all solar energy systems for a 10-year period from the time of installation.
Residential Solar Investment Program (RSIP)
In the state of Connecticut, there is a solar incentive called the Residential Solar Investment Program, or RSIP. This program is a state-mandated rebate that is worth $0.463 per watt, up to 10 kilowatts. On a 10 kilowatt system, for example, the rebate would be worth a handsome $4,630. This makes Connecticut one of the most appealing states when it comes to available solar incentives.
If you’re interested in a solar energy system and saving money, contact Green Power Energy today for more info on solar incentives and programs in New Jersey and Connecticut.
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