Thursday, October 9, 2008

Solar Incentives

Think you cannot afford solar? There are incentives out there big and small for solar on your home or business. When we started our install in 2007, Solar Oregon was holding a $200 promotion. It was one of 4 incentives that we used, it was certainly the smallest, but every little bit helps.

If you are considering solar, the incentives are currently an important piece to making it financially viable. There are federal, state and local incentives. The best list of incentives on the net the Database of State Incentives for Renewable Energy (DSIRE, link below). You select your state then browse the grants, loans, rebates, tax exemptions, tax credits, & production incentives. For Oregon I counted 86 of these programs. Some are for specific cities or counties and other are for specific types of renewable energy sources. Some eastern Oregon residence can even qualify for Idaho incentives, so if you live near a state boarder, it may be worth it to check your neighboring state's programs too. 

The federal page has 16 incentives for everything from alternative fuel vehicles, energy efficiency, to solar. It is important to note that on October 3rd, by a vote of 263 to 171, the U.S. House of Representatives passed historic legislation that extends the 30% federal investment tax credit for both residential and commercial solar installations for 8 years. The best part of this new version of the bill is that the $2000 cap that was on residential installations has been removed. Removing this cap, really helps make residential PV affordable. 

This new incentive applies to systems put into service on Jan 1st 2009 or later. So if you have a system being installed now, you may want to delay putting it into service until after the new year. 

How much can the incentives save you? For example, a 4.4kW PV system costing $44,000 in the Portland General service area would qualify for: 
  1. $9,900 from the Energy Trust of Oregon
  2. $10,230 Federal Tax Credit
  3. $6,000 Oregon State Tax Credit
This brings the final cost down to $17,870. Not bad for a $44,000 system. And you could qualify for other incentives and you could sell your green tags, although I do not recommend it (green tags).

Let's try a more modest 2 kW system. Starting price $20,000.
  1.  $4,500 from the Energy Trust of Oregon
  2.  $4,650 Federal Tax Credit
  3. $6,000 Oregon State Tax Credit
Bringing the total cost to $4850. And again you may qualify for other incentives. Less than $5000 for a $20000 system.  Wow! I can see why some people are saying that this bill will launch the US into becoming one of the largest solar markets in the world.

You'll need to read and understand the incentives that you are applying to. For example, the Energy Trust incentive is actually paid to the installer, not the homeowner. This is nice in that it reduces the price, however, since the Federal incentive is based on the price, it reduces the federal incentive. Also, the Oregon state incentive is limited to $1500 per year. So if you qualify for the full $6000, it will take you 4 years to receive the full tax benefit.


5 comments:

Anonymous said...

I am trying to understand your Solar Incentives. Do they actual reduce the cost by your indicated amount or just portions of your income that are tax free?

CelticSolar said...

I am just a guy with a blog. So you get what you pay for here! You need to contact your tax accountant for all the details and how they would apply to your specific situation.

Here is how it worked for us. The Energy Trust incentive money went directly to the contractor that installed the system. So that reduced the price that we paid.

For the last part of your question, there is a big difference between tax credits and tax deductions. The Oregon state and federal incentives are *credits*.

Credits are much better. Credits directly reduce the amount of taxes that you pay (unless you have complications like AMT then it may or may not or may be deferred to another year).

Here is the info on the Oregon State Incentive from their website:

http://www.oregon.gov/ENERGY/RENEW/Solar/Support-RETC.shtml

And here is the FAQ:
http://www.oregon.gov/ENERGY/RENEW/Solar/docs/SolarFAQ.pdf

Anonymous said...

Thanks for the feedback. I really enjoy your blog.

Sustaino - said...

The incentive information is very helpful! Any specific guidance on tax credits related to the state of Ohio. Any particular sites I should review first for a 2kW PV system?

CelticSolar said...

DSIRE has a good search function and a new solar dedicated site: Ohio

Also, my friends at Solar Power Rocks! have good info for each state and can refer you to a contractor:
SolarPowerRocks.com/ohio/