Cashing in on Solar
Last week, we shared the story of how one of our colleagues went solar. This week we’re here to dispel the “sticker shock” inherent to the process. Thanks to falling installation costs, strong solar incentives, and solar-friendly legislation in Virginia, going solar is a smarter investment than ever. The following is a list of incentives you need to know about.
This post, like last time, draws on the experience of a homeowner. Even if you don’t own the roof over your head, there are a multitude of ways to benefit from solar power.
Signing up for net metering
Through your utility in Virginia, you can get credits on your electricity bill for every extra kilowatt-hour (kWh) of solar electricity that you send back to the grid (for comparison’s sake, a typical panel can produce between 1-1.5 kWh on a sunny day). When you need more electricity than your solar panels are producing, you can use your net metering credits to make up the difference - helping you to balance out your electricity production and use. In other words, the excess electricity you create in the summer while on vacation can be used to power your home during the gray days of winter when you need energy most.
Net Metering Graphic Courtesy of EnergySage
Cashing in on the Investment Tax Credit (ITC)
Passed as part of a 2016 federal spending bill that extended the solar panel tax credit, the ITC, also known as the federal solar tax credit, enables you to deduct 26 percent of the cost of your solar equipment from your taxes. As long as you pay for your system upfront, you are eligible for this benefit. If you don’t have enough tax liability to claim the credit in its entirety in one year, remaining credits can be “rolled over” into future years as long as the tax credit is in effect (until 2022). Picture this: if your solar array costs $35 thousand (complete solar arrays in Virginia range from $20-50 thousand), you are eligible to deduct $9100 from your taxes, helping cut the cost of installing the system. Act quickly - by the end of 2020, the ITC will shrink to 22 percent!
Bolster your property value (without paying higher property taxes!)
While exact numbers vary from rooftop to rooftop and installation to installation, research indicates installing 5kW of solar panels adds nearly $30,000 to the retail value of a medium-sized home. What’s more, Virginia law allows any county, city, or town to exempt or partially exempt solar energy equipment from local property taxes (albeit not all cities and counties offer full or partial exemptions).
Take advantage of power purchase agreements (PPAs)
The recent advent of the PPA financing mechanism allows customers to lease solar energy systems, easing the financial burden of going solar (at the expense, however, of forgoing the aforementioned solar tax credit). In other words, PPAs empower residents to gain the benefits of solar without having to spend money upfront. Financing your solar array in monthly increments through a PPA - essentially replacing your usual monthly electricity bill paid to your utility - makes the entire endeavor more accessible. That is to say, you’re paying your solar company instead of your utility every month until you’ve paid off your array in its entirety. At that point, you’ll own all the electricity you create, instead of depending on utility rates that are subject to increase.
Challenges remain that restrict the renewable source of energy from unlocking its true, distributed potential for Virginians. Caps to net metering should be expanded, federal solar tax credits should be renewed and expanded after its expiration in 2022, all counties and cities in Virginia should offer property tax exemptions for solar equipment for its residents, and PPAs should expand eligibility for federal solar tax credits. Despite this, Powered by Facts is cognizant of the immense progress solar technology has made in efficiency and cost over the last half century, and the journey towards total solar freedom in Virginia continues. As it stands, solar arrays generate generous savings in electricity bills over their lifetime (typically 25-30 years). As utility rates increase, those electricity bill savings grow increasingly large with time. Solar is one of the few empowering investments you can make - in the long run, you’re saving a lot of money, gaining energy independence, and supporting efforts to stall climate change.