Financial Incentives

Net Metering

When you’re connected to the grid, the utility company keeps track of how much power your system produces vs. how much you use. When you produce more than your household can use, that power is diverted to the public utility system. At that point, your electric meter spins backwards, as you are credited, at retail rates, for the power you are supplying to the grid. When the sun goes down and you need the power, your system reverts to the grid and your meter spins forward as usual.

• As of December 2007, net metering is available in over 42 states and the District of Columbia.
• To qualify for net metering in some areas, your PV system must be under a certain size.
• Utility companies will credit your account for the power you generate, but will rarely pay you outright. Therefore, size your system carefully, so you don’t generate more energy than you actually need.

Federal Tax Credit

You can receive a tax credit worth 30% of the total cost of your PV system, capped at $2,000.

State Tax Credits, Subsidies, And Rebates

Depending on your state, you may be entitled to sales tax exemptions on the PV system purchase, a property tax exemption, and/or state personal income tax credits. Some states offer sizable utility company rebates, as well.

Buy-Down Loan Programs

These programs offer borrowers a lower initial interest rate. The rate increases during the first few years of the loan and then levels out.

Manufacturers’ Rebates

Dependent on the product you choose.

What It Costs

For those of you who like to do the math, the average American family living in a 2,000 sq. foot home uses about 10,000 kilowatt-hours per year. A PV system generates approximately 1,800 kilowatt-hours per kilowatt installed. The national average cost per kilowatt hour (installed) is between $7 and $10 per watt.

Your bottom line will depend on the state you live in and the cost of electricity on your grid. In general, the cost per kilowatt hour goes down as you increase the size of your system. Labor costs, however, remain fairly constant regardless of the size of the system.

Final Cost

Here’s the formula for purchase cost, not taking into account your future savings:

Final Cost = (Purchase price of installed system) – (Federal and State incentives) – (Manufacturer’s rebates) + or – (Retail cost of electricity purchased from or sold to the grid).

• $9000 – a single-kilowatt system will offset only a small fraction of your electric bill.
• $16,000 to $20,000 – 2-kilowatt system will meet nearly all the needs of an extremely energy-efficient home.
• $30,000 – 3-kilowatt system will generate part of an average household’s energy needs.
• $36,000 – 4-kilowatt system will generate most of an average household’s energy needs.
• $40,000+ – 5-kilowatt system will generate all the energy needs for an average household.

Warranties cover most systems for 25 years. If you plan to have batteries installed as well, that will add significantly to the value of the system, as well as to your cost. Well-maintained batteries last between 10 and 15 years.

How Much Will You Need To Save?

Again, it depends largely on where you live, how much you pay for electrifcity, and how much your utility company will pay you for your surplus energy. Some solar companies claim that the system will pay for itself in about 10 years, and will last 25 to 30 years. As far as resale of your home, the National Appraisers Association says that if your PV system decreases your energy costs by $500 annually, it can increase your home’s value by $5000.

Rental

If all this still sounds too pricey to you, there are plans in the works for renting PV equipment. You will sign a rental agreement with the company, pay a small down payment ($500), and they will install your PV system for you. Then, for the length of your rental agreement, you pay the solar energy company for every kilowatt hour of energy the system generates, based on local utility rates.