Solar Energy: How to Find the Best Incentives by State

It’s now possible to harness the power of the sun without fear of burning down your house. Thanks to innovative companies like SolarCity, making solar energy more accessible and affordable. As a result, more people are opting to go solar. In fact, according to the Solar Industry Association, over 250,000 American residential solar installations were completed in Q4 of 2019.

With more people going solar, it’s increasingly important to look for ways to make this energy source more available and affordable. One way is to look into state government incentives. These incentives vary by state, but can provide significant perks for those who qualify. In this article, we’ll discuss the various state and federal government incentives that are available for solar energy, as well as some other valuable information about going solar in general.

Solar Incentives By State

To begin, let’s take a quick look at state-by-state details on solar incentives. This way, you can determine which states may provide valuable perks to you as an installer (or buyer). Remember: state government incentives can apply for both residential and commercial projects.

To begin, head over to Google and enter “solar incentives by state” into the search bar. You’ll see a map that looks like this:

Google Search Result

As you can see, there are various states where the savings you make from solar energy outweight the cost of installation, meaning that going solar could actually end up being more expensive than you’d have to otherwise in those particular locations. (Keep in mind: this is dependent on a lot of factors, like the size of your roof and how much electricity you use.)

The key takeaway from this map is that, in general, the farther you live from the East Coast, the more expensive it will be to install solar compared to what it would cost you in closer proximity to the Sun (highlighted in yellow).

Federally Funded Solar Incentives

Even if you live in a state where the cost of solar energy doesn’t qualify for any state incentives, you might still be able to access valuable information and perks through one of the federal government’s many initiatives devoted to encouraging solar energy deployment. (Did you know there is a whole section of the government website dedicated to helping you compare solar providers?) Here are the details.

Sunset Provision

The first and one of the most valuable perks offered by the federal government is the Sunset Provision. This is an incentive available to homeowners with roofs, manufactured homes, and/or businesses. You may qualify if you meet the following criteria:

  • You own or have owned your home or business for more than 15 years.
  • Your home or business was built before 1995.
  • Your home or business meets the residential energy efficiency standards set by the federal government.

If you qualify for the Sunset Provision, you’ll receive an IRS Form JV (Joint Venture) that you can use to enter into a profit-sharing agreement with one of the following companies:

  • SolarCity
  • SunPower
  • Suntech
  • Enphase Energy

By entering into a profit-sharing agreement with one of these companies, you’ll receive an upfront payment of $5,000 (plus an additional $5,000 each month for 12 months) for the company’s installation of a solar energy system. In some states, you may also qualify for a grant or rebate as part of the Sunset Provision. These grants and rebates can range from $500 to $5,000, and potentially even more. (Depending on your state, of course.)

Power Purchase Agreement (PPA)

Another valuable perk offered by the federal government is the Power Purchase Agreement (PPA). This is a type of contract where you agree to buy electricity produced by a solar power system at a specified price that is usually below what the electricity would otherwise cost you.

If you’re interested in going solar with a power purchase agreement, the first thing you’ll need to do is contact your local power company and see what rates they offer.

Once you have that information, you can start looking for offers from various solar providers. To find all of the PPAs available in your area, you can use this resource from the American Council On Energy (ACE) in Nevada or this one from the North Carolina Energy Office. (If you live in North Carolina, you may also want to check out this website which provides valuable information about solar energy in your state.)

Once you have a power purchase agreement in place with one of the companies mentioned above, you’ll receive an IRS Form 1096 at the end of the year. This form will show you how much money you made from the sale of power (minus any paid-in-advance fees from the solar company). You’ll also need to include an extra form 1096 in order to claim this part of your federal income.

Energy Efficiency/Solar Grants

If you’re interested in going solar and want to know more about federal energy efficiency and grants, visit the following websites. They’ll provide you with all the information you need concerning government funding and incentives for going solar in your area:

  • EcoFriendlyPower
  • EcofriendlyEnergy
  • EnergyEfficientHome
  • CeresUSA
  • SolarCity
  • SunPower
  • Suntech

If you decide to go the EcoFriendly route, you’ll need to determine how much energy you use (kWh) and enter that amount into the equation. For instance, if you use 1,500 kWh of energy per month, you’ll need to ensure that you meet the 500 kWh threshold in order to receive any benefits from this federal program. (Note: if you use less than 500 kWh, you may still be able to access other valuable perks like the one devoted to homeowners with solar energy systems.)

Where Can I Go For Financing?

One of the most important things to consider when planning to install a solar energy system is where you’ll get the financing. It’s not unusual for homeowners to turn to the “big box” stores like Home Depot and Lowes for financing since they have a range of loans and incentives available, and can get you the financing you need in a matter of minutes. (Did you know that you can also get Solar Installer Loans from the Small Business Administration?) When choosing a solar provider, make sure they offer the financing you need and want in your area.

If you need help choosing a solar provider, contact the local Better Business Bureau and see if there are any complaints filed against the company. (Checking reviews and testimonials can also help determine how well a company is functioning, and whether or not they are a good fit for your needs.) Ultimately, your best bet is to contact the company directly and get all the necessary information in person.

Home Energy Rating

Another important factor to consider when planning a solar energy system is the energy rating of your home or business. This will have a big impact on how much electricity you use (and how much it costs you). The higher the energy rating, the more energy you’ll use (and the higher the cost). The American Council On Energy (ACE) has a whole section of their website devoted to explaining the different types of energy ratings and how they impact your day-to-day life.

If your house or business is older and poorly built, the energy rating of your home or business may be low. In these situations, it would be a good idea to upgrade the construction and improve the energy rating so you can take advantage of the incentives and financial help that are available for solar energy.

PV (Photovoltaic) / CSP (Concentrated Solar Power)

There are also two other options for going solar other than the ones discussed above. These are PV (photovoltaic) and CSP (concentrated solar power).

PV is what is commonly known as “solar power.” This is where you have solar panels (made of either silicon or glass) directly on your roof. The power of the panels is converted into electricity through a process called “convection” or “absorption.” Once the electricity is produced, it is distributed throughout your region via a grid operated by a public authority or cooperative.

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