Solar Power Saves You Money In At Least 3 Ways
The average cost of solar panel installation in the United States has decreased by about 70% in the last decade. Given the numerous federal and state-based solar incentives offered throughout the country, coupled with reduced utility bills, going solar can help you save a lot! Let’s take a look at how this works.
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One: Reducing your power bills is one way solar power saves you money
One of the major ways in which solar power saves you money is by mitigating, or in some cases even eliminating, your reliance on your local utility to supply you with power. Provided that the weather outside is sunny, your solar panel system should provide you with enough output to serve you as your primary power source. This means that you can run all your power-draining appliances such as air-conditioners and heaters on solar.
However, you may have to rely a bit more on your utility during the night and on an overcast and stormy days when there is limited sunshine. But keep in mind that if you store enough of the surplus solar energy in your batteries during the day, you might even be able to get through the night without needing your utility.
Keep in mind that if you store enough of the surplus solar energy in your batteries during the day, you might even be able to get through the night without needing your utility.
Savings from your reduced utility bill can cover the installation cost of your solar panel system over time.
So, for starters, solar power saves you money with a noticeable reduction in your electricity bill. as a result, over time, these savings will sum up to become substantial enough to cover the installation cost of your solar panel system. Solar power seems even more cost-effective when you consider that you’ll be able to power your air conditioning on solar during the extremely hot summers without having to worry about a hefty utility bill. Factor in the annual increase of 2.5% to 3% in the utility bill, and solar power seems like a great deal.
If your system cannot deliver peak performance due to cloudy outdoor conditions and can only get you a few hours of solar power. Utilize those few hours of solar power during the on-peak hours, that is when the electricity cost is at its highest during the day.
Two: Solar Incentives and Tax Credits Is A Second Way That Solar Power Saves You Money
All the states in the US have their own respective state incentive programs for going solar, which means that depending on where you live, you may be eligible for various tax credits for making the environmentally-friendly decision to go solar. Additionally, the federal government also offers a solar tax credit program. There are also several utility-based solar incentives that are limited to the customers of that utility.
All of these solar incentives combined help chip off a substantial portion of your system’s installation cost. Here is all you need to know about these incentive programs:
All of these solar incentives combined help chip off a substantial portion of your system’s installation cost.
State Incentives Demonstrate How Solar Power Saves You Money.
In addition to the federal ITC, several state-based solar incentives are also offered to encourage residential property owners to go solar. Although every state has its own set of solar incentives, there are some that are common such as rebates and tax credits.
There are still many more state-based incentives that vary from state to state. In order to better learn about the incentives offered in your specific state, look up your state on the Database of State Incentives for Renewables & Efficiency or ask your solar company.
The way State tax credits work is quite similar to the federal ITC, except they only apply to your state taxes. The exact amounts substantially vary from state to state, and they don’t usually lessen your federal tax benefits.
Installing a solar power system may also qualify you for an upfront rebate in some states. They’re usually only offered for a limited time as the funds for such rebates are quite short and quickly run out. Therefore, if you’re having a system installed, immediately search for rebates in your state to take advantage of the offer before it ends. Solar costs can be reduced by 10% to 20% with a state government rebate.
Solar Renewable Energy Certificate
The Solar Renewable Energy Certificate (SREC), also known as the Solar Renewable Energy Credit, is another state-based solar incentive. Once your solar power system is installed, get it registered with the relevant state authorities. The authorities will regularly check your system’s power output and grant you SRECs periodically. You can use your SRECs as a form of payment to pay off your municipal utility bill. In short, state solar incentives potentially provide multiple ways that solar power saves you money.
The Federal Solar Investment Tax Credit is another way that solar power saves you money.
The Federal Solar Investment Tax Credit (ITC) is a tax incentive program introduced by the federal government to promote the installation of rooftop solar panel systems on residential properties. The program was enacted by the federal government in 2006. The ITC program allows homeowners to claim the tax credit on federal income taxes.
The credit reimburses you for a portion of the net cost of your solar panel system installation. Only homes in the United States are eligible for the program, provided that their solar panel systems must be installed and operated during the designated years. Initially, a 30% tax credit was offered for systems installed before December 31, 2019. In December 2020, the US Congress extended the program. For systems that are installed between 2020 and 2022, a tax credit of 26% is offered.
The credit reimburses you for a portion of the net cost of your solar panel system installation. Only homes in the United States are eligible for the program, provided that their solar panel systems must be installed and operated during the designated years.
For systems installed in 2023, the tax credit falls to 22% and was scheduled to expire thereafter. However Congress has extended it further. Keeping this in mind, if you’re getting a system installed or have an installation underway. Factor in a 22% or 26% discount on your net cost depending on when the installation commenced. Are you still keeping track of the ways solar power saves you money?
Eligibility Criteria for ITC
Following are some mandatory requirements that you must meet in order to be eligible for the ITC program.
- The solar panel system should be new, and the installation should not date back before January 1, 2006, or after December 31, 2023. Unless Congress renews the ITC, it expires in 2024.
- The system must be located in the United States.
- The systems should be purchased, not leased.
- The installation site must be your primary or secondary residence within the US or an off-site community solar project.
Some companies give energy bill rebates depending on how much electricity your system generates, while others offer one-time incentives to install solar panels.
Additionally, utility rebates can be another way that solar power saves you money.
For example, many local utilities offer solar incentives to promote the installation of solar panel systems on residential properties. Some companies give energy bill rebates depending on how much electricity your system generates, while others offer one-time incentives to install solar panels.
PBIs, or performance-based solar incentives, are incentives that pay you a per-kilowatt-hour credit for the power your system generates.
Three: Metering Credits from Solar Power Saves You Money.
You will often come across instances when your system will be putting out surplus energy. For instance, on an ideal sunny day when your system is generating more energy than you need or you and your family are out for a while, and your home’s energy consumption is quite minimal. In both scenarios, the excess energy output of your solar power system qualifies you for net metering.
Strictly speaking, net metering refers to when the surplus energy of your system is being fed back into the national grid. A digital meter will keep track of the amount of energy that you are either drawing from the grid or providing to the grid. The benefit of this is that you will be compensated for the energy you provide the grid with in the form of a reduced monthly utility bill.
The benefit of this is that you will be compensated for the energy you provide the grid with in the form of a reduced monthly utility bill.
However, it is important to know that not all states permit net metering and those that do have various policies regarding it. Net metering policies are not in place in Alabama, Mississippi, Tennessee, or South Dakota. Although Idaho and Texas don’t have any state-wide net metering regulations, energy companies in certain of their localities do.
The majority of states that have net metering legislation have established retail tariffs for excess electricity. This means that your utility pays you for your surplus energy at an equal rate to what it charges you when you buy energy from the grid.
Concluding Some Of the ways solar power saves you money
In this article we’ve covered solar power savings from reduced power bills, solar incentives and tax credits and metering credits. If you have further questions on these topics, check out our Solar FAQs. And, as always, feel free to reach out to Firefly Solar with any questions.