Rebates, tax credits, and incentives make solar more affordable, reducing the upfront cost of your system by 30% to sometimes more than 50%.
Solar incentives are always changing and usually have expiration dates. We make sure that our customers take full advantage of all the financial incentives available and maximize the return on their investment.
Solar power provides widespread social benefits by delivering positive environmental impacts, contributing to our nation’s energy independence, and creating thousands of jobs. In recognition of these benefits, the government and public utility companies are fostering solar for homeowners and businesses through various financial incentives.
Incentives available to homeowners
(1) Renewable Energy Investment Tax Credit:
This federal tax credit, sometimes referred to as the ITC, is available to every homeowner who installs solar. Solar customers can subtract 30% of the net cost of their solar system from the amount they owe in taxes. The net cost of the system includes all equipment, permitting, labor, and related roofing or electrical work after deduction of any cash rebates. Energy storage systems with a capacity of at least 3 kilowatt-hours are also eligible for the 30% ITC. If your tax liability isn’t large enough to absorb the entire tax credit the first year, the balance is carried over to following years. For residential solar, this credit will step down to 26% in 2033 and then to 22% in 2034. Unless extended by the federal government, the ITC will expire after 2034. To claim the credit, residential solar customers fill out IRS Form 5695: http://www.irs.gov/pub/irs-pdf/f5695.pdf
(2) Self-Generation Incentive Program (SGIP):
This rebate is made available by the California Public Utilities Commission to incentivize existing, new and emerging distributed energy resources. Self-generation refers to “distributed generation technologies installed on the customer’s side of the utility meter. The electricity generated by the system provides a portion or all of the customer’s electric load.” Home energy storage systems, more commonly called “home batteries” are qualifying technologies. For more information, consult: https://www.cpuc.ca.gov/sgip/
Incentives available to businesses
(1) Business Energy Investment Tax Credit (ITC):
This corporate tax credit allows business owners to subtract 30% of the net cost of a solar energy system from the amount their company owes in taxes. The net cost of the system is the total amount paid for the solar system, after deduction of any cash rebates, and includes all equipment, permitting, labor, and associated electrical and roofing work. The ITC’s current 30% rate is available until the end of 2033, after which it will step down to 22.5% in 2034, then to 15% in 2035. Unless extended by the federal government, the ITC will expire after 2035.
To claim this credit, business owners fill out IRS Form 3468: https://www.irs.gov/pub/irs-pdf/f3468.pdf
For more information, please visit: http://programs.dsireusa.org/system/program/detail/658
We recommend that you contact your accountant if you have any specific questions regarding claiming the Solar Investment Tax credit.
(2) Modified Accelerated Cost-Recovery System (MACRS):
This incentive enables commercial, industrial and agricultural entities to accelerate the depreciation of the solar system over a period of 5 years. This can reduce the system’s net cost by as much as 30%. In conjunction with the ITC, the project’s depreciable basis is reduced by one-half of the current ITC value. For example, if the ITC is still at 30%, the depreciable basis of the project would be 85%. If the system costs $100,000, then the depreciable basis would be $85,000 ($100,000-1/2*30%*$100,000).
For more information, go to: https://programs.dsireusa.org/system/program/detail/676
- Net Energy Metering (NEM):
Net metering allows you to use the grid to “store” any excess electricity you produce so you can use it at a later time or date. For example, your system typically will produce more electricity during summer months than you will need. When this happens, your electricity meter will run backwards and you will receive credits for the electricity you sent to the grid. At night you will use electricity supplied by the grid (utility company) and your meter will run forward, using the credits that you accumulated earlier. Since the new Net Energy Metering billing plan, NEM 3.0, took effect in April 2023, the amount of credit given in exchange for excess solar energy has significantly decreased. While this change has affected the pay back period of solar systems, Net Metering remains an available incentive. New solar customers now have different options to consider when going solar. You can read more about it in this blog post: https://brightensolarco.com/solar-in-a-nem-3-world/