I was pretty excited today. When I went to my mailbox, not only did I get my latest issue of HOME POWER magazine, I also got an envelope from Focus On Energy. Just above my name and address, I could make out the words “PAY TO THE ORDER OF”…
One major consideration of installing a photovoltaic (PV) solar electric system is the upfront costs. To help with those costs, and to encourage renewable energy production, the federal government, along with local governments and power utilities, offers financial incentives to help make renewable energy more affordable.
When I originally decided to install my own solar system, I estimated the cost to be around $10,000. Because I would be building a new garage, I was planning on wrapping the funding into the cost of the building through either a Home Equity Line of Credit or (what I actually did,) a new mortgage. That at least took out the sting of needing $10,000 up front! With the money from my loan, I was able to purchase the solar panels, the racking, all the other components, as well as things like the electric permit and hiring an electrician and roofer. (And because it’s a home mortgage, that also means that the interest on my loan is tax deductible. I also lowered my interest rated vs my previous loan.)
The Federal government offers a 30% tax incentive. That’s pretty straight-forward. It’s a one page form that I will fill out with this year’s income tax filing. It will give me a 30% tax credit on the cost of my system. Of course, I have to wait until April 15th for that!
As for state and local incentives in my area… Unfortunately, there are none. In fact, the State of Wisconsin hasn’t even passed the current budget (which is at least two months over-due!) The state also wants to add an EXTRA special tax just on electric and hybrid cars, rather than promote them though incentives or tax breaks! That only leaves Utility Incentives as the last funding source. In my area, Focus on Energy is a state-wide program through the various power utilities. The utilities need to provide a tiny percent of their profits as a fund to promote energy efficiency. In the past, this money has been used to reduce the cost of CFL and then LED light bulbs, provide a rebate for people turning in old appliances for newer, more efficient ones, and provides incentives for renewable energy.
Unfortunately, funding for this program has decreased the past several years. In fact, the money never even makes it to the end of the year. People in my area installing solar panels are advised to install them and apply for the rebate right away, as the cash often runs out by October or so. (EDIT: I checked, and BUSINESS incentives are already used up for 2017 as of Sept. 4th, 2017!) It’s also now required to submit TWO rounds of paperwork – one to reserve a rebate, and another to actually apply for it! We also never know if the program will be renewed for the next year!
In a nut-shell, Focus on Energy provides a rebate of 12%, up to a total of $2,000, for residential photovoltaic systems. My total system cost (including hiring labor,) was $10,590.48, so my rebate came to $1,270.86!
That’s an actual check written out to me – not a tax deduction or tax credit.
After subtracting the Focus on Energy Rebate AND then 30% federal tax credit, my total cost will be $6,523.73.
The faceplate value of my solar is 6240 watts. So, in the end, my total out of pocket cost will be $1.05 per watt installed. (Knowing what I know now, I could have done the system for EVEN LESS money!)
Estimates predict that my solar array will produce about $1,000 worth of electricity per year, so a simple calculation says that it will pay for itself in about 6 to 6.5 years. I’ve also crunched numbers several different ways including using electricity I make myself to power a vehicle instead of purchasing gasoline. Taking that into consideration, the simple economic R.O.I. can be as short as 3.5 years! Solar and Electric cars are a fantastic match! PV+EV for the win!
Do you want to install solar or other renewable energy? Make sure you check for what rebates are out there at the Database of State Incentives for Renewables & Efficiency web page: http://www.dsireusa.org
Until next time, stay charged up! I’m going to the bank!
-Ben
PS: I’ll also add one caveat for the Do-It-Yourselfer… Before I purchased any solar components, I contacted Focus on Energy to make sure I would be doing things correctly for the rebate. The rebate form is worded in such a way so as to encourage people to hire a company to install solar for them. The cost of that total bill from that single supplier is then submitted for the rebate. Because I did everything myself, I needed to make sure I kept a copy of every single receipt for every nut and bolt on the project. Even after submitting that paper-work, Focus on Energy nit-picked it to death. They questioned my numbers and requested additional information, which of course I provided…. about two months ago. And I hadn’t heard from them since…. Until actually getting my rebate check in the mail today! If you are a DIYer, make sure to keep good records!
{ 2 comments… read them below or add one }
Hi Ben,
Great blog! Just curious: what did you learn while doing your solar installation that would have allowed you to reduce the cost?
Andrew
Hi Andrew!
I did end up purchasing a few things that in the end I didn’t need. Most of that was small though, extra plastic boxes, wrong number of stainless panel fasteners, etc. The main thing though that could have saved me a bit more in cost is just REALLY knowing more about solar systems and EXACTLY what my goals are. There are a few solar suppliers, such as RENVU.com, which commonly have clearance items or weekly specials. By having a more broad and complete knowledge of solar, I could have waited until finding a deal which met my needs, regardless of brand-name or technology type. And knowing exactly that those components would work for me, and could jump on a deal when it showed up. There is also sometimes used equipment available. While it won’t typically qualify for rebates and incentives, and can be a great money saver if it’s right for you.
That said, I think I did a pretty good job overall of keeping my costs down. My final installed costs (after incentives and rebates) is just over $1 per watt installed.