- What is the initial cost of solar panels?
- What kind of payback can you expect on a solar panel system?
- What kind of payback can you expect with a solar thermal water heating system?
- What incentives are available at the state level?
- What federal tax credits are available for solar panels?
- Is there a maximum federal tax credit amount of eligible systems?
- What if the credits exceed your tax liability?
- Is a tax credit the same as a tax deduction?
- What is net Metering?
- Will adding a solar system increase the value of your home?
- How can these solar systems minimize the effects of rising energy costs?
- What is a Renewable Energy Credit?
What is the initial cost of solar panels?
An average cost of a PV System ranges from $5-8 per Watt depending on whether you
are a residential or commercial installation. The solar panel system will vary greatly
based on your power needs and the specifics of the site.
What kind of payback can you expect on a solar panel
system?
With all of the federal and state tax credits/rebates currently
available, you could possibly cover most of your initial expenses within the first
few years. Once installed, solar panels can save you up to 50% (or more) on your
monthly energy bills. This means an immediate payback to you every month.
Example: If your monthly energy bill would have been $200 without solar panels,
then with solar panels saving you 50% you would save $100 a month or $1,200 a year.
Savings will vary based on number of people living in the home, climate,
and
a number of other factors.
What kind of payback can you expect with a solar thermal
water heating system?
Water heating is responsible for up to 17% of your energy consumption. A typical solar water heating system can save you 75% on your water
heating energy costs. This system typically will pay itself off multiple times over its lifespan. Savings will vary based on number of people living in the home, climate and a number of other factors.
What incentives are available at the state level?
Solar incentives are available in many states but differ in each. State incentives range from credits or rebates, to property tax exemptions and utility rate discounts. Tax credits and rebates can be as much as 50% of the systems cost. See the table below for a summary of incentives currently available in your state. Specific details on available state incentives can be found by visiting the website
www.dsireusa.org.
What federal tax credits are available for solar panels?
There is a federal tax credits available for up to 30% of the system's net cost. Expenditures include labor costs for onsite preparation, system installing, and wiring interconnect the system to the home. This 30% credit is applied to the total cost of the system less state rebates.
Is there a maximum federal tax credit amount for eligible
systems?
The American Recovery and Reinvestment Act of 2009 removed the maximum credit amount of $2,000. Currently, there is no maximum credit amount on either solar panels or solar thermal water heating systems.
What if the credits exceed your tax liability?
If a tax credit exceeds your tax liability, that additional amount can usually be carried forward to the succeeding taxable year.
Example: you paid $28,800 for a PV solar panel system. Your maximum tax credit amount is $6,210 or 30% of the system’s $20,700 net cost. If your tax liability is $5,000, you can claim a maximum of $5,000 on your 2009 taxes. The additional $1,210 tax credit can be claimed on the following year’s taxes.
Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $6,210 in income taxes and who receives an $6,210 tax credit would pay nothing.
What is net metering?
Available in over 40 states, net metering is an incentive for consumers to invest in renewable energy systems. Net metering measures excess electricity produced through the solar system by spinning the energy meter backwards, banking the electricity until needed. This provides the customer with full retail value for the electricity produced. Customers receive retail prices for excess electricity they generate through solar power. Interconnecting with the utility is done using a standard meter.
Will adding a solar system increase the value of your
home?
The Appraisal Institute has published articles showing a $10 to $20 increase in home value for every $1 in reduced utility costs. Showing a potential homebuyer the monthly energy saving from the solar system can create instant additional value for your home. The panels are also easily recognizable, and can create added value simply upon a potential home buyer’s first look at the home.
How can these solar systems minimize the effects of
rising energy costs?
Installing solar system is like insurance against future energy cost increases. The more you take advantage of solar power, the less you are exposed to energy cost increases.
What is a Renewable Energy Credit?
RECs are environmental commodities which represent proof that 1 megawatt-hour (MWh) of electricity was renewable (generated from an eligible renewable energy resource). The REC certificates can be sold and traded and the owner of the REC can claim to have purchased renewable energy. RECs can incentivize carbon-neutral renewable resources. Note that the energy associated with a REC is sold separately from the credits and is used by another party.
