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By installing a solar electric system in your home or commercial property, you can take advantage of current Federal and State Incentive Programs.
There are several federal incentives offered to homeowners who may be interested in purchasing a PV System for their residence, including:
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Residential Solar and Fuel Cell Tax Credit:
An individual can receive a 30% federal tax credit (up to $2000) on the cost of the PV system and its installation. An additional 30% tax credit can be acquired through the purchase of a solar water heating system.
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Residential Energy Conservation Subsidy Exclusion (personal):
According to section 136 of the IRS Code, energy conservation subsidies provided by public utilities, either directly or indirectly, are nontaxable.
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Different Types of Government and Private Mortgage Options:
Mortgage programs are available for homeowners who can borrow against the value of their home to finance their home improvement/energy efficiency projects:
- Energy Efficient Mortgages
- Federal Housing Authority Energy Efficient Mortgages
- Department of Veterans Affairs Energy Efficient Mortgages
- ENERGY STAR (R) Energy Efficient Mortgages – Private lenders
- Conventional Energy Efficient Mortgages (Fannie Mae, Freddy Mac)
Business owners who incorporate a PV System also benefit, taking advantage of:
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Business Energy Tax Credit:
The federal Energy Policy Act of 2005 offers a 30% tax credit on all solar technology equipment installed from 1/1/2006 to 12/31/2008 (10% as of 1/1/2009).
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Modified Accelerated Cost-Recovery System (MACRS):
Under the MACRS, businesses can recover investments in certain property through depreciation deductions. For solar PV systems placed in service after 1986, the current MACRS property class is 5 years.
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Tax Deductions for Commercial Buildings:
Owners/designers of new or existing commercial buildings that meet ASHRAE standards can receive deductions from $.60 to $1.80 per square foot.
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Renewable Energy Production Incentive (REPI):
For the first 10-year period of production, qualifying energy generation facilities are eligible for annual incentive payments of 1.5¢ per kWh (indexed for inflation and based on the value of the dollar in 1993).
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USDA Renewable Energy Systems and Energy Efficiency Improvements Program:
Offers direct loans, loan guarantees, and grants to agricultural producers and rural small businesses for purchase of renewable energy systems and energy efficiency improvements. Between 2003 and 2007, the granted fund is $23 million per year. (The program expires at the end of 2007 and is in the process of renewal). The maximum grant award is 25% of eligible project costs - up to $500,000 for renewable energy projects and up to $250,000 for energy-efficiency improvements. Under the guaranteed loan option, funds up to 50% of eligible project costs (with a maximum project cost of $10 million) are available.
In January 2006, the California Public Utility Commission (CPUC) adopted the California Solar Initiative (CSI) Program which provides over $3.2 billion for 10 years of incentives for solar projects alone. The program is split into two parts:
As established in 2001, New Jersey boasts one of the most aggressive solar rebate and incentive programs in the U.S.
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New Jersey Board of Public Utilities:
New Jersey’s Renewable Portfolio Standard (RPS) requires each electricity supplier/provider serving retail customers in the state to include 22.5% (2.12% of this 22.5% must be from solar electricity) of renewable energy by 2021. SRECs (Solar Renewable Energy Certificates) are tradable via New Jersey’s online marketplace. The maximum price for an SREC is forecast to be approximately $300/MWh. In recent months, the SREC program has compensated system owners an average rate of about $200/MWh generated.
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Solar and Wind Energy Systems Exemption:
The program is directed by the New Jersey Department of Energy, Division of Energy Planning and Conservation. The state of New Jersey offers full exemption from the state’s 7% sales tax for all solar and wind energy equipments.
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New Jersey Clean Energy Rebate Program:
PV systems up to 1MW in capacity are eligible for state incentive rebates.
Public and Nonprofit Applicants
- $4.40 per watt for the first 10 kW of system capacity
- $3.45 per watt for the next 30 kW of system capacity
- $2.80 per watt for the next 60 kW of system capacity
- $2.60 per watt for the next 400 kW of system capacity
- $2.05 per watt for the next 200 kW of system capacity
Public and Nonprofit Applicants (residential, commercial and industrial)
- $3.80 per watt for the first 10 kW of system capacity
- $2.75 per watt for the next 30 kW of system capacity
- $2.50 per watt for the next 60 kW of system capacity
- $2.25 per watt for the next 400 kW of system capacity
- $2.00 per watt for the next 200 kW of system capacity
Note: Rebates for PV systems are currently not available for the private sector or for school projects. All new applicants are held in queue until new funding becomes available. It is anticipated that rebates for PV systems with a capacity of 10kW or less will continue in some form, while rebates for larger systems will be discontinued.
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