Photo courtesy of ECG Solar, Cedar Rapids, IA
Investing in rooftop solar panels and battery storage can feel like a big financial commitment. Thankfully, there are plenty of incentives that can significantly reduce, and sometimes almost eliminate, the costs of installing solar and batteries. You can also get financial rewards for the clean energy your system generates.
Here's a closer look at the range of incentives offered, what they mean for homeowners, and how much they could save you on your solar-plus-storage system.
Federal incentives
Investment Tax Credit (ITC)
One of the most generous incentives available to homeowners planning to install solar and battery storage is the federal ITC. Available to any homeowner across the country, the ITC can be used for solar panels, battery storage, or a solar-plus-storage system.
Under the ITC, homeowners can deduct as much as 30% of the total cost of solar and/or batteries on their federal taxes. There is no income limit and no cap on the value. While in previous years batteries had to be paired with solar to be eligible, starting in January 2023 the ITC also now applies to standalone batteries of 3 kilowatt-hours or more.
If you don't have sufficient tax liability to claim the full ITC amount in one year, you can roll over the remaining credit to future years as long as the ITC is in effect. In 2033, the ITC will drop from 30% to 26%.
State incentives
State tax credits
Some states offer their own tax credits that work in much the same way as the ITC, but on your state tax liability. The rates vary, but these state tax credits don’t reduce the value of the federal ITC. You can combine both incentives to enjoy even larger savings on your new solar and/or battery system.
The Database of State Incentives for Renewables & Efficiency (DSIRE) is a great place to start if you’re looking for the tax credits available in your state. Below are some examples of state tax credit plans:
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Arizona: Under the Residential Arizona Solar Tax Credit program, the state reimburses homeowners 25% of the cost of solar panels from personal income tax, up to $1,000.
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Maryland: Maryland taxpayers can claim up to 30% of the cost of an energy storage system as credit toward state income taxes, capped at $5,000.
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Massachusetts: Homeowners in Massachusetts can receive a credit of 15% for solar installations up to a maximum of $1,000.
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New Mexico: New Mexico offers taxpayers a 10% credit toward solar installation costs, up to a generous $6,000.
Rebates
Some local governments, utilities, and even solar companies offer rebates to homeowners for installing solar panels and batteries. Unlike tax credits, rebates are usually a check paid upfront to the homeowner or the installer, who then charges less for installation.
Rebates are often calculated based on the size of your system. These rebates tend to be local, so eligibility depends on where you live. A reputable local installer should have deep knowledge of all the incentives available to you, and DSIRE can help you get a sense of where you may be eligible.
Some utilities offer novel incentive programs for customers using solar batteries as a way to explore the feasibility of incorporating more energy storage on the grid. For example, bring your own battery programs allow utilities to use your battery at certain times of year.
Below are some examples of popular state rebate plans:
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California: California's Self Generation Incentive Program (SGIP) offers dollar-per-kilowatt rebates to homeowners installing solar batteries.
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Colorado: While Colorado does not have a statewide rebate program, the majority of utilities and local organizations offer incentives. For example, EnergySmart Colorado provides rebates from $400 to $2,500 depending on where you live.
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Maryland: Maryland's Residential Clean Energy Rebate program enables residents to receive a rebate of $1,000 for a new solar panel system.
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Massachusetts: The Solar Massachusetts Renewable Target (SMART) program grants customers of Eversource, National Grid, and Unitil a bonus for each kilowatt-hour of electricity their solar panels produce. You can receive extra payment for a battery.
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New Hampshire: Homeowners with solar systems of 10 kilowatts or less can claim credits of 20 cents per watt up to $1,000, or 30% of their residential solar system.
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New York: The NY-Sun Megawatt Block program allows homeowners to claim a dollar-per-watt rebate for their solar energy systems.
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Rhode Island: Under Rhode Island's CommerceRI’s Renewable Energy Fund grant program, homeowners can receive 85 cents per watt when they install a new system, capped at $7,000. The average home needs between 17 and 21 solar panels, and the average size of a home solar panel is between 250 and 400 watts, so this could result in savings of at least $4,250.
Net metering
Your solar panels produce varying amounts of electricity depending on the season and the time of day. If you don't have a battery to store surplus electricity during times of high production, then those panels could go to waste. This is where net metering comes in.
Net metering enables you to send any surplus power your panels produce back to the grid in return for credits on your energy bill. When your panels don't produce enough electricity for your needs, you can use these credits rather than paying for more power. It’s a common incentive available in most states.
Take a look at DSIRE to determine whether your state has this incentive available.
Property tax exemptions
Solar panels can increase the value of your property. In fact, according to research from Zillow, homes with solar panels sell for 4.1% more than the national average. Some states offer property tax exemptions, which means any additional value your solar system adds to your home is waived for tax purposes. In other words, if the value of your home increases because of your solar panels, you will be taxed as if they weren't there. As many as 36 states offer property tax exemptions for solar installations.
Sales tax exemptions
To reduce the upfront costs of purchasing solar panels and equipment, 25 states offer sales tax exemptions. This may cover all or part of the equipment and installation costs. For example, in Minnesota, you don't have to pay any sales tax on your solar purchase, which means you can save nearly 7% of the costs.
Solar renewable energy certificates (SREC)
SRECs allow you to sell your solar power in a similar way to trading on a stock market. Under SREC programs, for every 1,000 kilowatt-hours of electricity your system produces, you will earn one SREC that you can sell to your utility. The price of SRECs varies widely, since it’s driven by demand, but in some regions prices can reach as high as $300 per SREC.
Given the average home solar installation is about 6 kilowatts and generates between 720 and 900 kilowatt-hours per month, you could earn between 8 and 10 SRECs per year, or at least $2,400. States that offer SRECs include New Jersey, Illinois, Pennsylvania, Maryland, Ohio, and Virginia.
Low-interest loans
In addition to cash incentives, some states also offer low-interest loans to homeowners planning to install solar and batteries. In Michigan for example, homeowners can receive a loan for energy-efficiency upgrades, including rooftop solar panels and batteries.
To benefit from any of these incentives, you need to fully own your solar-plus-storage system. Working with a reputable, trusted installer in your area will help ensure you don't miss out on any available financial benefits. Typically, an installer will include applicable incentives in their initial quote or proposal so you can see the savings before you make a decision.
Panasonic's network of trusted installers will make sure you have the highest-quality solar products, installed correctly, with all the available incentives. Find an installer near you.
