FLORIDA SOLAR REPORT

Home Solar Advocacy Publication

Solar Tax Credits and Rebates: Learn About Financial Incentives for Adopting Solar Energy

Transitioning to solar energy can seem daunting due to the significant upfront investment required. The cost of solar energy systems can range from thousands to tens of thousands of dollars, which understandably raises concerns about the financial commitment involved. However, there are various financing solutions tailored to make solar energy more accessible and affordable.

ITC Tax Credit In 2024 for Home Solar

Paying Cash for a Home Solar System Offers The Most Profit to Homeowners

Cash Purchase:

Homeowners who can afford to pay cash for a home solar system will receive the greatest return on investment. It’s common knowledge that money costs money, and it’s no different financing home solar. The important thing to keep in mind is you are working with a payment you are already making monthly to the power company.

The example below validates the excellent ROI when you pay cash for home solar. The example doesn’t take into consideration the power company price hikes. Energy will skyrocket in demand because of AI resulting in a higher cost. Paying cash is the best way to buy home solar, it’s a Free Guaranteed Investment! In a perfect world, we would all like to pay cash for home solar, but because it’s expensive it’s not always possible to pay cash.

Because you’re working with the power companies’ money there’s room to finance home solar and benefit financially. Solar panels and equipment are designed to last for 25 years or more.

Cost of Power from a Residential Solar System Versus The Cost of Power from Your Local Utility

Sample System Size

9.5K System  for a Conservatively Produces 14ooo kilowatts Per Year

Cost Per kilowatt from The Power Company

21.6 cents Per Kilowatt Including Fees and Taxes based on sample bill below. This means a 9.5K Solar System will produce roughly enough energy for a $216 a month power bill, which is based on extremely conservative estimate of production.

Cost Per Kilowatt for Solar

2.60 Per Kilowatt for a total cost of $24,700

Deduct 30% Tax Credit* of $7410*

$1.82 Per Kilowatt for a total Net Cost of $17,290

The Power Company Charges $216 per month totaling $2592 a Year.

Based on $2592 a year a home solar system will offset the original cost of $17,290 in a little under 7 years, at which point you will be banking a minimum of $216 a month for the remainder of the life of panels designed to last 25 years or more.

 

Total Solar Savings for 20 Years

Over a 20 Year period you will have paid a minimum of $51,840 to the power company based on a $ 216-a-month power bill. You will have paid $17290* for the same power. This equation does not consider power company price increases over the next 20 years. Based on paying $51,840 to the power company over a 20 year span the total cost of a home solar system without utilizing the tax credit a home solar system is still a great value.

This Sample 9500K Solar System will Generate a Minimum of $34,550 Profit Over a 20 Year Period!

*Solar Tax credit requires an annual income tax liability. The tax credit is available for the first 5 years of your solar purchase. We highly recommend consulting with a tax expert to determine if you qualify for the tax credit.

Because of solar panels’ longevity and related equipment, financing solar is not so bad. There’s one caveat when you finance solar, don’t let the Seller or the Finance Company demand your ITC Rebate be paid to them when you file taxes. The reason it’s not a good idea to include your ITC Rebate in the deal is your monthly payment will go up substantially if you don’t pay all of your rebate to the finance company. Leave the ITC Tax Credit out of your deal and pay it toward the principal when the time comes if you prefer.

Solar Loans:

If paying the entire cost upfront isn’t feasible, consider a solar loan. You can borrow the money needed to purchase and install the solar panels. These loans typically offer reasonable terms and moderate interest rates.

    • Home Equity Loans and HELOCs: For those with substantial home equity, leveraging a home equity loan or a home equity line of credit (HELOC) is another viable option. Home equity loans operate similarly to personal loans, featuring predetermined repayment schedules, consistent monthly payments, and fixed interest rates. HELOCs provide a revolving line of credit akin to a credit card, allowing you to borrow funds as needed. Both options often offer lower annual percentage rates (APRs) compared to personal loans. The repayment period typically spans 15 to 20 years.
      • Key Benefits: Reasonable terms, moderate interest rates, and potential tax write-offs for interest payments.
      • Key Drawbacks: Borrowing up to 85% of your home’s value through a combination of a first mortgage and a second loan.
    • Solar Loans Directly Through Contractors: Some contractors offer financing directly for solar installations. Evaluate these options based on total interest cost, manageable monthly payments, and any available tax incentives.

  2. Third-Party Ownership:

    • If you prefer not to own the solar panels outright, explore third-party ownership options:
      • Solar Lease: Lease the panels and pay a monthly fee for their use. This approach allows you to benefit from solar energy without the initial investment.
      • Power Purchase Agreement (PPA): Similar to a lease, a PPA involves paying a monthly fee for the electricity generated by the panels. The third-party company maintains and operates the system.

Remember to consider factors such as tax incentives, repayment terms, and the possibility of securing a low annual percentage rate when evaluating financing options. Choose the approach that aligns best with your home and financial situation.

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