Solar Power Incentives
Opting for solar energy systems can be costly for a residential or business owner. However, because experts predict energy costs will rise in coming years and consumers have showed growing interest in alternative energy, but are reluctant to pursue it because of high costs, various federal and state programs provide a combination of solar power savings; thereby, lowering the financial drain that is associated with solar power. The federal government as well as all 50 states offers various forms of tax credits and incentives for home owners and business owners who invest in solar power. Due to the wide variety of tax incentives and rebates, the amount of solar electric systems installed in 2007 doubled the installations in 2006. The available tax credits and incentives have turned the solar industry into an economic powerhouse for America.
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Below is a summary of the tax credits and incentives offered by the federal government and the state of California:
Federal
The Energy Policy Act of 2005 went into effect upon the President’s approval in August of 2005. The Act attempted to combat growing energy problems, to change previous United States energy policy, and to entice consumers to become more energy efficient. The Act provided tax incentives and loan guarantees for energy production of various types, enabling solar power consumers to lessen the financial burden that is associated with becoming energy efficient. However, with the ever-growing interest in solar energy and the ongoing rise in electricity costs, the Act became obsolete. Thus, in 2008, the federal government passed the Emergency Economic Stabilization Act. This Act amended the 2005 Act, to include modifications and extensions of many consumer tax rebates and incentives.
The 2008 Act provides homeowners and business owners a federal tax credit for using solar power in their home. Residential and business owners who install solar electric systems can receive a 30% tax credit for systems placed in service from January 1, 2006 through December 31, 2016. There is no monetary cap for residential or commercial installations. Also, contrary to popular belief, the home served by the solar energy system does not have to be the taxpayer’s principal residence. Essentially, the purchase of a solar energy system makes you eligible for a tax credit equal to 30% of the cost of your solar system, including installation.
More information about Federal Tax Incentives can be found at Database of State Incentives for Renewables & Efficiency (DSIRE).
California
In addition to federal tax incentives, some solar power consumers may be eligible for state, county, and city rebates. The major rebate plan is the California Solar Initiative. (Click Here to Download the CA Solar Initiative Handbook) This initiative gives $2.9 billion in tax rebates for solar installation. The Initiative is part of California’s “Go Solar California” campaign. California has offered solar energy rebates to customers in certain territories for many years, but with the growth of solar energy and high utility costs, past rebates were insufficient. As a result, California enhanced its rebate programs to include two modified solar incentive and rebate programs. The new Initiative also included an enhancement in the way solar incentives are calculated. Incentive levels are now based on solar energy performance factors such as size, installation angle, tilt, and location. This modification maximizes rewards for owners of systems that provide maximum solar generation. The California Solar Initiative consists of two payment types: Expected Performance-Based Buy-Down, or EPBB, and Performance Based Incentive, or PBI. The former pays solar consumers their incentive a one-time, up-front incentive. It is generally for smaller solar energy system consumers. The latter payment type, generally for consumers of larger solar power systems, pays the consumer over a five year period.
In addition to the California Solar Initiative, there are several other state, city and county solar power incentives and rebates available for homeowners and business owners. Brief examples of other incentives and rebates available to solar power consumers located in California include the California Property Tax Exemption for qualified solar energy systems and the San Diego County Green Building Incentive Program.
The California Property Tax Exemption allows a property tax exclusion for certain types of solar energy systems installed between January 1, 1999, and December 31, 2016. Qualifying active solar energy systems are defined as those that "are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy." These include photovoltaic (PV) systems.
The County of San Diego’s Green Building Incentive Program is designed to promote the use of resource efficient construction materials, water conservation and energy efficiency in new and remodeled residential and commercial buildings. One example of and incentive of this program includes a waiver of the fee for the building permit for a photovoltaic system.
Several other rebates and incentives are available to those wishing to become more energy efficient and cost efficient. For more information about California solar energy incentives and rebates, as well as all other states, visit our solar industry links page or the Database of State Incentives for Renewables & Efficiency.
Here's another good site: California Solar Initiative - Incentive Calculator
