Not long ago, switching to solar used to be quite an expensive undertaking. This meant anyone who was eco-conscious enough to go solar, say a decade or so ago, had to shell out a substantial amount to get one installed in their facility. Not anymore. These days, you can install way more efficient and durable solar PV systems that too at a price lower than it was ten years ago. Times have changed and so have the efficiency, durability, and cost of solar panels. That said, solar panels aren't an overly cheap commodity; you'd still find the switch a little heavy on your pockets. The good news, however, is that these days, you have a host of incentives to alleviate the strain on your pockets and help you earn a good Return on Investment on your solar PV system.
But before delving into what's what, let's get one thing out of our way – how much you earn depends on a few key factors, including your location, the type of your PV system, the incentives your state government offers, etc. So, make sure you factor in these variables as you calculate your ROI.
With that in mind, let’s unravel the list one by one.
Tax-paying homeowners can breathe easy, for the Federal Solar Tax Credit is here to save your day. A.k.a., Solar Investment Tax Credit, this incentive works wonders for anyone looking to save a buck or two on their solar. How? Imagine you installed a solar PV system recently. Depending upon the cap set by the government, a part of your installation cost would be discounted from your federal income taxes the next time it is due. Presently, the solar tax is capped at a whopping 26%, but that is set to change post-2022. The credit would plummet down to 22% in 2023, before totally ceasing to exist by 2024. So, if ever there's a better time to make your switch to solar, make no mistake, it is now.
Installing solar isn't a costly affair anymore, thanks, in part, to a type of incentive called Rebates. Rebates are paid either as cashback when you install a solar PV system or given to you as a discount on the total cost of your installation. In most cases, it is the state government or utility companies that initiate rebates. The power to exercise rebates is handed over to the installers, who then transfer the benefits to their clients. In some cases, rebates are offered directly by the solar panel manufacturers themselves. Either way, they can effectively bring down the overall cost of your installation.
Utilities charging you a sum for the electricity that you consume is no new concept. But what about the other way around? What if, for a change, you can charge the utilities for the energy you produce and supply to the grid? No, this isn't the stuff of the dreams; this is what the concept of Net Metering is about! Suppose your solar PV system produces more electricity than you need. Notably, the surplus can be sent back to the grid, for which the respective utility is legally obliged to pay you. How? By compensating for the electricity that you draw from the grid when your energy needs soar, especially through the winters. Imagine how positively this will reflect on your electricity bills!
SREC is best understood against the backdrop of state regulations known as Renewable Portfolio Standards (RPS). Let's say you own a utility company operating under a jurisdiction that is within its right to exercise RPS. The law, in essence, dictates that a fraction of the electricity your company produces must come from a clean energy source. Now, consider this scenario: you don't have the necessary infrastructure to generate clean energy on your own and thus meet the requirements laid out by the government. What options do you have now? Well, in that case, you can go ahead and purchase an SERC, the possession of which will give you the formal claim over the solar energy generated by another party. This basically means you are paying off to take credit for the solar power that the other party produced.
Now, let’s reverse the role and see what this means to you if you find yourself on the other side of the fence i.e., in the shoes of the party selling the SREC. As per the regulations, you stand to earn an SREC for every 1MW of solar power you generate. Cash in on this, and voila, you got yourself a sparkling deal!
The existence of such incentives is clear proof that the government is determined to increase clean energy consumption within the country. For you, it means leveraging the fat cash cow that is solar while also basking in the gratification of having made an eco-conscious decision.