The benefits of owning a solar energy system significantly increase when you take advantage of available rebates, tax credits and incentives. This is because these incentives will reduce your upfront installation costs, and as a result accelerate your payback period – paying less up front means breaking even more quickly. These programs can reduce the upfront costs of your system by 30 to 50 percent, but vary state-by-state as well as city-by-city. Read on to see if your city is one of the top 5 cities that incentivize solar!
Solar incentive programs and state credits
State incentives for solar differ across the country. Utilities and local, state, and federal governments have established a variety of financial incentives to encourage the installation of solar energy systems:
- The preeminent incentive today is the federal investment tax credit (ITC), which can reduce the cost of your solar installation by 30 percent.
- Some states also offer their own state tax credits. Popular examples include Arizona, Oregon, and Massachusetts.
- Certain organizations (like utilities and nonprofits) that want to encourage solar installations will offer time-limited cash rebates; these rebates can further reduce your costs by another 10 to 20 percent.
- Solar Renewable Energy Certificates (SRECs) are another source of financial value, but only available in certain states.
- Net-metering allows for the possibility of selling excess electricity back to the grid, essentially sending your electricity meter backwards until you need the energy at a later point.
- Some utilities, like Austin Energy, will pay system owners per kilowatt-hour (kWh) for the electricity that their solar panels produce.
- Cities and states also offer subsidized loans, property tax exemptions, and state sales tax exemptions for solar energy system owners.
How we ranked the best cities for solar
EnergySage analyzed available incentive programs throughout the United States, and assembled a list of the top five cities where homeowners can reduce the costs of going solar. To do this, we first needed to approximate the average size and efficiency of a solar energy system in each city. We sourced the system size data from our marketplace averages, and used NREL data to gauge the electricity-generating potential of the panels. Next we had to look at what city and state incentive programs were available, and relied on the Database of State Incentives for Renewables and Efficiency (DSIRE). Because their data is pulled from many different sources, we standardized it for use in nationwide comparison.
The results of our ranking show the top incentive programs by city, assuming standard electricity bill and home installation. Each city ended up in the top 5 because it offers healthy incentive programs to install solar and/or has high electricity costs that make solar more financially attractive.
The results: the top 5 cities that incentivize solar
These calculations are based on an average electricity bill of $100/month.
Austin, Texas — EnergySage calculated the average price for installed solar in Austin to be 25 percent lower than the national average price. Austin Energy offers an additional rebate for installed solar which, when combined with the ITC and property tax exemption, results in savings of more than 50 percent. Austin Energy will also credit system owners 11.3 cents per kWh of electricity produced by their system through its Value of Solar Energy Rate.
Seattle, Washington — While Seattle City Light has one of the lowest electricity rates in the country, the average price of solar installation also falls just below the national median price. The utility offers renewable production incentives of up to $5,000 per year, a state sales tax exemption and net-metering credits.
Charlotte, North Carolina — NC GreenPower provides a performance-based incentive for solar systems sized up to 5 KW. Additionally, North Carolina offers a state tax credit of up to 35 percent of the net cost of the system, with the maximum incentive varying between $1,400 and $10,500 (depending on the technology).
New York, New York — New York City’s Long Island Power Authority has one of the highest electricity rates of our analysis. Those wondering about NY state incentives: the state provides two financial incentive programs: a rebate program with a residential incentive of $0.30/W, and a state tax credit that will reduce the net cost by 25 percent (up to $5,000).
Kansas City, Missouri — In addition to a below-average cost per watt of installed solar in Missouri, the state also has a rebate program that offers $1.00/W to homeowners who submitted their application in 2015—one of the highest rebates in the country.
It’s important to note that financial incentive programs vary state-by-state and city-by-city, and homeowners are well served to utilize an independent 3rd party when assessing their options. Just because you don’t see your city here, doesn’t mean you’re not incentivized to go solar! Simply enter your zip code in the DSIRE database to find incentive programs near you. For more detailed results, enter your property address and electricity usage here to receive an instant estimate of your solar savings.
This post first appeared on Mother Earth News.