What Solar Panel Incentives Are Available in Pennsylvania?
June 2, 2021
Despite the “free solar panel” ads that frequent your Facebook feed and your mailbox, solar energy is not free or cheap. Going solar requires a large upfront investment.
But with the reduction in your electric bill and many other incentives, Pennsylvania homeowners and businesses are able to achieve short paybacks and high ROI’s on their solar energy investment.
A recent report from Paradise Energy Solutions showed that Pennsylvania homeowners are receiving an average payback of 14.89 yearswith an ROI of 7.42% on their solar investment. Pennsylvania businesses are paying for their solar system in 10 years or less. That’s 20+ years of free, clean electricity.
So, what incentives are available to help Pennsylvanians achieve these great paybacks?
The Solar Investment Tax Credit (ITC) offers solar owners a chance to recoup 26% of the installation cost in tax savings. This is a credit used against your owed federal taxes.
This credit is set to step down to 22% in 2023. In 2024, it will step down to 10% for businesses and go away completely for homeowners.
In addition to the federal tax credit, businesses can take advantage of accelerated depreciation. This allows all the federal depreciation to be used in year one.
These tax benefits return a significant amount of the installation cost soon after the solar system is energized.
Pennsylvania requires its utility companies to credit solar owners for any extra electricity that’s transferred to the grid. This means you’ll get a credit for each kilowatt-hour. The credit can then be used at night or other times when you use more electricity than your solar system is producing at that time.
Net Metering assures that no energy goes unused, and it eliminates the need for an onsite storage device (unless you’re looking for a backup energy source).
Solar Renewable Energy Credits (SRECs)
SRECs are icing on the cake for solar owners.
For every 1,000 kilowatt-hours produced by a solar system, the system owner receives 1 SREC. This certificate can then be registered and sold to generate additional income.
The price you will get for each SREC is driven by market demand. At the time of this article, SRECs in Pennsylvania were selling for $35 a credit.
Incentives like the tax credit, net metering, SRECs, and USDA grants all make 2021 a great time to invest in solar energy.