Many people considering going from traditional electricity to solar power cite financial savings as their top priority. A study by the North Carolina Clean Energy Technology Center studied the cost difference between standard utility rates and solar rates in the 50 largest cities across the country. Researchers found customers saved on average $44-$187 per month during the first year of investing in a 5 kW solar system.
The cost of solar panels are decreasing, as well. In 1990, it cost nearly $90,000 to outfit a house or business with the proper solar equipment; by 2014, that price had dropped to just $30,000, according to Solar Nation. The nearly 70 percent cost reduction is due to upgraded technology and increased competition. There are also some consumers who save so much energy by using solar panels they feed power back to the grid.
Federal tax breaks are available for those who install solar equipment. The amount a person can save with solar power varies based on the location of the property. Understanding the ins and outs of the Solar Investment Tax Credit can make a tremendous difference for property owners.
Savings Passed Along
The Solar Energy Industries Association, a trade association that advocates for the energy industry, helped break down how the credits can assist a business. The plan is a 30 percent federal tax credit that applies to both residential and commercial properties. To receive the full allotment of the break, a new solar-powered system must be in place on a building by the end of 2016; starting in 2017, the credit will decrease by 10 percent. The company that installs, develops or finances the solar project accepts the credit, and the savings are used and passed along when the solar system is installed on a home or business.
Property owners need to understand the intricacies of the tax credit to determine their savings eligibility. Additionally, utility companies considering making the change to solar power should understand how the tax credits can benefit their business’s bottom line.
The first key is knowing which business projects would be eligible for the tax break. The U.S. Department of Energy explained that to receive the full 30 percent discount, a solar project had to be installed and completed between Jan. 1, 2006 and Dec. 31, 2016. The users of the solar power are subject to American income taxes – meaning a tax-exempt charity would not be subject to savings – and the property itself must be in the United States. Finally, the project must be completed with new equipment and cannot be used to generate energy for a heated swimming pool.
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