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What Solar Panel Incentives Are Available in Your State?

Solar for Homeowners | 9 min read
Solar incentives available in the mid-Atlantic states

A solar system will produce free electricity for your home, business, or farm for decades. In just a few years, your solar system can pay for itself. From then on, it’s decades of free electricity.

Going solar is a long-term investment that requires money upfront. The good news is that there's help available. Federal and state governments have made it easier to install solar through a series of incentives. Whether they’re tax credits, grants, or something else entirely, they’ll put money back in your pocket as early as the first year you install your system.

While federal incentives stay the same across the board, incentives on a state level vary quite a bit. We’ve done the work and outlined the best solar incentives for each state we service.

Solar Incentives Available:

Solar Incentives Available Across All States

Federal Government’s Solar Investment Tax Credit

One of the best solar incentives is offered on a national level by the federal government: the solar investment tax credit. This incentive allows you to get 26% off the installation cost back in tax savings and it’s available to anyone as long as they pay federal taxes and opt for solar ownership as opposed to a lease or PPA. You’ll receive 26% of the total cost of the system back through a reduction in your owed taxes.

However, it’s important to note that this incentive will expire for residential solar systems after 2021, and will decrease to just 10% for commercial solar systems. So if you’re considering going solar in the near future, don’t wait. You’ll pay much more for a system in 2022 than you would in 2021.

Accelerated Depreciation

Another great incentive available to any businesses or farms installing a commercial system is accelerated depreciation. This allows you to accelerate all the federal depreciation tax savings to the year your system is installed, further front-loading your solar investment and knocking down installation costs. Depending on your tax bracket, you could reduce the cost of your system by over 20%.

USDA REAP Grant

A grant available to many farms and rural businesses is the Rural Energy for America Program (REAP) Grant from the USDA. This grant can significantly reduce the cost of your solar system by up to 25%. However, unlike the solar investment tax credit and accelerated depreciation, this grant isn’t available to every taxpayer. In fact, only a set amount of money is awarded each year, making it an extremely competitive program.

To be eligible for the grant, you must be a farm or rural business located in a qualifying area, and you can’t owe any back taxes. To determine if your business is in a qualifying area, you can use the USDA’s Eligibility Map.

While REAP Grants are extremely competitive, Paradise Energy employs experienced grant writers with an impressive track record of successful applications. About 80% of the projects we submit for the REAP Grants receive funding. And even if your project isn’t eligible or doesn’t receive funding, solar energy can still be a powerful and safe investment.

Solar Incentives Available In Many States

There are two common solar incentives that many states offer to some degree. These are net metering and Solar Renewable Energy Credits, or SRECs.

Net Metering

There are 38 states that have mandatory net metering standards, plus Washington DC and Puerto Rico. Net metering is the utility’s way of compensating you for extra electricity your grid-tied solar system generates, and it makes generating 100% of your electricity from solar much easier and more affordable.

Your system will produce more electricity during the daytime than you use during the daytime. That extra electricity will be transferred to the power company’s electricity grid. They’ll keep track of how many kilowatt-hours (kWh) your system transferred over, and you’ll get credit for each one. Then, during the night time or on cloudy days, you can draw electricity using the credits you’ve built up. The utility grid essentially provides free energy storage.

States with net metering offer solar generators the retail rate for the electricity they generate. States without it will offer you the wholesale rate, or another compensation method entirely. If your state requires retail rate compensation, you’ll be compensated the same amount of money as the utility would sell it for. That means if you transfer 50 kWh of electricity to the utility, you’ll have 50 free kWhs to pull from the utility. So with the retail rate, it’s an even exchange.

If you’re compensated with the wholesale rate, you’ll be compensated with how much it costs the utility to generate the electricity, which is less than the retail rate.

Solar Renewable Energy Credits (SRECs)

Some states have set renewable energy portfolio standards for their utility companies. These standards require the utility to produce a certain percentage of electricity by renewable means.

In order to meet their standards, utilities can purchase Solar Renewable Energy Credits (SRECs) from homes, businesses, and farms that are producing renewable electricity. Each megawatt-hour generated equals one credit. These credits can then be sold on an open market to generate additional income for the solar owners.

The more renewable energy the utilities are required to produce, and the fewer solar systems in your state, the more these SRECs will be worth.

Solar Incentives Available in Delaware

Net Metering

Delaware requires utilities to offer net metering at the retail rate. That means you’ll get a one-for-one exchange, so any kWhs you transfer to the grid will be worth exactly how much it would cost you to purchase from the utility.

Agrolab,-Harrington,-DE_Solar-Energy-SystemSolar Renewable Energy Credits (SRECs)

Currently Delaware does have an SREC market The only option for solar owners is to sell their SRECs in the PA secondary market.

 

Incentives from Individual Utility Companies

While the State of Delaware isn’t currently offering any grants or incentives, several Delaware utility companies are. If you get your electricity from Delmarva Power, Delaware Electric Cooperative, or Delaware Municipal Electrical Corporation (DEMEC), you may be eligible for additional funds to install your system.

Delmarva Power customers may qualify for their Green Energy Grant, which offers $600/kW with a maximum of $5,000. The Delaware Municipal Electric Corporation offers grants of $1,000/kW up to $3,500 for qualifying systems.

The Delaware Electric Cooperative offers qualifying systems $.50/watt of solar installed for the first 5 kW, and $0.20/watt over 5 kW and is capped at $2,500. Nonprofits can receive a little more, with $1.05/watt for the first 5kW, and $0.52/watt after 5kW with a cap at $3,500. This program has a specific budget and rates may change depending on how many systems are installed.

Solar Incentives Available in Maryland

Net Metering

Maryland requires their utility companies to compensate solar-generating homes, businesses, and farms with the retail rate for electricity. That means any extra energy you transfer to the electricity grid can be pulled off at no additional cost, thanks to net metering.

Layton's Chance Vineyard Solar Energy SystemSolar Renewable Energy Credits (SRECs)

Maryland joins many of the other Mid-Atlantic states who have set significant renewable energy goals for the 2020s with their CARES Act. By 2030, they’re requiring all of their utility companies to generate 25% of electricity from renewable sources. This could be great news for the state’s SREC market, as rates are likely to increase as renewable energy becomes more sought after.

Maryland’s Clean Energy Grants

The Maryland Energy Administration offers a rebate of up to $30,000 for qualifying rooftop commercial solar systems, up to $20,000 for non-rooftop commercial systems, and up to $1,000 for qualifying residential systems through the Clean Energy Grant program.

Tax Exemptions

Maryland makes it a little easier to go solar with a few tax exemptions for solar owners. Because installing a solar system on your property will increase its value, it also would increase how much you owe in property taxes. However, Maryland waives any property tax increase due to solar. In addition, you won’t have to pay sales tax on the installation and solar components.

Solar Incentives Available in New Jersey

Net Metering

New Jersey requires net metering and compensates excess solar-generated electricity from homes, businesses, and farms at the retail rate. This means you can offset high energy prices with solar energy at a kWh-per-kWh rate.

Solar Renewable Energy Credits (SRECs)

The State of New Jersey has set the goal for their utility companies that 50% of the electricity will be generated by renewable sources by 2030. Additionally, New Jersey has an SREC market. The 2030 goal could mean SRECs will become more valuable.

Tax Exemptions

New Jersey offers a few favorable tax exemptions to those who are installing or own a solar system. First off, you won’t have to pay the state-wide 6.625% sales tax when you’re installing your system.

Installing a solar system can significantly increase the value of your property. In some states, you’d be on the hook for that added value when it comes time to pay your property tax. However, New Jersey waives the taxes for any increase in value due to the solar system.

Solar Incentives Available in New York

NY Value Stack: Net Metering Alternative

While many states use net metering as a way to compensate solar producers, New York transitioned to what they call the VDER Value Stack. This program aims to more fairly compensate solar producers for their energy because electricity generated by solar has a different value than electricity generated by traditional, non-renewable means.

Brown-Coach_NY_Solar

VDER Value Stack takes into account the following: energy value, capacity value, environmental value, demand reduction value (DRV), and locational system relief value (LSRV). Depending on how these values play out for your specific situation, you may end up earning more or less per kWh than you would with retail rate net metering.

We’re not able to fully do this topic justice here, but you can learn more about the VDER Value Stack in this blog.

Tax Credits and Grants

New York doesn’t have an SREC market. However, it does offer grants and other incentives that certainly make up for it.

The NY State Solar Energy System Equipment Tax Credit is available to homeowners installing solar and offers a 25% tax credit and maxes out at $5,000.

The NY-Sun Megawatt (MW) Block Program offers up to $1,000/kW installed by businesses and homes alike. However, this rate will vary based on how much solar energy is already installed in your area.

If you’re a National Grid customer and you’re installing solar on a property that produces food (such as a farm, vineyard, or orchard) you can qualify for additional grants. The more you invest in your system, the more you’ll save:

  • $25K Investment – $5K Grant
  • $25 – $100K Investment – $10K Grant
  • $100 – $500K Investment – $25K Grant
  • Over $500K Investment – $50K Grant

Tax Exemptions

New York waives its state-wide tax rate on solar installation services and equipment. However, municipalities within the state are permitted to forgo this exemption, so it doesn’t apply everywhere in New York.

Additionally, the state waives property taxes on the value your solar system added to your property. However, like the sales tax exemption, this may not be enacted within your specific municipality.

Solar Incentives Available in Ohio

Net Metering

Ohio offers net metering to qualifying solar systems in the state, meaning you’ll receive the retail rate for any extra electricity generated by your solar system. You’ll then be able to pull from your bank of credit when your solar system isn’t producing electricity for free electricity.

Walnut-Creek-Cheese_OHSolar Renewable Energy Credits (SRECs)

Ohio does have an SREC market, meaning you can sell the credit you earn for each megawatt-hour your solar system produces.

By 2026, Ohio will require 8.5% of electricity sold by their utility companies to be generated from renewable energy sources. Solar owners can contribute to this goal by selling utilities SRECs on the Ohio market.

Interest Rate Reduction on Loans

Ohio’s ECO-Link is a program that aims to lower the interest rate on loans taken out by homeowners for property improvement projects, which includes solar. If you take a loan out for an eligible bank, you’ll be able to lower the interest rate on your solar loan (of up to $50,000) by 3% for seven years.

Tax Exemptions

Installing a solar system on your property increases its value. An increase in property value means an increase in property taxes. However, solar systems installed on commercial properties won’t be subject to an increase due to the added value from solar energy. Homeowners in Cleveland and Cincinnati will benefit from this same exemption, though homeowners in other parts of the state will have to pay.

In addition to this, both homes and businesses are exempt from any state sales tax on the installation and equipment required to go solar.

Solar Incentives Available in Pennsylvania

Net Metering

Pennsylvania requires its utilities to credit solar producers at the retail rate for excess electricity transferred to the grid. This means you’ll get that one-for-one exchange for kilowatt-hours, making it easier to offset 100% of your electricity usage with solar energy.

Almo-Commerce-solar-systemSolar Renewable Energy Credits (SRECs)

Pennsylvania has an SREC market, allowing solar owners to sell their megawatt-hour credits on the market to utility companies looking to meet their state-mandated renewable energy portfolio standards.

By 2021, the state aimed to produce 18% of its power with renewable means. However, only 0.5% of that needs to be from solar, meaning the state won’t likely see a huge increase in SREC prices for now.

Solar Incentives Available in Virginia

Net Metering

Virginia abides by net metering rules, meaning you’ll receive one credit for each kWh your solar system transfers to the utility grid. That credit can be traded for a kWh from the grid whenever you need it in a one-for-one exchange. This helps speed up the payback of your system.

Tax Exemption

If you’re installing a solar system, you’ll be pleased to hear that it will increase the value of your property. However, with an increase in the value of your property comes an increase in your property taxes. This won’t be the case for some residential systems in Virginia. Homeowners who install solar won’t have to pay taxes on the value solar has added to their home. However, not all localities in Virginia abide by this, so this exemption will vary depending on where you live.

Weaver Logging Solar SystemSolar Renewable Energy Credits (SRECs)

Currently there's no market for SRECs in Virginia, so they are being sold in other state’s secondary markets. Once an SREC marketplace is established in VA, solar system owners will be able to sell SRECs state’s marketplace.

Solar Incentives Available in West Virginia

Net Metering

All utility companies in West Virginia are required to offer net metering for solar producers. This means you get a credit for each kilowatt-hour you produce that’s worth just how much it would cost you to purchase a kilowatt-hour from the utility. This allows many West Virginians to produce enough electricity with a solar system to offset 100% of their electricity needs, as they can draw on these credits whenever they’re needed.

Getting the Best Deal on a Solar System

The cost of solar energy has dropped by 82% between 2010 and 2019 While it’s rapidly becoming more affordable and provides homes and businesses the free electricity for 25 to 30 years or more, it can still be a significant investment.

How Much Will Going Solar Cost CTA

Incentives like net metering, SRECs, tax credits, grants, and tax exemptions all make this investment a little bit easier to make. Some states have a plethora of incentives to entice new solar owners, and some states do not. Regardless, solar can be an extremely profitable investment for your home, business, or farm.

While it’s easier to put off big decisions until you’ve gathered enough information, time is running out on one of the biggest solar incentives - the solar investment tax credit by the federal government. 2021 is the only year homeowners and businesses can save 22% on their solar system.

For more information on incentives for your state, visit DSIRE.com.

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