State and local incentives, including rebates, can lower your solar installation costs. You should check your state’s Department of Energy’s website to find solar rebates in your area. State incentives vary from outright rebates to sales tax exemptions or abatements. Some states offer a solar renewable energy certificate, or SREC, program where power producers (including homeowners) can sell excess solar energy to utility companies. Typically an installer applies for the rebate on behalf of the customer prior to installation. Your solar installer will be knowledgeable about the rebates and incentives offered by your state.
Federal Tax Credits
The Solar Investment Tax Credit is a dollar-for-dollar reduction in what you owe the IRS for anyone who purchases solar panels for their home or business. A US taxpayer may claim a credit of up to 30% of qualified expenditures for a system that is owned and used as a residence by the taxpayer. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. The maximum allowable credit is determined by the year the system is placed in service.
Net Energy Metering (NEM)
Net Energy Metering or Net Metering allows consumers who generate some or all of their own electricity to access it anytime, not just when that power is being generated. Solar is not an “on demand” resource – you want electricity 24/7, not just when the sun is shining. That’s where net metering policies come in. They regulate how your solar installation connects with your local utility company to access electricity. through their delivery grid. The policies vary by state but most provide solar customers a way to store and access energy based on the kilowatts they generate. Costs vary depending on how much power the consumer generates and uses.
Net metering allows consumers to get paid for the excess energy their personal solar panels generate. It incentives consumers to install solar panels and helps generate renewable, green energy that can be used throughout the electrical grid. Scroll down to find out more information and frequently asked questions about net metering.
How Net Metering Helps Consumers
Consumers benefit from net metering in three different ways. First, net metering makes it possible for consumers to get a positive return on their investment in solar panels much faster. While solar panels will eventually pay for themselves without net metering, this practice puts money into consumer’s pockets much faster.
Second, net metering also means that more clean solar power is being used by others on the grid, even those that do not have solar panels. This helps reduce the demand and use of fossil fuels. This gives consumers a more sustainable form of electricity and is better for the environment.
Third, net metering allows consumers to potentially profit from their solar panels after the panels have paid for themselves. In some ways, the combination of net metering and solar panels can turn your home into a mini-power generation station that subsidizes others on the grid and allows you to profit from it.
How Net Metering Works
Virtually all buildings are connected to the electrical grid. As part of this connection, homes and office buildings have meters that monitor how much electricity is used. This allows the utility that provides the electricity to accurately bill the consumers of that electricity. It used to be that these meters had to be physically checked by a worker every month. Increasingly smart meters allow utilities to monitor the meters remotely.
When you install solar panels on your home or office building, you are still connected to the electrical grid. However, most, if not all, of your power will be generated by your solar powers and not your utility.
What happens when your solar panels generate more electricity than you use?
If your state has net metering, your utility has to buy that excess power back from you at a set rate. If you use electricity from the grid at night, but during the day you create excess power, net metering will run your meter backwards. In many cases people will produce more than they use for an entire month. In some places, because of net metering, instead of getting a power bill they get a credit or even a check for the electricity their solar panels generated.
Why Net Metering Helps Solar
Net metering is not only helpful for individual consumers, but it is also helpful to the entire solar industry. Even though the cost of manufacturing and installing solar panels is substantially lower than ever, there is still a large initial investment required convert to solar power. Tax credits, loans, and other financing systems can help make the initial installation more affordable, but net metering really provides an ongoing monthly benefit to consumers. This gives people a powerful incentive to convert to solar.
Without net metering, the growth of the solar industry would slow. While it is a stable enough industry to survive, it would take much longer for solar to reach the market penetration it is currently on target to reach in just the next few years.
Slowing the growth of the solar industry is obviously bad for the companies that work in this sector, but it would also negatively affect other parts of the economy, such as the manufacturing sector. Net metering allows solar to grow without being subsidized by government grants. Instead, solar power ends up being paid for by the utilities and users who benefit from it.
Is Net Metering Used Everywhere?
Net metering is used in most of the United States. However, currently just twelve states do not have net metering. But, there is a lot of pressure in these states from solar consumers to allow net metering.
The reason this practice is so widespread is that it makes sense economically. It encourages the growth of an important energy sector in a way that is environmentally responsible and economically sustainable. It uses the power of the free market to incentivize further investment by consumers and professional investors in the solar industry.
Is Net Metering in Danger of Going Away?
However, just because net metering is wide spread doesn’t mean it’s safe. Many large utilities and their lobbyists have begun targeting small Public Utility Commissions around the country to try and end net metering. The utilities hate it because they don’t like having to buy power from consumers with solar panels at market rates. They would rather have access to that power at no cost to them, or simply let the excess electricity be wasted and force consumers to use power from their power plants.
It is important for solar consumers any anyone concerned about the growth of green, sustainable energy to fight for net metering at the local, state, and federal levels.