Solar Rebates & Incentives

Rebates and incentives are a crucial way to encourage broader adoption of solar energy in homes and businesses.

These incentives will typically come from your utility, state government, or the federal government in the form of tax credits, property tax abatements, one-time rebates, or performance-based rebates.

Lowering the cost of going solar helps more people in your community go solar, which supports clean air, a more resilient energy grid, lower energy prices, and lower fossil fuel emissions.

Solar Incentives and Rebates Terms

The concept of solar incentives is simple: Reduce the cost of solar to make clean energy accessible to more people.

But solar incentives are a rat’s nest of acronyms and industry terms that can be difficult to untangle. We’re here to help with this handy-dandy cheat sheet.

First, some basic terms:

Solar Incentives

Incentives provided to a homeowner or business installing solar by a government agency or utility in order to accelerate solar adoption.

Rebates

A one-time incentive for solar installations offered by utilities and/or government agencies.

Tax Credit

A direct dollar-for-dollar deduction off of your income taxes that you would normally pay to the federal government.

Tax Deduction

Deduction of taxable income.

Utility Rebates

Cash refunds utilities pay to homeowners to help promote the adoption of solar in order to meet their qualifications.

Solar Incentive and Rebate Programs

Federal Solar Investment Tax Credit (ITC)

The solar investment tax credit (ITC) is a 30% tax credit that you are allowed to claim in the form of a deduction from your income taxes (after any available rebates) off the overall gross system cost, including any necessary upgrades to the main panel box upgrades in order to go solar.

In August 2022, the Inflation Reduction Act increased the tax credit from 26% to 30% and extended it until 2032. It also renamed it the Residential Clean Energy Credit (although most people still call it the ITC or solar tax credit).

So if you purchased a solar system worth $25,000 in 2022, you can claim a $7,500 deduction on your 2022 taxes that you file in early 2023.

The new and improved solar tax credit also applies to battery storage, whether or not it’s connected to solar. So you can claim the tax credit for adding battery storage to an existing solar system or for battery storage that’s not connected to solar at all.

Local Rebates

One-time incentives for homeowners installing solar, distributed through local jurisdictions such as a city or county. For example, the city of Fort Collins, Colo. offers a local rebate of $250 per kW of solar installed up to $1,000.

Performance Based Incentive (PBI)

PBIs are incentives based on the energy production of a solar system. This compensation is based on the amount of energy (in kWh) a solar system produces over a given period of time.

Since the incentive is based on production, PBIs encourages installer and solar owners to prioritize performance and maintenance over time.

Performance Data Provider (PDP)

PDPs are certified third parties, under the CSI, which monitor all of the systems receiving performance-based incentives.

Renewable Energy Certificates (RECs)

Renewable Energy Certificates (RECs) allow homeowners to sell renewable energy back to utilities who need a certain amount of renewable energy certificates to meet governmental regulations.

1 REC = 1-megawatt hour = 1,000-kilowatt hours of energy

A typical solar system earns between three to seven RECs per year, depending on the size, which solar owners can sell or trade on the market. This is another way to incentive solar adoption and production among homeowners.

Solar Renewable Energy Certificates (SRECs)

SRECs are nearly identical to RECs, except SRECs are specific to energy produced by solar photovoltaic systems (hence the name solar renewable energy certificates).

SRECs aren’t available in all states and the price of the certificates are constantly changing.

See if your state has an SREC market here.

State Solar Rebate Programs

Several states offer rebate programs that cover some or all of the cost of purchasing a home solar system and/or battery storage. These rebates can work in addition with the federal tax credit to increase the savings of going solar.

California, Massachusetts, New York, and New Jersey are among the leading states for solar rebate programs.

State Solar Tax Credits

Some states offer solar tax credits that work just like the federal solar tax credit.

For example, New Mexico has a 10% tax credit worth up to $6,000 for solar energy systems installed on or after March 1, 2020.

The Bottom Line

Thanks to the 30% Residential Clean Energy Credit created by the Inflation Reduction Act, any homeowner in the US that wants to go solar is eligible an substantial incentive.

And many homeowner will be eligible for additional incentives through their state, city, or utility. It’s worth taking the time to research incentives in your area to maximize your savings with solar.

Or, punch in your zip code below to connect with one of our Energy Advisors to have them help you out!