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Types of solar incentives
There are federal and local solar incentives available to help decrease your costs and maximize your solar savings.
Here’s an overview of the four most common types of solar incentives:
Tax credits
Solar tax credits can help you decrease your solar costs and what you owe come tax time. The country’s best solar incentive–the federal investment tax credit (ITC)–allows you to claim 30% of your solar costs as a credit. In addition, many states offer local tax credits that can help you save $1,000 to $5,000 more.
Cash rebates
Some states, municipalities, utility companies, and equipment manufacturers offer up-front rebates for installing a solar panel system. Solar rebates are generally only available for a limited time. Sometimes, these solar rebates can reduce your system costs by 10 to 20%.
Solar renewable energy certificates (SRECs)
An increasing number of states have renewable portfolio standards (RPS), which require utilities to generate a certain percentage of their electricity from renewable resources. If you live in an area with a solar carve-out, your solar panels will generate an SREC for every megawatt-hour (MWh) of solar electricity production. Utilities buy your SRECs to comply with state-level renewable energy requirements. Selling your SRECs can result in hundreds (or even thousands) of dollars more per year in income, depending on the supply and demand in your state.
Performance-based incentives (PBIs)
PBIs pay you based on the electricity that your system produces. PBI programs are slightly different from SREC programs in one key way: while SRECs represent the environmental attributes of solar generation (i.e., emission reductions), PBI programs provide an incentive for the electricity produced itself (i.e., the kilowatt-hours of production). Unlike SRECs, PBI values are typically fixed for the duration of the program.