Going green means reducing energy consumption and environmental impact for most homeowners.
But have you ever thought about turning that into a way to save money? Considering solar energy for your home, there are quite a few ways for property owners to join in on the sustainable trend without breaking the bank.
This blog post will discuss ten popular methods of getting paid to go solar in 2023. From tax credits to leasing programs and renewable energy credits, discover the strategies you can use as a homeowner to make the switch – while potentially putting more money back into your pocket!
So if you’re interested in seeing how solar power could help you get financially rewarded while helping reduce your carbon footprint at the same time, keep reading!
Table of Contents
10 ways homeowners can get paid to go solar
As renewable energy gains traction worldwide, it’s becoming more accessible and attractive for homeowners to switch to solar power.
So let’s explore ten ways homeowners can get paid to go solar!
1. Federal tax credit
Are you considering going solar?
You’re lucky – the federal government offers a significant solar tax credit (also known as the investment tax credit, or ITC) to encourage homeowners and businesses to invest in renewable energy.
This credit covers 30% of your total solar installation costs and can even be spread over multiple years if necessary.
The investment tax credit (ITC) is a federal incentive that allows homeowners to receive 30% of the total cost of their solar installation back as part of their federal taxes.
This applies for newly installed or original systems located within the United States at either your primary residence or second home, provided you own the system and don’t lease it.
It’s important to note that if your total tax bill is less than what you’d receive from the tax credit, the remainder will carry over to the following year.
The investment tax credit covers various expenses related to installing and operating a solar energy system. These include but are not limited to the following:
- Cost of panels
- Labor costs for preparation and assembly
- Additional equipment such as wiring, inverters, and storage devices charged exclusively by PV panels
- Sales taxes on eligible expenses
Beginning in 2023, stand-alone energy storage devices will qualify for the 30% credit even if they aren’t directly connected to a solar panel system.
This means investing in renewable energy is much more cost-effective and can significantly offset initial setup costs associated with going solar.
Claiming this incentive is simple – file IRS Form 5695 as part of your annual federal return and receive up to $6,000 back on your taxes, depending on how much you spend on your installation.
Please consult with your solar provider. They should have all relevant documentation and instructions for claiming this ITC as part of your overall installation expense report. Here are some helpful steps along the way:
- Download IRS Form 5695 as part of your return
- Enter project costs from your solar contract into Part I
- Calculate any tax liability limitations using Residential Energy Efficient Property Credit Limit Worksheet
- Enter any figure from line 15 onto Schedule 3 (Form 1040), line 5
We strongly recommend consulting with a qualified tax professional when filing for this incentive so that you can ensure that all credits are correctly claimed, including any state credits or exemptions available in your area.
Additionally, remember that any portion of the credit that goes beyond what you owe in taxes will roll over into future years until it is used up ultimately!
2. State tax credits
State Tax Credits provide an effective way for homeowners to reduce their solar energy costs and can be an excellent incentive for investing in solar.
The most widely used tax credit is the federal Investment Tax Credit (ITC), which allows homeowners to deduct 30% of their taxes for solar equipment and installation costs. This incentive applies nationwide and does not vary by state.
In addition to the ITC, around ten states offer additional tax credits to incentivize people to install solar systems.
The incentive of solar energy credits for these ten states is unprecedented, with discounts ranging from 10 to 40% and as much as $5,000.
You can find the best tax incentives in New York, Iowa, Connecticut, Maryland, Rhode Island, New Mexico, Colorado, Massachusetts, New Hampshire, and last but not least – New Jersey!
For example, New York residents can access additional incentives beyond the ITC, such as NY-Sun Megawatt Block Incentive – a dollars-per-watt ($/W) cash rebate available to residential and commercial systems.
Homeowners can capitalize on the Solar Energy System Equipment Credit, allowing a deduction of up to $5,000 or 25% of total solar energy expenses from their taxes (whichever is lower).
Due to this generous Sales Tax Exemption, buyers do not pay the state’s 4% sales tax on solar equipment.
And let’s not forget about Net Metering Program, which permits any extra power generated by your system to be fed back into the grid in exchange for credits on utility bills!
3. Short-term savings
Transitioning to solar is a fantastic way to save money in the present while also getting paid back over time.
When you add solar panels onto your roof, you can benefit from an immediate cost reduction since most homeowners opt for a no upfront fee loan, effectively making their monthly payments cheaper than what they would pay with traditional energy sources.
Additionally, solar panels are almost sure to pay off in the long run as they provide a long-term investment with fixed interest rates and fixed monthly payments that never change during the life of the loan.
The total savings from solar panels depends on a few factors, such as the price of energy and the cost of installing solar panels.
Systems are designed to meet your home’s average annual power usage, accounting for natural fluctuations in electricity use throughout the year.
This helps you save money from the start and ensures you’re getting an honest look at how much you can save going solar.
According to the Department of Energy, the average homeowner can save between 10-50% on their energy bill in the short term by going solar.
In some cases, this could amount to up to $720 per year in savings! Protection may be even more excellent depending on the size of your system and location.
4. Long-term savings
Investing in a system that produces energy at a fixed cost can lock in low energy rates for decades and even own an asset with valuable free electricity.
For example, solar systems typically pay themselves off within 5-7 years and generate a return on investment (ROI) of 20-30%, depending on location, size, and type of installation.
After the system is paid off, it generates electricity for free. This free electricity adds up over time and could result in over $50,000 of savings over twenty years – much higher than what PG&E can offer with their increasing prices every year.
5. Net energy metering (NEM)
Net energy metering (NEM) offers an excellent incentive for homeowners looking to switch to solar energy.
NEM allows you to get paid for any surplus energy generated and sent back to the utility company – but how does it work?
In short, you can receive credit for any extra energy produced from your solar system. Utility companies won’t cut a check for this power but will subtract the credits from your power bills. The difference is carried over to the next month if you have more credit than consumption in a billing cycle.
Additionally, depending on your power company’s policy, credits may roll over indefinitely or reset after each year.
This makes it possible to reduce annual electricity costs to zero through time-of-use strategies: accumulate credits during sunny summer months and use them during winter when solar generation decreases.
It’s essential not to squeeze your solar array over – if you produce more than necessary, you cannot charge your utility company each month.
Instead, any excess credit is rolled over until it expires – so make sure to pick an expiration date after winter has ended if given the option!
This will ensure that all the renewable energy credits accumulated in the summertime are used up before expiration.
6. Home equity increase
Solar energy is a rapidly growing industry, and for a good reason.
Not only does it provide clean energy and reduce greenhouse gas emissions, but it can also be financially beneficial to homeowners.
Specifically, investing in solar PV equipment has significantly increased home equity values.
According to a study by the Lawrence Science Lab, solar PV systems on a home consistently increased the value during home sales at an average of $4.00/watt.
When you purchase solar PV equipment, you can get back 80%-88% of your project cost with an equity increase (without applying for the tax credit). Plus, your house will likely sell faster too.
The U.S. Department of Energy’s Lawrence Berkeley Laboratory also conducted a study in conjunction with other universities and institutions, which showed that home buyers are willing to pay around $10,000 more for a solar-powered home.
If you’re considering investing in solar PV equipment for your home, this is worth considering. You’ll be making a sound investment and increasing your return on investment and the value of your property!
When looking into installing a PV system at your house or business facility, it’s crucial to factor in all the benefits you’ll receive from going “green,” such as reduced greenhouse gas emissions, clean energy production, net metering credits from utilities, increased home equity value etc. All significant incentives for changing to renewable energy sources!
So take advantage of this excellent opportunity to make more innovative investments while helping save our planet!
7. Solar renewable energy certificates (SRECs)
For homeowners and business owners in certain states, investing in a solar energy system can do more than lower their electricity costs.
With the rise of renewable portfolio standards (RPS) and clean energy standards (CES), they may be eligible to receive additional income through Solar Renewable Energy Certificates (SRECs).
Solar Renewable Energy Certificates allow public utilities to count the clean energy generated from your renewable energy system towards their own goals.
Currently, 31 states and the District of Columbia have a renewable portfolio or clean energy standards that require a specified percentage of electricity utility sales from renewable resources.
In comparison, seven more states have non-binding renewable portfolio goals. This incentivizes governments to reward residents who help the state reach its goal by providing incentives like cash rewards for generating clean energy.
For example, Oregon has one of the most ambitious RPS goals: To hit 100% renewable energy by 2040.5 For each megawatt-hour (or 1,000 kWh) of clean energy generated, public utilities will purchase these certificates from you in cash.
Though complex to understand, SRECs offer tremendous upside in the form of additional income for residential and community solar customers who generate enough clean energy through their systems.
Eligibility will vary depending on your location; however, any reputable solar company can help you understand the process for earning and selling your renewable energy certificates.
The amount you can earn through SRECs depends upon market prices when you sell them.
However, homeowners with 10 kW systems could make around $800 – $1,200 every year for every 1000 kWh they produce.
It’s important to note that some states also require a mediator such as PJM Environmental Information Services (EIS) or New Jersey Clean Energy Exchange (NJCEE) between yourself and the utility company to trade your SRECs for money — but this can increase the value of your certificates too.
Therefore, it is essential not only to consider what types of savings you could receive from going solar today but also put together a long-term plan so that everything works together – including factoring in possible future increases in SREC values – even if you won’t realize those increases until later down the line.
A good solar installer should help you create a tailored plan that factors all possible government incentives into an evaluation when deciding whether investing in a residential rooftop panel is suitable for you and your home’s unique needs over time.
8. Property tax exemptions
To start, it’s essential to understand what property tax exemptions are.
These are incentives from state and local governments that help offset the cost of installing solar energy systems.
Specifically, they exempt homeowners from paying additional home taxes after adding a renewable energy system.
Currently, 36 states offer some form of property tax exemption for renewable energy systems. For example, California has the “Active Solar Energy System Property Tax Exclusion,” which ensures that adding solar panels won’t raise homeowners’ property taxes.
Other states have different forms of incentives as well.
In New York, residential solar PV systems may be eligible for an exemption on all or part of the value added by their solar installation.
In Massachusetts, certain small-scale photovoltaic installations are not subject to local real estate taxes or excise taxes.
These varying incentives make it even more important for potential investors to do research before deciding on a particular incentive program and system size.
In addition, understanding how your state’s laws apply is essential when determining whether investing in a solar energy system is financially viable in your area.
9. Solar rebates
Solar rebates are financial incentives given by states, local governments, and even utility and solar companies to encourage people to switch from traditional energy sources to renewable energy sources like solar power.
The rebate amount will vary depending on the provider, but it could range anywhere from 15-20% of the cost of new equipment installation.
Sometimes these rebates are given directly to the resident, and other times they’re given directly to the contractor, who then lowers their installation fee for the customer.
It’s important to note that only some states or municipalities offer these types of incentives – so be sure to check your local area before committing any funds towards a new system.
Additionally, some utilities provide additional rebates when customers add a battery storage system or other energy efficiency upgrades — California utility PG&E, for example, provides up to 100% extra savings if you live in an area with frequent power outages.
The first step is to check with your local government or utility provider about available programs and see what types of rebates may be available near you.
Many providers have detailed guides online that explain all aspects of their program (eligibility requirements, the application process, expected timeframes, etc.).
Additionally, your installer should be able to tell you more about any potential savings available through specific programs – it pays off in dollars and cents!
Furthermore, some providers may have additional incentives beyond just solar rebates – such as free installation/equipment or reduced rates for low-income households or customers who purchase multiple systems at once. Be sure to ask around!
10. Sales tax exemptions
A solar sales tax exemption is a common financial incentive designated by state governments.
According to the Solar Energy Industries Association, there are currently 25 states that offer this incentive. It is essentially a waiver on taxes levied on consumer purchases of solar panels, batteries, and other solar equipment – which can be considerable depending on the state’s tax rate.
For example, if your state usually has a sales tax of 6% and you purchase a $16,000 solar panel system, you would end up paying an additional $960 ($16,000 + $960 = $16,960).
With a solar sales tax exemption in place, however, you will only pay the original purchase price – meaning you save those additional costs!
It’s easy to see how these incentives can help make investing in solar energy more affordable—especially for those who live in states with higher than average sales taxes.
Check out this video by JerryRigEverything:
Here he tells us about his experience after one year of going solar and answers so many questions that you could be asking right now.
How solar works
In the past decade, a growing number of Americans have been turning to solar energy as a way to power their homes.
Thanks to advancements in technology and research from the Solar Energy Technologies Office (SETO), costs for solar installation have decreased significantly, making it an increasingly viable option for homeowners.
If you’re considering adding a solar system to your home, you’ll want to understand how these systems work.
While two leading technologies are used – photovoltaic (PV) panels and concentrating solar power (CSP) systems – they need more clarity.
Photovoltaic Panels
Photovoltaic panels, more commonly referred to as PV panels, absorb photons from the sunlight, which create an electric field across their internal layers, causing electricity to flow.
You can then use this energy to power your home or store it in batteries for later use.
PV panels are typically found on rooftops or fields and come in various sizes depending on your needs and budget.
Concentrating Solar Power
Mirrors are used in Concentrating Solar Power (CSP) plants to reflect and concentrate the sun’s rays onto receivers that absorb solar energy and turn it into heat, consequently generating electricity.
This type of system is generally more significant than what would be needed for residential purposes.
However, it can still provide efficient power at an industrial level, especially for locations with prolonged sunlight exposure, such as deserts or mountain regions.
Regardless of which type of system you choose, having access to renewable energy sources like solar is an essential step towards reducing your carbon footprint while saving on long-term energy costs.
With the help of SETO’s research investments, more people than ever before will now have access to the benefits that this technology has to offer!
How much power can I generate with solar?
The National Renewable Energy Laboratory (NREL) has developed a tool called PVWatts, which you can use to calculate the energy production and cost of grid-connected PV energy systems for any address in the world.
This is an excellent way to develop an estimate of potential photovoltaic (PV) installations, as well as compare their cost to standard utility bills.
In addition, PVWatts uses an average system size of 7.15 kilowatts direct-current within a 3-11 kilowatt range, making it enough power for an average home in Austin, Texas.
It’s important to note that this is merely an estimate – working directly with a solar installer or professional can help you get an even more accurate assessment tailored to your specific needs.
When considering solar installation for your home, you should consider several other factors besides wattage, including the type of panels and available sunlight in your area.
For example, some areas have more hours of sun or are better suited for certain types of panels than others.
Therefore it’s wise to make sure you understand your options before making a commitment and choosing one particular panel type or mounting system over another – as these factors will determine your setup’s overall efficiency and output.
If you’re considering going solar, we recommend you see this video before taking the step:
