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Energy

Going Solar in PA: Can YOU Actually Save $?

Are solar panels feasible for the common homeowner? This week our guest blogger, Clayton Bedwell, shares his industry knowledge on how to calculate financial incentives for solar installations.
sunpower_mainOver the last decade, growing concern over global warming has pushed federal, state, and local governments to legislatively encourage the implementation of clean and renewable energy sources.   Pennsylvania – the Saudi Arabia of coal & natural gas – currently touts some of the most aggressive solar incentives in the country.  However, these incentives won’t stick around forever and aren’t completely straightforward.  Below are a few State and Federal incentives currently available – and how to easily calculate them.  Residential installs can range anywhere from 1 Kilowatt (kw) to upwards of 10kw, but for the sake of simplicity lets use a 5kw system that has a raw install cost of $8 per Watt or $40,000 for the entire project.

  • Pennsylvania Sunshine Solar Rebate Program – For residential applications, Pennsylvania will reimburse you $2.25 for every Watt of solar installed.  But, this will be capped at either $22,500 in rebates or 35% of the install cost, based on whichever amount is less.  So for our example, we simply convert Kilowatts to Watts (1kw = 1000w) and multiply by the rebate amount (5,000w x $2.25) to get our total rebate amount of $11,250.  The rebate amounts will decline over time as installation benchmarks of 10 Megawatts are met.
  • Residential Renewable Energy Tax Credit (Expires 12/31/2016) – The IRS offers a 30% tax credit for residential solar installations.  This credit is applied after any state rebate programs are removed from the install cost, so in this case, we subtract $11,250 from $40,000 to get our tax basis of $28,750.  Therefor your tax credit is 30% of $28,750, or $8,625.
  • Pennsylvania Alternative Energy Tax Credit (Expires 12/31/2016) – Pennsylvania also offers a tax credit, but at 15% its  just half as much as the federal variety.  Just like with the IRS tax credit, we must first update our basis ($28,750 – $8,625 = $20,125) before applying the credit.  So using $20,125 as the updated basis, the PA tax credit comes in at $3,019.

The conclusion?  After applying all the available state and federal incentives, installing solar panels can pay for themselves in 4 years and last at least 30.  What started as a $40,000 solar installation will now cost the homeowner just $17,106!

Posted by Clayton

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