Solar guide: How to find energy efficiency rebates available in your city and finance your solar panel installation

Finding energy efficiency rebates in your area is not a difficult task—there are currently many options available to homeowners.

The federal Investment Tax Credit (ITC) offers 26% back on your solar electrical systems until the end of 2020. It applies to all types of solar home energy, including photovoltaic (PV) solar panels, solar shingles, and solar heating and cooling.

In addition, many states, utilities and regulatory authorities offer their own incentives, which can help bring down the cost of installing a system substantially.

What are incentives and rebates, and why are there so many available for solar energy?

Solar incentives and rebates are programs offered to homeowners or businesses to promote new solar energy sales.

Incentives are usually discounts allocated ahead of payment. Rebates are given after full payment is received.

The purpose of these inducements is to encourage solar power generation and in doing so reduce demand for power from non-renewable sources. This is in keeping with various mandates state governments have to reduce their environmental footprint and cut carbon emissions.

How do you research solar energy incentives and rebates for your city?

There are several ways for homeowners interested in solar to find out incentives and rebates they can qualify for:

1. Search by state

You can check all the applicable solar incentives and rebates for a particular state on the ‘Find solar incentives by state’ page.

2. Search by utility

Want information about a specific utility? Our sister site SolarReviews has a large database of information for each of the major electric utilities in America. Read ‘going solar with your utility’ to find key facts and figures about your utility’s policies relating to residential solar; you can also use the utility-specific solar calculator for information tailored to your home.

3. Use the solar incentives calculator

Our online solar calculator is updated monthly with all incentives and rebates offered by federal, state and county administrations as well as utility companies. Just pop in your zip code below and answer some easy questions from the options provided and hey presto! you will be shown all the incentives and rebates available in your area.

4. Request a quote

On our sister site SolarReviews you can check consumer reviews of solar installer as well as request free, no-obligation quotes from qualified companies. A professional installer working in your area will have lots of experience applying for local rebates and incentives as well as necessary permits and permissions. They would be happy to talk to your about your needs and preferences and make recommendations accordingly.

5. Check with your municipality

You can talk to your local municipal office to determine if there are property tax credits that solar installations qualify for, and whether sales tax is payable on solar energy purchases in your region.

What states offer the best rebates and incentives?

It can be difficult to make an exact comparison as states incentives are structured differently, but New York state ranks as one of the top states. In addition to the federal solar tax credit—which is available across the U.S.—homeowners in NY can also qualify for:

• Net metering, which enables you to sell excess power back to the grid after using what you need for your own purposes.
• New York’s Residential Solar State Tax Credit valued at 25% of the system cost (up to $5000). This works much like the federal tax credit; if your tax liability is not large enough the first year, you can roll over the extra credit to the next tax year.
• Sales tax exemptions, valued at 100% of the sales tax on the system.

Other states with high levels of incentives and rebates include:

• Arizona
• California
• Colorado
• Connecticut
• Maryland*
• Massachusetts*
• New Hampshire
• New Jersey*
• New York
• Pennsylvania*
• Rhode Island
• Vermont

States marked with an * are among those that offer Solar Residential Energy Credits (SRECs), which can be sold for cash. In New Jersey, for instance, you can earn $1000-$1500 each year with the SRECs generated by a typical home solar system.

Do you need to work with a professional installer?

Hiring a professional solar energy installer is essential for claiming the benefits of available incentives and rebates. Most local, state and federal authorities require systems to conform to certain standards, and using a licensed installer assures this. Professional solar installers know which incentives will work for you and can help you apply for them successfully.

Other benefits of using a professional over DIY include knowledge of general and electrical safety protocols, availability of specialized equipment and training, warranty coverage and increased resale value. A poorly-installed solar energy system might not deliver the savings you want because it’s not optimized by an expert.

If you can’t pay the upfront cost of a solar system even with rebates and incentives, can you finance?

Yes—there are lots of options available to help you pay for solar panels. Solar installers typically offer a range of efficient financing options to help you manage the purchase and installation costs. Depending on the financing mechanism you choose, you should still be able to receive most of the incentives and rebates available to consumers who purchase their systems outright.

Some of the financing options you can access include:

• Third-party ownership (TPO) agreements like solar leases and purchase power agreements (PPAs). These aren’t recommended as allow the solar company to claim valuable incentives like the solar tax credit instead of the homeowner.
• Secured loans such as a HELOC or mortgage refinance. These tend to offer the lowest interest rates for homeowners.
• Unsecured loans. They often charge a large ‘origination fee’ that results in a higher overall system price. Energy efficiency loans are another option in this category.

What are the best financing programs?

The best deal for building owners is to arrange their own financing through options such as home equity lines of credit (HELOCs) or personal loan programs.

This allows you to get the solar installation for the same price as a cash buyer would pay. Even if you have to pay interest to your lender, in many cases the benefits of a solar electric system can result in energy savings that are higher than your monthly financing payments.

Finding the right financing can be challenging, but we’ve compiled a detailed list of banks, credit unions and government programs to help you find the best lender in your area.

What’s the average payback period on a solar installation?

The average payback period for residential solar installations in the U.S. is from 6 to 8 years.

The payback period a solar system you buy will be determined by the following factors.

• Initial system cost. Goes without saying, the lower, the better!
• System installation incentives and rebates. Any reductions in system cost or to your taxes will increase your savings and quicken payback
• System size. The bigger your system, the better. This will help you offset more of your expensive grid electricity usage.
• Your energy usage. Linked to the point above. The higher your household’s energy consumption, the greater the potential savings from solar panels.
• Electricity cost. Again, more expensive electricity means bigger savings from your solar panels output.
• Net metering (what the utility pays you for the power your panels produce). Where available, net metering — or high feed-in tariffs close to net metering — means your utility pays you a high price for your solar output; this really helps ot improve the payback period.
• Other incentives and rebates. In 9 states, your solar panel production will earn you SRECs that will put as much as $1,500 in your pocket every year.

To get specific calculations for what the payback period will be in your circumstances, and state, use our solar calculator to determine what your average payback period will be.

Is going solar worth it?

• You’ll know the answer to this after you conduct your fact-finding mission and determine:
• How much you are currently paying for energy bills
• What the ideal system is for your specific application, and how much it costs
• Which solar financing options, if any, you’ll want to use
• The incentives and rebates you are eligible for
• Benefits and savings to expect for your particular installation.

You can figure this all out by using Solar-Estimate’s easy online solar calculator, which asks you a few easy questions and gives you a ballpark estimate of total cost (before and after rebates and incentives) monthly savings versus monthly lease repayments, cashflow, and payback period.

Cash purchases will always offer the best returns, but for many homeowners lower/eliminated power bills will means savings from month one even after making the monthly loan repayment and residual utility bill.

Don’t wait to start enjoying the advantages of solar. Start your calculations by looking for the best deals available in your area today.