Ann Arbor Takes Steps to Promote Residential Solar
Home to Michigan’s largest solar panel array of 1.1 MW and one of the top green research universities in the country, Ann Arbor has a lot to offer when it comes to solar energy. In fact, solar has become the fastest growing segment of the economy in the state of Michigan during the last decade (MLive.com).
Recently, the Ann Arbor Climate Action Plan called for reducing community carbon emissions by 25% by 2025. As a result, the town has pledged 2.4 MW worth of solar photovoltaic installations each year for the next 10 years, making solar energy an extremely viable alternative for homeowners (a2energy.org).
To further understand why solar is an appealing option for people looking to reduce their energy bills and save money, let us explore some of the financial incentives and rebates that are offered in this “solar ready community.”
Federal Tax Credit: A 30 percent federal tax credit is available for the purchase and installation of solar photovoltaics. There is no cap on the dollar amount of these credits; however, this 30% credit reduces to 26% after 2019. From there, the 26% tax credit stays in place until 2021 and eventually decreases to 22%. This credit is calculated by taking 30% of the total cost of the solar PV system, including installation, permitting, etc. For example, if the total cost of your solar PV project was $20,000, you would be eligible to receive a $6,000 tax credit at 30% (michigan.gov).
True Net Metering: Net metering refers to when your system is connected to a public-utility power grid and the surplus of power generated from your home is transferred onto the grid, offsetting the cost of power taken from the utility for the full retail rate. This perk is available to any Ann Arbor customer with a solar PV system size smaller than 20 kW. The utility will either use your existing meter if it is capable of spinning backwards or install an upgraded meter at no additional cost. Credits from excess net metering generation can also carry forward indefinitely which is a huge incentive for homeowners, who can pay $0 for their energy bill, or even receive compensation for the excess power that their system produces.
Rebates: DTE Energy, the primary power supplier for Ann Arbor, offers a number of solar incentives through their Solar Currents program. According to the utility, “the program offers [residential customers] both an up-front rebate of $0.20 per DC watt and a production incentive of $0.03 per kWh for the renewable energy credit (RECs) produced by the system through August 31, 2029” (energy.gov). The up-front rebate is payable upon the successful installation of the system and the production incentive payments are received as a credit on the customer’s electricity bill. At the end of the year, the homeowner will receive a check for unused bill credits from the utility if the balance is more than $250.
With all of these solar-friendly programs and incentives in place, it is no wonder that homeowners in Ann Arbor are excited to go solar!