We’ve all heard the sales spiel. “Get solar panels for free from the government!” or “The federal government will pay for solar panels to be installed on your home!”
This statement contains a lot of truth, yet the whole “free solar” thing is at the very least misleading.
This assertion is based on the fact that most solar schemes do not demand any upfront payments or out-of-pocket expenses. After your solar system is built, you will receive your first statement or payment, which will normally be less expensive than your existing power bill and will (at least in part) replace your electric bill.
This does not mean the solar is free, but instead, it is less expensive than electricity through the utility company.
This is referred to as cash-flow positive by individuals who are more conversant with financial jargon. It means that your finances were not “struck” and that no money was taken out of your pocket, but you will experience immediate savings.
If your energy monthly is $150, for example, switching solar would result in a $0-20 electric charge and a $110 solar payment. You’d save at least $20 per month in the first month, and more if electricity bills rise.
The solar federal investment tax credit makes this possible. The federal government will effectively pay for 30% of your solar panel system if you pay income taxes. This makes solar electricity far less expensive than what you’re paying TEP/TRICO/APS/SSVEC/UNISOURCE right now.
The state of Arizona additionally offers a one-time $1000 tax credit on the cost of a solar panel system.
Most investors regard this as a highly profitable financial option, if not a no-brainer.
Why should the electrical provider act as a middleman, charging you whatever they want? Make your own clean power for considerably cheaper than the electric utility and take control of your electricity usage!
What is the government’s position on solar panels?
Congress extended the ITC in December 2020, providing a 26 percent tax credit for systems installed in 2020-2022 and a 22 percent credit for systems installed in 2023. (A 30 percent tax credit was available for systems installed before December 31, 2019.) Unless Congress extends the tax credit, it will expire in 2024.
Is solar energy backed by the government?
Switching to solar power comes with a slew of government-backed incentives. Solar tax credits are available from the federal government, as well as many state governments. Understanding what the solar tax credit is, how it works, and other state-based solar incentives are all important steps in determining the true cost of installing solar panels.
What Is the Solar Tax Credit?
The Solar Tax Credit, commonly known as the Solar Investment Tax Credit (ITC), is a federal program designed to boost the solar industry’s growth in the United States. The ITC is a tax credit that provides a government subsidy. The solar business in the United States has increased by 10,000% since the ITC was implemented in 2006.
The ITC is a significant financial incentive. In 2019, the ITC is worth 30% of your income. In 2020, the ITC will be reduced to 26%, and in 2021, it will be reduced even lower to 22%. The credit rate for the ITC is calculated by and applied to the tax year in which a solar installation is started. For example, if you start a $10,000 solar installation in 2019, the ITC will allow you to deduct $3,000 from your 2019 taxes. Maintaining a comprehensive record of expenses and receipts for all costs involved with your ITC qualifying solar build is crucial if you wish to use the ITC.
When a person is unable to fully benefit from the ITC, for example because their tax obligation is smaller than their ITC, the remaining credit can be carried forward to the next tax year. For example, if a person’s tax burden in 2019 is $2,000 and they receive a $3,000 ITC, $2,000 of their ITC will be applied to their 2019 taxes, and the remaining $1,000 would be applied to their 2020 taxes.
While the ITC is rather simple to use, if you have any doubts about how it will apply to your situation, you should speak with an experienced tax professional.
Is it really cost-effective to go solar?
Solar panels, on average, take nine to twelve years to pay for themselves. You may repay the original costs of your investment over time, and you can then continue to save on energy expenditures.
Why are solar panels a waste of money?
Because solar panels cannot store electricity, their production will be reduced in overcast conditions and will be nil at night. As a result, most home solar systems necessitate the usage of a solar battery. When evaluating if solar panels are worth it for you, keep this additional expense in mind.
Cost
The cost of purchasing a solar system is relatively expensive at first. Solar panels, inverters, batteries, wiring, and installation are all included in this cost. Nonetheless, because solar technology is continually improving, it’s realistic to predict that prices will continue to fall in the future.
Weather-Dependent
Although solar energy can be collected during overcast and rainy days, the solar system’s efficiency is reduced. Solar panels must be exposed to sunlight in order to collect solar energy. As a result, a couple of overcast, rainy days can have a significant impact on the energy system. It’s also important to remember that solar energy cannot be collected at night.
Thermodynamic panels, on the other hand, are an option to consider if you need your water heating solution to work at night or during the winter.
Check out our video for a breakdown of how effective solar panels are in the winter:
How long do I have to claim the solar tax credit?
You are eligible for the federal solar tax credit if you are a U.S. homeowner who owns a solar panel system installed in a U.S. residence. If you owe less in taxes than you earn, the tax credit can be carried over for up to five years.
When it comes to solar panels, how long do they last?
Photovoltaic (PV) panels, commonly known as solar panels, are designed to last for more than 25 years. Many solar panels that were placed as early as the 1980s are still operating at full power. 1 Solar panels are not only incredibly dependable, but their lifespan has risen substantially in the previous 20 years. 2 Many solar manufacturers back their equipment with performance guarantees in their warranties, in addition to decades of successful performance. 1
Keep in mind that just because your solar panels are predicted to last a couple of decades doesn’t imply they’ll stop producing electricity. It simply implies that their energy production will be reduced by the amount that solar panel manufacturers believe is necessary to meet the energy needs of the ordinary American family.
What is the amount of the solar tax credit in 2021?
You’ll be eligible for the federal solar Investment Tax Credit at the federal level (ITC). In 2021, the ITC will offer a 26 percent tax credit on solar panel installation costs, as long as your taxable income exceeds the credit amount.
This ultimately translates to a 26% reduction on your home solar system for most households. So, if your system costs $20,000, the ITC will allow you to claim a tax credit of roughly $5,200.
How long does it take for solar panels to pay for themselves?
- Solar panels pay for themselves over time by lowering your utility bill and, in certain cases, earning you money through continuous incentive payments.
- In the United States, the payback time for solar panels ranges from 5 to 15 years, depending on where you live.
- The amount you paid, the price of electricity from your provider, and potential upfront and ongoing incentives all influence how quickly your solar panels pay for themselves.
Is it possible to run a house solely on solar energy?
Can Solar Energy Really Power an Entire House? Fact vs. Myth: Can Solar Energy Really Power an Entire House?
“Can it truly power my complete house?” is one of the most often asked questions about solar power by homeowners. The answer is actually fairly straightforward: yes, solar can power your complete home.
