Switching to solar power offers a host of financial advantages. There’s the electric bill that is negligible to non-existent each month. On average, solar converts have reported their new solar installations pay for themselves in about eight years. The solar power also boosts home values an additional 4.1 percent according to Zillow. The immediate financial advantage to enjoy when you convert is explained in two words – solar incentives.
Found Money in Solar Incentives
Solar incentives are available on a federal level, as a federal tax credit. Local incentives include programs like Minnesota’s Xcel energy’s net metering. Some states also offer SRECs (Solar Renewable Energy Credits). We’ll explain SRECs but Minnesota is not one of the only seven states that offer them.
Federal Tax Credit
The Federal Tax Credit is a popular program that offers up to 26 percent of the cost to convert your home or business to solar energy power. This credit is a dollar for dollar reduction of income tax you owe. Even if you don’t have an additional tax bill at the end of the year, you can take advantage of this tax credit. You will simply get a refund of the taxes you have already paid out of your paychecks.
If there are not enough taxes due to claim your credit this year, you can roll over the rest of your credits to future years. That means you can claim the 26 percent credit even if your tax liability is less than the credit. At the time of this writing, the 26 percent tax credit is good through the end of this 2022, on solar energy systems installed by the end of 2022. The tax credit is scheduled to drop to 22 percent in 2023. Though this may change, there is no guarantee, and scheduling your installation this year is recommended.
Net metering gives you credit for returning unused solar generated electricity to the grid. In the summer, customers with solar energy generating systems often use less power during sunlight than their system generates. By returning that energy to the grid for a credit, electricity consumers are banking watts for hours when their panels are not generating power. During the night, those consumers are buying back electricity for their use.
When a net metered system sends solar power to the grid, the electric meter actually spins backwards and your utility applies a credit to your account. Net metering is a factor in how long it takes for your solar energy system to pay for itself. If you have net metering, the repayment period is shorter. Without that period it will take a longer time to pay for itself. Minnesota does have a full retail net metering program. Talk to your Renewable Solar Resources representative for more information.
To speed up the conversion to renewable energy, a handful of states have created solar renewable energy credits. How does it work? For every megawatt hour (MWh) or 1,000 kilowatt hours (kWh) of solar electricity produced by a solar panel system, one SREC is generated. Because SRECs are separate from net metering credits, you can receive both. You can earn money from selling SRECs and still receive net metering credits.
Renewable Resources in Minnesota
If you’re In Minnesota, and interested in a transition to solar energy, solar incentives can make the switch even more affordable. A family run firm called Renewable Solar Resources spent years working to support the transition to solar energy systems on residential and commercial properties. Renewable Solar Resources believes in the future of solar power as an increasingly efficient, reliable energy source. Solar panels, SolarEdge optimization and solar storage continue to become ever more efficient, making solar an extremely rewarding choice.