When it is all said and done with, how much do the tax advantages help? A lot. According to Keith Davis of Residential Technologies, an integrator in Charlotte, N.C., as much as 65 percent of the cost of a system in North Carolina can be covered through tax incentives and rebates. For a typical residential installation, Davis says the payback is seven to eight years. After eight years, a large system can produce positive cash for the homeowner, especially since utilities in the state are required to buy back power from solar customers at 15 cents per kilowatt hour (kWh).
Hans Stullken of One Way Electric says that, for a typical $70,000 residential solar panel installation, a homeowner in Arizona can receive as much as a $30,000 rebate from the local utilities based on usage and system size, a 25 percent state tax credit on the installation cost only (currently capped at $1,000 but that cap may be lifted), and as much as a $12,000 federal tax credit over a period of years. So if the state cap is lifted, a homeowner could pay, in the end, as little as $18,000 for a $70,000 system. In the meantime, they have drastically slashed their energy bill forever.
“The incentives are driving the market,” says Tim Henderson of One Way Electric. “Homeowners are realizing that the rebates are there to be taken. ROI, not wanting to be green, is the big driver right now.”
It doesn’t stop there. In the state of Arizona, there is no sales tax charged on the purchase of solar panels. That’s a savings of 5.6 percent. Also, according the Stullken, the full amount of money spent on solar panels is added to the appraisal of a home, but that amount is not considered when calculating property tax. So a $400,000 home that spends $70,000 on a PV installation is appraised at $470,000, but the property taxes are still based on $400,000.
How Much Can You Recoup?
As part of the American Recovery and Reinvestment Act of 2009 (ARRA) signed into law in February of 2009, $40 billion was allocated to energy-related programs, including tax credits, rebates and incentives for homeowners and builders to adopt alternative energy systems.
The new law provides a $1,500 tax credit for installing Energy Star windows, doors insulation and heating/cooling equipment through 2010 for existing homes and 2016 for new homes. In addition, homeowners can receive a 30 percent tax credit (with no limit) for installing solar panels, wind turbines and geothermal heat pumps. Moreover, builders can receive a $2,000 tax credit for constructing a home with energy-efficient materials.
Tax incentives and rebates come in many shapes and sizes from many different parties. The Database for State Incentives for Renewables and Efficiency (DSIRE) is an excellent resource for determining what you can recoup on solar and other green initiatives. http://www.dsireusa.org”>Visit http://www.dsireusa.org.
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Julie Jacobson is co-founder of EH Publishing and currently spends most of her time writing for CE Pro, mostly in the areas of home automation, networked A/V and the business of home systems integration. She majored in Economics at the University of Michigan, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. Julie is a washed-up Ultimate Frisbee player with the scars to prove it. Follow her on Twitter @juliejacobson.