Understanding Solar Incentives
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Understanding solar incentives
There are three major types of solar incentives you should be aware of when buying your solar panel system: tax credits, rebates, and performance-based incentives (or PBIs). Let’s take a look at how each helps you go solar!
#1. Tax credits
There are both federal and state tax credits available for people installing solar panels. This type of incentive gives you money back when tax season arrives. For example, the federal investment tax credit, or ITC, provides a percentage discount back that comes off your annual taxes. Keep in mind that most solar tax credits are calculated as a percentage of your total cost, so amounts will vary from system to system.
#2. Rebates
Rebates are typically paid as a lump sum to help decrease the initial cost of your system. Some rebates are a fixed dollar amount, and others are based on the size of your system. For example, if your utility offers a rebate of 50 cents per watt, or $500 per kilowatt, then installing a 10-kilowatt solar panel system means you’d receive an upfront rebate of $5,000. If you’re shopping on EnergySage, you can also access exclusive cash rebates directly from manufacturers.
#3. Performance Based Incentives (or PBIs)
PBIs are based on the electricity output of your system: the more electricity you generate, the more you’ll earn. Many PBIs are paid out as a fixed rate per kilowatt-hour of electricity. For example, if your solar panels generate 600 kilowatt-hours of electricity per month, and your utility offers a PBI of 10 cents per kilowatt-hour, then you’d earn an extra $60 each month. Common PBIs include feed-in tariffs and solar renewable energy credits (or SRECs).
Solar incentives vary by city, state, and utility. On EnergySage, we track all this information for you -- giving you the ability to compare multiple quotes with all the applicable incentives already factored in.
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