Financial Incentives for Solar Electric Systems

Enlarge Image Image Gallery "The Homeowner's Guide to Renewable Energy" discusses how to conserve energy and cut heating bills, and how to prepare for renewable energy options. Focusing on strategies for replacing specific fuels, the book then examines each practical energy option available to homeowners.

The following is an excerpt from "The Homeowner's Guide to Renewable Energy" by Dan Chiras (New Society, 2011). The excerpt is from Chapter 8: Solar Electricity - Powering Your Home with Solar Energy. 

Solar electric systems are a great source of clean, reliable electricity. Solar electricity can be stored in battery banks for use at night or on cloudy days. Or it can be “stored” on the electrical grid. Remember, even though initial costs may be high — from $5,000 to $40,000 or more, depending on the size and the type of system — the fuel (sunlight) is free, abundant, and clean, and it’s not under the control of some powerful multinational corporation. Financial incentives discussed (see below) and good net metering laws help make this venture more cost-effective, too.

Solar electric systems require minimal maintenance, too, unless batteries are included in the mix. And solar electric systems are a relatively environmentally benign source of energy. In addition, they operate quietly, unless you need considerable backup from a generator. Solar electric systems are modular, which means that you can install them incrementally. You can start small and expand as your finances permit. Solar electricity, like other technologies discussed in this book, provides energy independence. No matter whether you live in a busy city or a sleepy town or a remote rural area, solar electricity can meet your needs, and help replace waning supplies of oil and natural gas.

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Solar Electric System Incentives 

Solar electric systems can make sense in places where electrical costs are extremely high. In California, Hawaii, and Germany, for instance, conventionally produced electricity goes for premium prices.

Solar electric systems also often make economic sense when financial incentives are available to utility customers. Financial incentives come in several forms. The most common are federal tax credits and local utility rebates. Together, they can decrease the initial cost of a solar electricity system by about one half. US businesses can receive their federal tax credit almost immediately by filing for a grant from the US Treasury Department once the system is installed. There’s no need to wait for tax season. And businesses don’t even need to have a tax liability to qualify for a tax credit.

US businesses can benefit from an additional economic incentive: accelerated depreciation on federal income tax. This allows businesses to depreciate the cost of a solar electricity system in five year’s time, which effectively reduces the initial cost of the system by approximately 30 percent, depending on the business’s tax bracket.