Cost of Solar, Financing, Lease Options
How much does solar energy cost?
An average residential solar system costs between $15,000-$25,000 after solar rebates and solar incentives. Considering that you will probably spend over $72,000 in electrical bills over the next 25 years, this can be a small price to pay. Some companies even offer solar lease options in which you pay no out-of-pocket expenses for the installation.
The exact cost of your solar system will depend on the applicable New York solar state rebates and utility incentives available in your area and the type of solar installation you chose. Using a qualified installer who is familiar with the local incentives and permitting process will ensure that you get the most from your investment.
Are there any government tax incentives or rebates?
One of the great elements of solar power in the U.S. is that there are large number of tax incentives and rebate programs that exist to make it easier to afford solar power for your home. The solar installer that you select will be up to date on all of the applicable incentives based on where you live but below are some of the basics:
- Federal Tax Credit: Investment Tax Credit (ITC) allows individuals to deduct 30% of the cost of a solar system from individual federal income taxes;
- Individual State Rebates: Many states offer cash rebates that are either flat amount or are based on the size of your solar power system – check out the U.S. governments Database of State Incentives for Renewables & Efficiency for more information on the rebates in your particular area;
- Property Tax Exemptions: Many states also specifically exclude the value a solar energy system from your your annual property taxes… for example, if a new solar power system adds $30,000 to the value of your home, that $30,000 will be exempted from the total assessed value and your property taxes will not increase as a result of the new system.
- Municipal and Utility Rebates: In addition to the federal and state incentives, many local municipalities and utilities will offer rebates on top of everything else…please check out Database of State Incentives for Renewables & Efficiency for any incentives in your specific area.
What are some of the current New York solar rebates and how do they work?
New York’s state government has enacted incentive and rebate programs to make solar energy more affordable for your home. Review some of the top programs below:
- The New York State Energy Research and Development Authority provides a cash incentive of $1.75 per watt to eligible installers for the installation of approved, grid-connected solar PV systems. The maximum capacity supported by the program is 7 kilowatts (kW) for residential systems; 50 kW for non-residential systems; and 25 kW for non-profits, schools and municipalities.
- The New York State Energy Research and Development Authority also provides an incentive for solar thermal installations. The incentive based on the amount of electricity displaced by the solar water heating system. The incentive is set at $1.50 per annual kilowatt-hour (kWh) displaced, up to $4,000 for residential systems and $25,000 for non-residential systems. Displaced kWh may not exceed 80% of the calculated existing thermal load.
- The Green Residential Building Program, administered by the New York State Energy Research and Development Authority (NYSERDA), offers cash incentives to residential building owners who install solar systems and other green technologies. The program is available to owners of buildings with 1 – 11 residential dwelling units that meet the minimum green building requirements and have a Certificate of Occupancy or Certification of Completion dated between January 1, 2010 and October 30, 2013. Eligible participants can receive a cash amount of up to $3.75 per qualified occupied square foot but are capped according to the number of units in the building: $5,125 for single family dwellings and $13,375 for an 11-unit multi-family residential dwelling.
- Long Island Power Authority offers its customers rebates for grid-connected solar systems as part of the Solar Pioneer and Solar Entrepreneur programs. Currently, the program offers a rebate of $1.75 per watt for the first 10 kilowatts of a residential system, $1.75 per watt for the first 50 kilowatts of a commercial system, and $2.75 per watt for the first 50 kilowatts of government, school or non-profit installed system.
- The New York Residential Loan Fund, administered by the NYSERDA, provides reduced interest rate loans through participating lenders to finance renovation or construction projects that improve a home’s energy efficiency. The level of interest rate reduction may be up to 4%, but is adjusted to maintain a floor rate of 3%. Loans are limited to residents in 1-4 family homes that are customers of one of the state’s six investor-owned electric or natural gas utilities — Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New York, Inc., National Grid, New York State Electric & Gas Corporation, Orange and Rockland Utilities, Inc., or Rochester Gas and Electric Corporation — and that pay the system benefits charge or the renewable portfolio standard charge.
Does New York have any tax incentives to adopt solar power?
Yes. New York residents receive a tax credit for their personal state income tax equal to 25% of the net (post rebate) system cost up to $5,000. The tax credit is available for system only up to 10 kilowatts in size, except 50 kilowatts for solar systems owned by condominium or cooperative housing associations. Enacted in August 1997, this personal income tax credit originally applied to expenditures on solar-electric equipment and was expanded in August 2005 to include solar-thermal equipment. Residents do not have to pay any sales tax on any solar systems, including solar hot water.
Is New York a “net metering” state?
Yes. The policy mandates that the major investor owned utilities let residents store any excess energy your solar panels produce with the grid. Then they credit your bill when your system isn’t generating (for example, in the middle of the night). At the end of the year, if your panels have produced more energy than you’ve consumed, they’ll pay you the “avoided cost”, or basically the wholesale rate, for your extra energy. The only problem is that net metering is currently limited to 1% of state utilities 2005 total capacity. So once your utility hits that cap, no more net-metering until the state public utilities commission raises the cap.
If I can not afford an up front payment for a solar power system, are there financing options to help me?
Yes, our partners offer a variety of great solar financing options to help offset some of initial installation costs. In some cases, your monthly payment will be less than the amount of savings on your electric bill. Low interest rates are available and the solar system increases the value of your home. Again, the your solar installer will have all of the details on the available solar financing options but make sure you ask about the following:
- Home Equity Loans: borrowing against the equity of your home;
- Solar Lease: leasing the solar panels for a fee over a set length of time; and
- Power Purchase Agreement: an arrangement similar to a lease arrangement where the solar provider/installer secures funding on their own for the solar project, installs the solar system in your home/office building and then sells the electricity from the solar system to the home/building owner at a fixed contractual price for a set length of time.
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