A solar tax credit is an amount of money that taxpayers can subtract from the taxes they owe to the government. Tax credits are claimed when you file taxes from the previous year. If you made a solar investment that was approved by the government in that previous year, you would be able to deduct that amount when you file your taxes with the government. All products that are eligible for tax credits for residential energy efficiency are labeled with an Energy Star certification.
The Solar Renewable Energy Credit (SREC) allows you to earn (and sell) energy credits for every kilowatt-hour your system produces. SRECs are just like RECs, but specific to electricity that comes from solar panels. A homeowner will earn one SREC every time one megawatt-hour (or 1000 kilowatt-hours) of clean, renewable solar energy is produced by their solar panel system.
Solar rebates work differently than tax credits by getting cash back into your hands more quickly after you switch to solar. While there are no federal rebates for energy efficient purchases at this time, many state governments, local governments, and utility companies offer cash rebates for the purchase of energy-efficient products. Some manufacturers offer specials and sales that make it easier to power your home with clean, renewable energy.
Net energy metering, also known as NEM or net metering for short, is a special billing arrangement, between you and your electric utility company, that provides credit to customers with a solar power system for the full retail rate of the electricity their system generates. With a net metering program, your utility credits you for any energy your solar system produces that you don’t use – your meter will spin backward and build a “bank” of those credits. If you use more energy than your solar system produces, you pay the utility for that energy.
In addition to the great federal solar incentives, many states offer additional tax credit and rebates. There are currently several states with rebates and incentive programs that you can receive to help you pay for your new solar system. Furthermore, there are various programs that will help you offset the cost of your solar energy system and the cost of making your house greener. For the most up-to-date list of all energy incentives for your state, visit the Database of State Incentives for Renewables and Efficiency.
Quality Solar Energy
There are many reasons why homeowners go solar, but improving the environment and cutting energy costs are the most common. Many people are aware that solar is a great home efficiency upgrade and are eager to reduce their carbon footprint while also improving property value.