Roof with solar panels

Residential Solar Panels: Weighing the Costs and Savings for Your Home

Did you know that solar energy offsets over seventy million metric tons of carbon dioxide every year? Besides the positive environmental impact, residential solar panels can also help you save a lot of money on your monthly energy bills. However, it’s important to remember that the initial installation costs will be a little costly.

If you’re interested in residential solar panels, then you may be wondering whether or not they’re worth the investment for your home. Luckily, we’ve organized this article to help you break down the costs and savings that come with installing a system. That way, you can be sure whether it’s the right decision for your home. Let’s get started!

How Much Do Residential Solar Panels Cost?

Before we go into the costs of residential solar panels, it’s important to decide whether they’re right for you or not. Luckily, we’ve organized this guide to help you decide. If you’re interested, then your next consideration is likely how much a system will set you back. The exact cost of solar panels depends on a variety of factors.

The most important consideration is how big you want your system to be. Some people simply want to offset their traditional electricity bill by a little every month. Others want to rely solely on solar for all of their energy needs. Ultimately, the size of your system will play a big factor in how much the initial investment costs.

However, it will also play a big factor in how much you save each month on bills. In California, the average cost of a solar system is between $12,900 to $17,400, or around $2.91 per Watt of energy. If this sounds like a lot, then don’t panic. There are a variety of ways you can save on these costs.

 

What is the Average Payback Period For Solar Energy?

A payback period refers to the amount of time it takes for the solar system to pay for itself. It does this through savings in monthly energy costs that would typically go toward your traditional electricity bill. The average payback period takes around seven years. However, ultimately, it depends on how you pay for your system.

The size of it also plays an important factor. However, the payback period isn’t the only amount of savings you’ll receive. In the next section we’ll go over some of the other incentives you can get.

 

Ways to Save On Your Residential Solar Panels

Many people are initially intimidated by the large price tag attached to most solar systems. However, it’s important to remember that you can cut this cost down through a variety of savings. These savings come in the form of tax incentives, rebates, and financing options. In this section, we’ll take a look at three of the popular ways you can save on solar panels in California.

 

Federal Tax Credit

The Federal Tax Credit for solar photovoltaics is one of the best ways to save on the final price of your new solar system. So how does it work? Essentially, a percentage of the price you paid for your solar panels will be taken out of your federal income taxes in the form of a tax credit. As of right now, you will be able to claim 26% credit on the price of your system.

So, let’s say you purchase a residential solar panel system for $15,000. 26% of $15,000 is $3,900. So, your final federal income tax would be reduced by $3,900. Talk about savings!

However, it’s important to take advantage of this tax credit before 2021. Why? Because in 2021 the percentage of tax credit will decrease to 22%. While you’ll still save money, it won’t be as much as the 26% incentive available in 2020.

 

California Solar Rebates

Many cities and counties in California offer what is known as the Home Energy Renovation Opportunity (HERO) Financing Program. This program is offered by the Property Assessed Clean Energy (PACE). It allows homeowners to finance their solar panels and pay them back in the form of property tax.

If you live in Rancho Mirage, then the Rancho Mirage Energy Authority will pay $500 to cover the cost of your permit fee. Finally, you can still take advantage of net metering in California.

This program allows you to take bill credits for any extra solar capacity your home generates that isn’t used. However, this net metering does have a capacity of 5%. This is based on the accumulated customer peak demand for the metering program.

$0 Upfront Leasing 

If the expensive price tag is still worrying you, then consider going with a company that offers $0 upfront leasing. When you go with this option, the leasing company technically owns the solar system. Instead of paying in one massive chunk, you pay as you go. This option is ideal for people who want solar but can’t afford the initial investment.

The only downside to this is it will take the longest amount of time to see an ROI (or, return on investment). If the return on investment is really important to you, then your best bet is with an upfront cash purchase.

 

Need Solar Panels in the Orange County Area? Contact Altair Solar

We hope this article helped you decide whether or not you want to install residential solar panels. Ultimately, if you’re willing to put in the money for a good system, then you’ll eventually see energy savings from it. But how do you find a good solar panel supplier that you can trust?

If you live in the Orange County area, then look no further than Altair Solar. Our engineers, manager, and installers have over thirty years of experience in the solar industry.

As such, we can provide you with a detailed analysis of your home so you get the best system for your needs. On top of that, you get a lifetime of monitoring from us, so you always know if a problem occurs. So what are you waiting for? Contact us today and schedule your free site visit. 

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Going Green: How to Finance Solar Panels in Los Angeles for Your Home

Are you struggling with massive utility bills? Wondering how you can keep your family afloat in an age of rising costs, and rising temperatures?

Well, you are not alone.

Energy costs and average temperatures are on the rise all over California. Many homeowners in Los Angeles are deciding to go green and make the smart switch to solar energy.

Solar power comes with tons of great benefits, both for the environment and for your wallet. Going solar is a great way to help the heating planet while saving thousands on energy bills in the long run. Plus, the cost of installing solar panels in Los Angeles is much lower than you might realize.

Want to make this affordable switch? This detailed breakdown makes it easy to start the process:

Understanding the Major Tax Incentives of Going Solar

One of the biggest advantages of getting solar panels in Southern California is the major tax credits that come with making the switch to solar.

If you install your system before the end of 2021, you could see massive savings on your federal and state taxes, thanks to The Solar Investment Tax Credit (ITC), created in 2006.

Solar Investment Tax Credits offer homeowners a dollar-for-dollar reduction in their federal and state income taxes. For example, when you claim a $1,000 federal tax credit, the amount you owe to the government is reduced by $1,000. Those are some major savings!

Also, homeowners could get tax rebates that cover many of the costs of solar panel installation. These include, but are not limited to, site preparation, assembly fees, inspection costs, any sales taxes, and the installation of the system itself. Claiming these tax credits could save you almost $5,000 on your solar panel system installation costs, on average.

For more questions about the ITC, download the U.S. Department of Energy’s Guide to Federal Tax Credit for Solar Photovoltaics.

Installing Solar Panels in Los Angeles With a One-Time Cash Payment

Purchasing your own solar panel system comes with big upfront costs. But, it also comes with the shortest Return on Investment (ROI), and the ability to own your very own system.

Owning your own solar panel system is the easiest purchasing option. It can mean you pay almost nothing for your monthly electrical costs. This could save your family thousands of dollars a year.

The average cost of installing a solar panel system completely out-of-pocket is around $18,000. But with that cost comes virtually free energy for life.

Even if you decide to go the cash payment route, it is still wise to hire professionals to install your home system. The dangers and costs of installing solar panels could be way too extreme for a DIY project.

$0 Upfront Solar Leasing

Paying out-of-pocket for a solar panel system can get expensive. If your family is unable to afford a one-time payment, there are still plenty of zero-down financing options. One of these, called a solar lease, can help to mitigate the cost of installing solar panels in Los Angeles.

With solar leasing, you enter into an agreement with a leasing company for the solar panel system. This means the company you lease from owns and maintains your system, in exchange for you paying a fixed monthly “rent.”

In this type of agreement, the leasing company would receive all tax cuts, rebates, and other solar incentives. But, your electrical costs could be anywhere from 10%-30% lower than a traditional energy bill. That means major savings for your family, plus free installation of your system.

Power Purchasing Agreements (PPAs)

Another zero-down solar panel system financing option is the Power Purchasing Agreement (PPA). This type of agreement is like a solar lease. The PPA provider owns and maintains your system, while you pay a low monthly cost.

The major difference between a PPA and solar lease is the way your monthly costs are calculated. With a PPA, you agree to pay a set per-kWh rate for the amount of energy generated by your system, instead of the fixed monthly “rent” you would pay with a solar lease.

Much like a solar lease, your PPA provider would receive all tax benefits. Still, you could see energy costs that are 20%-30% lower than a traditional energy bill. Again, that is with no upfront installation costs.

Learn more about the differences between solar leases vs. solar PPAs. This way you can determine the perfect fit for your family.

Financing Your System With a Solar Loan

The fourth option to pay for the costs of installing solar panels in Los Angeles is the solar loan. With a solar loan, you borrow money from a third-party lender to pay for your system installation. Then you pay back the loan plus interest in monthly installments.

If you use a solar loan to buy your solar panels, you become the sole owner of your system. Much like a cash purchase, this means you get all the tax benefits and incentives. This also brings your monthly energy costs down to almost nothing.

Plenty of solar loans come with a $0-down lending option, though monthly payment installments are still required. Your monthly payment amount is calculated based on the costs of your system, your interest rate, and the type of loan you choose.

Now Is the Time to Save

It is a critical moment, both for the planet and your pocketbook, to go green and make the switch to solar energy.

Luckily, installing solar panels in Los Angeles is easy and affordable. There are plenty of $0-down options. In every case, monthly payments can be up to 30% lower than your current utility bill.

Ready to get started?

Contact us to begin the process of making the switch today. The sooner you go solar, the sooner you will start seeing major savings. Your wallet, and the planet, will be glad you did.

5 Important Considerations When Shopping Orange County Solar Companies

California is the leading state in solar panel installation. In fact, did you know that over 20% of the energy produced in California is from solar panels?

With the solar panel installation numbers rising, more and more people are needing to get quotes and find Orange County solar companies to make the installation happen.

When you are choosing an Orange County solar company to install your solar panels, it is a big deal. Here is what you need to know when choosing a solar company to ensure that you are getting the best quality and service.

Here are the five most important considerations when you are shopping for Orange County Solar Companies.

1. Legal Documentation

If the company that you are considering using to install your solar panels is reputable, they will be able to give you a copy of their insurance and licenses if you request them.

By seeing the insurance and the licenses, you should feel safer in knowing that part of the cost of the roof and the service is protected and there is security coverage.

If they can not provide copies of the licensing and insurance documentation, that tells you that the company does not take your safety as seriously as they should.

2. Local Is Best

When you shop local it is a great way to ensure that you are getting service that is catered to you and your home. Local businesses are experienced in installing solar panels in your exact area.

The business will know local codes and regulations. You will feel like you can ask questions and better understand the installation process as well as what you can expect once you have the solar panels.

If you are looking in the Orange County area, you will also be able to ask neighbors or others around you who have installed solar panels before. You will be able to find more people who can give you personal testimony on the company’s past work.

When choosing the best solar company in Orange County, shopping local is always the best option.

3. Compare Warranties

When getting solar panels installed it is essential to look at warranty length.

If the solar system is not installed properly it can take years for the signs of damage to appear. If your warranty is short or does not give ample time for the signs of damage to appear, you could be looking at getting the damage fixed on your own dime.

Comparing warranties are a good way to ensure that you save yourself money on smaller fixes and normal wear and tear. The warranty will show you if the company will fix problems for a fee or for free.

If you are wondering what kind of maintenance and repairs your solar panels will require, you are not alone. That can be a big factor when choosing to install solar panels. This article walks you through everything you need to know.

The company that will be good for you is one that stands behind its work and truly believes that nothing will go wrong. They give you lengthy warranties because they feel like they can.

4. Reviews, Reviews, Reviews

Reading reviews is one of the best ways to get an honest gauge of the previous work that a company has done. But the way to weed through all the reviews is to look at how frequently the reviews are posted.

Seeing reviews posted over and over again, good or bad, means that the people have something to say about the company and they want to say it.

You can also see how recent the review was. If there are no reviews recently, that should be a red flag for you.

Remember, take a look at your local shops, compare what warranty the companies will give you, make sure they can show you their legal documentation, and read all the reviews you can!

Some other tips when looking at choosing a solar panel company are:

  • Conduct interviews with each company
  • Examine all of their past work
  • Get everything in writing
  • Ask for references

5. Do They Specialize In What You Need?

If you needed to get work done on your car, would you hire someone how works on cars but also specializes in something else? No probably not.

It is the same thing when finding a solar panel company. Look for a company that specializes in residential installation.

Or if you are a business, then look for someone who specializes in commercial installation.

The more specialized and knowledgeable the contractor is, the better your experience will be.

With California being such a hot spot for solar panel systems, there will be quite a few companies to sift through to find the best solar panel company in southern California.

This is a big decision and you should feel confident that you are getting the highest quality service and customer care.

Committing to The Best Orange County Solar Companies

At Altair, you know that you are getting the best in the Orange County solar companies.

Altair Solar is a hassle-free contractor. You will only receive the top of the line products, experienced staff, and free lifetime monitoring.

We arrive at your location and give you a detailed analysis and what we think would be the best solar system for you. We want all your needs to be met and we want you to maximize your savings.

Servicing Orange County and beyond, we are ready to safely install your new solar panel system.

Come and learn more not only about our services, but how you can save money and the environment today with solar panel installation.

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Are Solar Panels Right for You?

 

Are Solar Panels Right for You?

Rising energy costs are driving many homeowners to seriously consider installing solar panels on their home. This is especially true in Orange County and Los Angeles – and throughout most of California – where the sun shines most of the year and the costs of air conditioning is on the rise.

Perhaps you’re considering investing in a solar installation. Let’s take a few moments and answer some of the most common questions about solar panels, solar installation and solar energy to see if a solar system would be a good fit for you and your family.

How do solar systems work?

Usually solar panels are mounted on the roof, but they can be placed on walls or even in the yard. Your installer will analyze your home and consult with local building codes to determine the most effective installation that will maximize the power from the sun.

Energy is collected in the panel and is then converted to AC power that can be used by all the devices, fixtures, and appliances in your home. You have the choice to install an off-grid system utilizing batteries or connect into the utility grid or a blend of both. If you connect to the electricity grid and you do not use all the electricity you generate, you can sell it back to the electric company.

Will solar panels provide enough electricity to power my home?

Living in Orange County will provide you with enough sunlight, so that will not be a problem. Providing that the direction of your roof slope can maximize contact with the sun’s ray and the solar installation can meet all local ordinances, a solar system can always provide enough electricity. It may require installing extra panels, but that is easy to accommodate.

The challenge is providing electricity during off-peak times such as early morning, late evening and at night. If you do not want to pull electricity from the grid, you will need to include a battery backup that will store all excess energy generated during the day.

Your solar installer will examine your unique situation and advise the most practical solution to make sure you maximize the effectiveness of your solar panels.

How long does it take to install a solar panel system?

You can expect a solar company to complete the residential installation of your rooftop solar system in one to three days. Commercial installations can take substantially longer. Ground-mounted systems require additional preparation work. Before the actual installation can occur, however, your solar installer will make sure that all permits and approvals are in place.

How much does a solar power system cost?

Solar panel systems are much less expensive than they were a decade ago and they last over 20-years. The average cost of a solar panel installation in California ranges from $12,900 to $17,400. If you install your system before the end of 2021, you will be eligible for a tax credit that will subtract about 25% off the cost. The typical payback period is anywhere between four to six years.

There is no such thing as a one-size-fits-all solar panel system. Each system needs to be created to suit the location and needs of the homeowner. Your solar installer will assess your situation and give you several options to choose from. Just imagine the freedom of being able to lower the AC without any guilt or cost concerns. That dream can quickly become a reality.

Do you have any more questions? We would love to hear answer them. Give us a call or send us an email.

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3 Worst Solar Power Misconceptions

3 Worst Solar Power Misconceptions Solar panel installations have been around for decades, yet as an Orange County Solar contractor, it seems that the public continues to think of this as a “new” energy source. As advances are made with solar products, there exists the challenge of keeping up-to-date on the new developments – and especially the solar industry in Southern California. So, let’s take a few minutes and go over some of the most common misconceptions about solar panels and other solar products.

Solar Misconception #1: “Solar installation is expensive.”

By far, the biggest misconception about solar panel installation is the idea that it is way too expensive. According to a study completed by the Solar Energy Industries Association (SEIA), the cost of solar installation has fallen by more than 70% in the last decade! In fact, the average cost of a solar installation in California ranges from $12,900 to $17,400. From that price, you can subtract another 26% with the 2020 tax incentives (22% in 2021) lowering the average price after tax credits to only $11,200. Now consider your savings. Let’s say you choose the system that 100% powers your home. You can easily save $1,200 or more in electric bills. Over the 20-year life span of a solar panel, that will save you at least $24,000. If your system generates more electricity that you use, you can sell it back to the electric company which can generates additional income and meanwhile you can be proud to do your part to help reduce our carbon dependence and save planet earth.

Solar Misconception #2: “Solar energy is too new to be a reliable alternative energy source.”

The solar industry has been harnessing the power of the sun for over 50 years. Like any progressive industry, there has been new innovations that have created more efficient collection methods – but that only shows that the solar industry is moving forward as an even more reliable energy source.

Solar Misconception #3: “You need a room full of batteries to power a house with solar.”

Many homeowners believe that batteries are an essential solar system component, but that is not true. While there are advantages to having a solar batter backup system, it is not a requirement. If using a battery-free system, you will need to be connected to the electrical grid to access power when the solar panels are not at full capacity. This includes peak activity times such as early mornings and evenings and any activities after dark. This is called a grid-tied system. Excess electricity generated during non-peak off hours (such as during the day when the lights are off and you’re at work) are offset by sending unused solar power back into the grid. If you live in a net energy metering state, such as California, then they will issue credits for the energy you supply to them which is then used to offset your electricity bill. If you have any additional questions or concerns about solar panel installation systems, please contact us. We would be happy to provide you with more information.

 
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How to Find a Solar Contractor in Orange County

How to Find a Solar Contractor in Orange County One of the fears that hold consumers back from installing a solar panel system is the fear of not hiring a good contractor. We understand that. And we want to help you to find the best Orange County solar contractor that is qualified and able to help you with your solar installation project from the start to the finish. The challenge is that there are many who claim to be the best solar installer in Orange County – and many do not find out the truth until it is too late. Here is some advice on how to find a qualified solar contractor in the Orange County area.

Find a Solar Contractor with a Solid Reputation and High Reviews

A qualified and skilled solar installer must have two critical components: extensive professional experience and positive client feedback. There are two ways to check out a solar contractor’s reputation. First, ask your friends or work associates that have solar panels who they used and how it went. You can also check online and read reviews. Here are a couple of

   

Make Sure Your Solar Installer is Qualified

Your solar contractor needs to be licensed – and it’s okay to ask to see that license. You can expect a solar contractor to be licensed in general contracting, electrical, home improvement and/or home performance contracting. A solar company should have at least one installer who is certified from the North American Board of Certified Energy Practitioners (NABCEP). They should have, at a minimum, general liability insurance and preferably be bonded. Give preference to companies who have been in business for many years. Before you choose a solar panel installation company, make sure to get quotes from a couple of installers. Check to see what kind of warranty is included and if they will help with obtaining any rebates, tax incentives or energy credits. If you follow these few tips, then you can be assured of getting the best solar panel installation company in all of Orange County, California.

 

How Do Solar Panels Work?

How Do Solar Panels Work? Solar panels harvest the power from the sun’s rays and convert that power into solar energy. But have you ever wondered, “How do solar panels really work?” or “How is solar energy created?” Let’s take a look at how solar panels create electricity.

How are solar panels made?

Solar panels are made up of photovoltaic cells that generate direct current (DC) through two layers of silicon. The photovoltaic cells are joined together in a metal frame or glass casing. Thin wiring attracts the DC current and directs it out of the solar panel.

How do Solar Panels Create Electricity?

Silicon, a nonmetallic semiconductor, is the main ingredient in a photovoltaic (PV) cell. As it soaks up sunlight, the light particles collide with the silicon atoms and knocks off their electrons. The movement of the electrons creates a flow of electric current. This is known as the photovoltaic effect. The thin wires capture this direct current and direct it to a solar inverter.

How do Solar Panels Work?

Let’s get even a little more specific and a little more technical about how solar panels convert solar power into electrical energy. A photovoltaic cell is an electrical sandwich. In the middle are two slices of different types of silicon. There is an N-type that is negatively charged and the P-type that is positively charged. The “bun” of the photovoltaic sandwich is made up of metal contacts that attract the free electrons. Then the whole sandwich is wrapped in glass. A ray of sun carries tiny photons. When a photon hits the PV cell hard enough it knocks off an electron off the silicon atom which is pushed up to the N-side and it leaves a hole which is drawn to the P-side. It is just like the opposing force that is created when you try to put the positive and negative ends of a magnet together. As the electron moves around the solar cell along the thin wires seeking a hole to move into, an electrical current is created. This movement creates an electrical circuit. 17 | September | 2015 | SiOWfa15: Science in Our World: Certainty ...

What is so great about solar panels is that there are no movable parts. There is no loss to the atoms or their electrons. So as long as the physical components of the sandwich remain intact, the system will work indefinitely.

How does a solar panel power my home?

Your home runs on AC or alternating current, but your solar panel generates DC or direct current. In order to convert the solar energy to a usable current, it must be directed to a solar inverter. If your home is connected to the electrical grid, then you would be using a grid-tie inverter. If your electrical panel produces more electricity than your home needs, you can send power back into the electrical grid and receive credits from your electrical company. If your panels are only producing a portion of the electricity your home needs, then the grid will make up the difference.

 
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5 Reasons To Shop For Solar In The Winter

Through the years, more people have been conscious about the impacts of their activities to the environment, prompting actions that will fuel sustainability in ways more than one. A perfect example of this would be the use of solar panels as a way of being more efficient in the consumption of energy. Through the latter, you can make use of renewable energy in order to power household appliances as opposed to the use of electricity. If you are thinking of shopping for solar panels, winter is just the right time to do it..

 

Be Ready By Summer

One of the reasons why you should shop for solar during the winter is because it will provide you with ample amount of time to be prepared and ready once the summer season kicks off. It is important to note that the entire process, from choosing a solar company to the completion of the installation, can take about three to six months. Therefore, if you start during winter, you can be sure that by summer you can start using your solar panels.

 

Take Advantage of Tax Credits

In order for the government to convince people to use solar panels in its goal of achieving energy efficiency, national and federal governments are providing tax incentives. Through these tax incentives, the cost of installing solar panels will be cheaper. Nonetheless, most solar companies get very busy in the summer time, so if you start shopping in the summer, you might not be able to install your system in time to claim the tax credit for that year.

 

Prices Will Be Cheaper

As it has been mentioned above, summer is a time wherein the demand for solar panels will be at its peak. Most homeowners only think about installing solar during the summer months. With the surge in the demand during such time of the year, you can also expect the prices to be higher. Therefore, winter is an attractive time to purchase solar because the prices will be more affordable. If you shop around, you will be able to find attractive deals that will be budget-friendly.

 

Installers Love Working During the Winter

Have you been on the top of the roof of your house during a hot summer day? If you have been, you will realize how it is better to be installing solar during winter. Installers will love working during such time of the year because of the cold weather.

 

Check out our blog on How To Look For a Solar Contractor in Orange County

 
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What Kind of Maintenance Do Solar Energy Panels Need?

What Kind of Maintenance Do Solar Energy Panels Need? Since the 1970s, solar panels have come a long way and made some pretty nice improvements. Roof-mounted solar panels are four times more energy efficient and are much more durable and better able to withstand harsh climates. The design of solar panels has improved by creating nearly seamless connections and easier roof mounting systems. Contrary to many people’s idea, solar panels are surprisingly low maintenance and come with warranties that can last for more than 20 years.

How Many Solar Panels Will I Need?

The size of your solar energy system will be in proportion to the amount of power you need on a daily basis. The number of panels you will need will also depend on the type of solar system you decide to install.

How Much will a Solar System Cost?

The installation of a solar system for a typical home will cost between $12,000 and $24,000 – but you will not pay all that out-of-pocket. There are government incentives and tax brakes that can reduce the cost by upwards of 30% (that is until 2021 when some of the programs end). We have seen solar installation prices slashed by almost 50% over the last decade and as demand increases and technology improves, we anticipate prices will continue to fall.

How Much Maintenance Will a Solar System Need?

Solar systems are designed to be extremely low maintenance and professionally installed systems have a life span of at least 30 years. The most common maintenance item is the battery. Solar batteries will need to be replaced every 5 to 15 years. That means that over the 30-year solar system lifetime, the batteries will need to be replaced 2 to 6 times. Batteries are impacted by temperature. Batteries in a freezing environment require more voltage to reach their maximum charge. Batteries in high heat (90F or higher) will take less of a charge. Thus, the best way to maximize power output and minimize maintenance costs is to provide a moderate and steady temperature. Also check with your installer to see if the battery is included in the solar system warranty. Like batteries, solar panels do not do very well with sudden extreme changes in temperature. If you live an area that has freakish weather, check with your solar contractor to see if they have more advanced systems to deal with the rapid temperature changes. If you live in an area with heavy snow, you will need to remove the snow that piles up on your roof – just like you would anyway. Careful attention needs to be given when removing the snow so that the panels are not damaged. Your solar contractor will either offer this service or can recommend someone to help you. Thus, maintenance of solar panels is really hardly an issue – no more thought than what you would give your roof system. While the initial installation cost may seem high, picture the freedom of 30-years of bill-free green-energy and with nearly no annual maintenance costs.

 
FTA: PTASP Deadline Extended to December 31, 2020 - Missouri Public Transit Association

Why You Need to Install Your Solar Panels Before 2023

FTA: PTASP Deadline Extended to December 31, 2020 - Missouri Public Transit Association

Why You Need to Install Your Solar Panels Before 2023

Converting our energy use to more sustainable and environmentally friendly energy sources is growing in strength and demand – both with homeowners and as a manner of national importance. While you may be considering the benefits of installing a solar system in your home in the future, there is a compelling reason why you will want to act now and get it installed before December 31, 2022.

There is a Federal Tax Credit Reduction in 2022

The Solar Investment Tax Credit (ITC) was created in 2006 to support the implementation of more solar energy use within the United States. It initially granted a 30% tax credit. In 2020, the ITC was reduced to 26% for both residential and commercial installations. The tax credit will be further reduced from 26% to only 22% in 2021.

The Residential Tax Credit Ends in 2022

The Solar Investment Tax Credit drops to 0% for residential installations in 2022. The commercial tax credit will be reduced to 10%. It doesn’t look like there is going to be another extension such as was granted in 2015.

What is the Solar Investment Tax Credit?

If a homeowner installs solar panels before the end of 2022, they are given a dollar-for-dollar reduction in their income taxes. For example, an average solar system costs around $18,000. If solar panels are installed in your home during 2020, you will be able to subtract $4,680 from your federal tax bill.

Who is Eligible to Claim the Solar Tax Credit?

Anyone who meets the federal qualifications is eligible to claim the ITC. Under the residential credit, you must be the property owner, a member of a condominium, or a tenant-stockholder in a cooperative housing corporation who directly contributed to the solar PV system and meet all the following criteria:

  • A solar photovoltaic (PV) system must be installed between January 1, 2006 and December 31, 2021.
  • It must be an “original installation” of new equipment, not used.
  • The solar panel system must be located at your primary or secondary residence within the United States.
  • The solar system can be purchased with cash or financing but it cannot be leased nor can any solar power be purchased by the homeowner from another solar system.

What Solar Installation Costs are Included in the Tax Credit?

Homeowners can calculate the tax credit off the material and installation costs of any solar PV panels or cells, storage devices, wiring, inverters and mounting equipment. Installation costs can include site preparation, assembly, permitting fees, inspection costs, developer fees and includes any sales taxes plus the actual installation.

If you will receive a rebate or a tax credit from your state, it will not affect your federal tax credit. (Your state credit will, however, reduce your state taxes which will increase your federal taxes. So, there is a small impact.)

If you will receive a rebate from your utility company for installing a solar system, the rebate is subtracted from the installation cost and the federal credit is calculated off the remainder. If your utility company agrees to purchase excess current from you or provides you with a cash incentive, this is considered as taxable income and it will not reduce your tax credit.

Do You Have More ITC Questions?

Download the Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics prepared by the U.S. Department of Energy.

If you want to save an average of $4,700 on your solar energy system installation, make sure you have it installed before December 31, 2022!