Understanding Solar Financial Incentives
Understanding Solar Financial Incentives
Understanding Solar Financial Incentives
Ever wonder what makes solar such a sweet deal for homeowners? There are financing options and a variety of incentives to explore to help you go solar. The biggest benefit is the 30% Federal Tax Credit, which Congress is about to eliminate entirely. If you’ve ever had solar power on your home improvement list, it’s time to bump it up to the TOP, or you might miss out on 30% savings! Whether your goal is to be kinder to the environment, to be more energy independent, or a combination of both, solar incentives can help you get there.
Current Federal Incentives
If your home goes solar right now, federal statute provides a tax credit of 30% of the total cost of your project. Even better- if the total amount of the credit is more than your tax liability for the year, it can be carried forward. This generous tax credit can be just what a household needs to ensure going solar makes financial sense! The only downside to this transformative tax credit: we never know how long it will last! Currently, the Trump administration is proposing a complete removal of this credit, which is why we’re on high alert to get folks through the door as quickly as possible this summer.
Businesses looking to add solar to offset their high energy costs can also receive a 30% tax credit. However, if your project will generate over 1 megawatt of electricity (which is a very big project!), you will also have to meet certain standards around things like labor practices and Buy American policies. (We can help you understand the size of your array and take you through that list if it makes sense for the size of your project.)
Vermont Incentives
If you live or do business in Vermont, there are additional incentives that you may be able to add into the mix. Most Vermont electric utilities have home energy storage programs that either:
- Allow you to lease a battery for a monthly rate, provided you share some power with the utility during high-usage times; or
- Give you a rebate when you purchase your battery provided that you are willing to share power back to the grid when it’s needed.
On the business side, if your business is a pass-through entity (which is a formal way of saying a business structure that is not a corporation, such as an LLC or sole proprietorship), your company can take an additional 24% of the 30% tax credit (an approximately 7.2% additional tax incentive.) (Apologies that this is getting a little wonky!)
New York Incentives
For New York residents, solar incentives are a bit different – the value proposition makes it SO hard to say no to solar + storage. The state just brought a generous program online that gives solar battery customers $250 back per kWh, up to $5,000. In broad terms, that’s about 20% off a 2-battery system! New York utilities will also provide a credit to customers that give electricity back to the grid.
For businesses, New York provides group net metering arrangements with a company’s utility. Businesses that generate enough electricity that other locations can use it are compensated in the form of bill credits. The credits are calculated based on when and where they provide electricity to the grid. This is generally known as “the Value Stack”.
The Future of Federal Incentives
With the current budget bill on the table in Washington, the future of federal incentives is uncertain. That means right now is the best time to go solar and ensure that you get the best deal possible. In the event that federal incentives go away at the end of this year, your project would need to be completed by the end of 2025 to qualify for the existing incentives, meaning that now is the best time to find out how solar incentives will put solar within your reach.
As you can see, some of the incentives available can get a little complicated. The good news is that SunCommon has completed thousands of projects over the years in both Vermont and New York, and we’re skilled at helping people get the most value for their money. Despite some common misconceptions, customers actually save money when they go solar!