3 Solar Incentives in Pennsylvania

As the global demand for renewable energy continues to grow, more and more homes and businesses are considering installing solar energy systems. In Pennsylvania, the government and electric utilities offer several incentives designed to encourage residents and businesses to invest in solar power. These incentives significantly reduce the initial investment cost of a solar system and provide long-term financial returns, making solar energy a more affordable and environmentally friendly option.

It is critical for Pennsylvania residents who want to install a solar energy system to understand and take advantage of these incentives. This article will detail Pennsylvania's three main solar incentives: The 30% federal solar tax credit, the net metering system, and solar renewable energy certificates or credits (SRECs). By taking full advantage of these incentives, you can significantly reduce the cost of your solar energy system and enjoy the economic and environmental benefits of solar energy for many years to come. If you would like to learn about Georgia's solar incentives, click below to visit.

30% Federal Solar Tax Credit

The Federal Solar Tax Credit is a tax incentive the U.S. government offers to encourage more homes and businesses to invest in solar power systems. Eligible taxpayers can take a percentage of the tax credit for the purchase and installation of solar energy systems. Since its introduction, this policy has helped countless families and businesses significantly reduce the initial investment costs of solar energy systems.

Tax Credits for Pennsylvania Residents

For Pennsylvania residents, a federal tax credit of up to 30% is available for installing a solar energy system before 2019. This means that if your solar system costs $20,000, you can take $6,000 off your federal tax bill for that year. However, this credit will drop to 26% in 2020, 22% in 2021, and disappear completely in 2022. Therefore, if you want to get the most out of your tax credit, you need to act fast.

While the year-to-year reduction in tax rates may seem like a small change, when we're dealing with systems that cost tens of thousands of dollars, those tiny percentages can mean huge savings. For example, a $30,000 solar system would receive a $9,000 tax credit in 2019, but only a $6,600 credit in 2021. The difference is a whopping $2,400, which is a significant amount for many families.

To ensure that you can take advantage of these benefits, it is recommended that you consult with a tax professional as early as possible to determine if you qualify for solar tax credits and complete the installation of your solar system before the incentives expire.

Net Metering in Pennsylvania

Net Metering is an incentive mechanism that allows owners of solar energy systems to send unused electricity back to the grid and receive a credit on future electricity bills. This mechanism allows customers to not only be self-sufficient, but also to sell excess energy to the utility for additional financial gain. Net metering provides nearly all of the same benefits as the battery-plus-storage feature but without the additional cost of adding these items to the system.

Net Metering Policies in Pennsylvania

In Pennsylvania, net metering policies offer great benefits to solar renewable energy consumers. When your solar panels produce more electricity than your home can consume at any given time, the excess is sent back to the grid and recorded on your bill. If your home needs more electricity than your solar panels can produce at any given time (at night, for example, when the panels are unable to produce electricity), you can get the electricity you need from the grid. This net metering process allows you to benefit from all of the electricity generated by your solar panels, not just what your home uses. For example, if your solar system produces more electricity than your household needs during the day, this excess will be sent back to the grid and recorded as an electric credit. These credits can then be used to offset the electric bill when the home needs more power in the evening or on cloudy days.

A key advantage of net metering is that it makes solar systems more affordable because you don't need to make an additional investment in an expensive battery storage system. With net metering, you can efficiently use all of the electricity you generate, thus maximizing the economic benefits of your solar system.

How Do I Participate in Net Metering?

Participating in net metering is simple. First, you need to install a solar system that meets the requirements for net metering and make sure the system is connected to the grid. Next, you'll need to sign a net metering agreement with your local utility that details how the utility will record and calculate credit for excess electricity. Finally, the utility will install a bi-directional meter for your solar system that will record the amount of electricity delivered to and taken from the grid.

Solar Renewable Energy Certificates or Credits (SRECs)

Solar Renewable Energy Certificates (SRECs) are market-based incentives designed to promote solar power. Every time your solar system produces 1,000 kilowatt-hours of electricity, you can earn an SREC.SRECs can be sold on the market and their value fluctuates based on market supply and demand.

Pennsylvania's SREC Market

In Pennsylvania, homeowners with high efficiency solar panels can earn one SREC for every 1,000 kWh of electricity produced. In May 2018, the market value of an SREC was about $13, according to SRECTrade.com. Therefore, if an average household can produce enough electricity to earn 2-6 SRECs per year, the total value of these certificates could be between $26 and $78.

While the value of an SREC may not seem high, it provides a way to get a financial return without an additional investment. Once you have installed your solar panels, the system will automatically generate SRECs, which you can choose to sell or hold in anticipation of future price increases. SRECs provide an additional source of income for homes that want to maximize the financial benefits of their solar system.

Utilizing SRECs is simple. First, you need to make sure your solar system meets the requirements for SREC certification. Next, you can register your system on the SREC marketplace and begin accumulating SRECs. once you have accumulated a certain number of SRECs, you can choose to sell them on the market or hold them in anticipation of future market price increases. Through this mechanism, you not only benefit from the use of solar energy but also receive additional income from the sale of SRECs.

Combining the Benefits of the Three Incentives

By utilizing a combination of the Commonwealth's solar tax credits, net metering, and SRECs, Pennsylvania households can significantly reduce the initial investment cost of their solar system and earn a sustainable financial return for many years to come.

• Lower Initial Investment Cost: The Commonwealth Solar Tax Credit is the most direct way to lower the initial investment cost of a solar system. With this policy, you can take advantage of a tax credit of up to 30%, significantly reducing the acquisition cost of your system. As the policy decreases each year, acting early ensures you get the most out of the tax credit.
• Improve System Economics: Net metering and SRECs provide long-term economic returns. With net metering, you can send excess power back to the grid and earn electric credits, which reduces your electric bill. With SREC, you can earn additional income by converting the solar power you produce into tradable certificates. These two mechanisms complement each other, making solar systems not only environmentally friendly, but also very affordable.
• Environmental and Social Benefits: In addition to the economic benefits, installing a solar system has significant environmental and social benefits. By going solar, you can reduce your dependence on fossil fuels, lower your carbon emissions, and help mitigate climate change. At the same time, solar energy, as a renewable energy source, helps increase energy independence and energy security.

The three major solar incentives offered in Pennsylvania - the 30% federal solar tax credit, net metering, and SRECs - provide residents with significant economic and environmental benefits. By taking full advantage of these policies, you can significantly reduce the initial investment cost of your solar energy system and enjoy sustained financial returns for many years to come.

As solar technology continues to advance and the market matures, the cost of solar energy systems is expected to continue to fall, becoming the energy solution of choice for more and more homes and businesses. If you're interested in installing a solar energy system in Pennsylvania, act early to take advantage of available incentives and maximize your financial return.

Feel free to consult with our team of professionals at powerhome.com for a detailed consultation and customized solar solution that will help you achieve a win-win situation for both the economy and the environment. Through our through our efforts and your support, we believe that solar energy will be more widely used in Pennsylvania and throughout the United States, and together we will create a cleaner, more sustainable future.