Dear Umbra,
I have been looking high and low regarding ongoing tax credits and incentives for solar installations on private residences. I may be looking for something that doesn’t even exist, but the rumors certainly do. Is there some website I can confer with to see if there really is such a thing?
I have already received the initial installation credit, but, as I said, I have heard of new tax laws regarding ongoing, slowly decreasing credits. I can’t take this to my tax lady without having SOME KIND of something or other in black and white for her to see. PLEASE HELP!!!
David Draper
Bakersfield, Calif.
Dearest David,
Just as an aside to everyone else, I did not answer this question because of the use of all caps and excessive punctuation, so don’t go getting ideas. I simply wish to borrow David’s question to follow up on some of the recent solar info and start talking about financial support for solar installations.
Tracking the flight of the solar dollar.
There are arguments about whether solar is financially feasible or competitive or worth it, and from what I can tell, the argument is only possible due to the existence of state, federal, even city and county financial incentives.
The comprehensive compilation of financial incentives for renewable energy is at the Database of State Incentives for Renewables and Efficiency. Despite the name — and an acronym that sounds like a parfum — DSIRE also tracks federal incentives for consumers (not manufacturers). DSIRE allows you to check for renewable-energy incentives, or energy-efficiency incentives, or both. If you wish simply to see all the photovoltaic incentives in the United States, you can access that chart at the Solar Energy Industries Association.
Since David lives in California, let’s use that state’s current incentives to show all of us what might be possible if we start our own solar dreaming. For a random mooring in numbers: GE tells us that you can multiply your daily kWh use by 0.25 to get the ballpark watt size of the PV system you need, and Southern California Edison tells us that a PV system might cost $7 to $10 per watt. So, a 2 kWh system might cost us $20,000.
One type of financial support available to help us manage this huge sum is a rebate. California offers rebates for home PV installations, $2.50 per watt for residential systems less than 100 kW; various utilities in the state also offer rebates, and one county does too. Often with rebates there is a little cap: customers in Riverside, for instance, can receive $3 per watt up to $15,000 or 50 percent of the project cost, whichever is less.
Loans are also available to finance solar installations, and (David, this perhaps is useful to you) the interest paid on these loans is tax deductible. Property tax exemptions are also mentioned for the Golden State, for solar systems and their related components. The state offers loans to institutions, and a utility offers one to individuals. Santa Monica County offers plain old grants for buildings meeting certain renewable-energy criteria.
Net metering is, of course, available in sunny California and is, in its own way, a financial incentive. There and in most places net metering is used as a storage system for your solar power, obviating the need for pricy batteries and giving you an out if you exceed your solar capacity. Your excess electricity will run the utility meter backwards; when you are using more power than you create, the meter will run forward as your electricity comes from the grid. People characterize it as “selling” your electricity back to the utility. But at the end of the year, if you have “sold” more power than you have “bought,” in most states you don’t get any cash. The financial incentive works for both parties, I guess.
At the federal level, there is a tax credit for solar electric and solar hot water. DSIRE relates that there may be a personal tax exclusion for subsidies paid from utilities, as above. Friends, I feel I may have helped a few of you over the years by explaining complicated subjects in my jolly, sloppy fashion, but I falter on tax law. I think what DSIRE refers to is that you may not be taxed on the rebates, and — on a related topic — they also imply here that there may be tax advantages to conservation credits on your utility bill. Then again, I may be misreading the text. Have a look, obtain the SEIA guide to federal tax incentives for solar (again, David, this would be helpful to you), and hire a professional.
In short, money is available to help with the costs of solar, but the amount is quite dependent on your state and locality. Solar itself is dependent on your locality, in fact. How’s that for a deep thought?
IRSly,
Umbra
