Powerful Solar Electric Incentives
There are incentives at both state and federal government levels for solar PV systems. Solar PV incentives are different for a home and a commercial building. And incentives change frequently so what may be a great opportunity one year may be less valuable the next.
As Northeast Smart Energy operates in multiple states, we try to keep this web site up to date. Please click on the link below for your state to see what incentives are currently available. The Federal incentives are listed immediately below:
FEDERAL SOLAR PV PURCHASE INCENTIVES
ITC: Investment Tax Credit – currently at 30% of system cost. As of 2012, for both residential and commercial, this is a 30% income tax credit.
MACRS: Modified Accelerated Cost Recovery System. Currently at 5.25 years for depreciable alternate energy capital equipment versus standard 15 years for capital equipment. Carryovers apply through 2016
Residential solar installations:
ITC: 30% of system of cost as a full dollar for dollar tax credit applied to year end income tax. Valid through 2016.
Commercial solar PV installations:
ITC: 30% of system cost as a full dollar for dollar tax credit applied to year end corporate income tax. Tax credits may be used through 2016.
MACRS: Total system cost less 50% of the ITC value as accelerated depreciation creates the cost basis for the depreciation. The acceleration is 5.25 years versus 15 years. Carryovers apply through 2016.
Non Profit Organizations:
As non-profit and municipal organizations pay no corporate income tax, the ITC is not available. Similarly, accelerated depreciation is not available as it is a right-off against corporate income tax.
Residential – The Clean Energy Finance and Investment Authority (CEFIA) reduced the incentive rate. In order to qualify for this incentive a homeowner must have a Home Peformance with ENERGY STAR audit. These normally cost $75 and must be through a CEFIA approved auditing company.
The Expected Performance-Based Buydown (EPBB) incentive provides you with an upfront cost reduction based on major design characteristics of your system, such as panel type, installation tilt, shading, orientation and solar insolation (a measure of solar radiation energy on a given area). The incentive is paid directly to your Eligible Contractor.
Incentives are tiered, with a higher rate for the first 5 kilowatts (kW) and a lower rate for the second 5 kW. CEFIA does not provide incentives for any portion of a system that exceeds 10 kW.
Your incentive is calculated with the following maximum rates per watt:
- Up to 5 kW: $0.80/watt
- Greater than 5 kW up to 10 kW: $0.40/watt
Systems with a calculated “design factor” greater than or equal to 87% will receive the full incentive amount. Systems with a calculated “design factor” less than 87% will receive a rebate discounted according to calculated design factor.
Reference: State Incentives Database
Rebate amounts are based on the total PV system size per building, regardless of the number of electric meters in use and certain other characteristics of the project. The proposed Commonwealth Solar II rebate levels for residential and commercial PV systems are:
- Base incentive: $0.40/watt
- Adder for Massachusetts company components: $0.05/watt
- Adder for moderate home value: $0.40/watt (applicable to residential projects only), or
- Adder for moderate income: $0.40/watt (applicable to residential projects only)
- Natural Disaster Relief Adder (see program manual for detailed eligibility requirements): $1.00/watt
The rebate is available to the system owner, which may or may not be the host customer. In the case where the system owner is a third-party owner serving a residential host customer, the project is treated as a commercial project (and eligible for the commercial rebate amounts only). Solar renewable-energy credits (SRECs) associated with system generation belong to the system owner and may be sold via the Department of Energy Resources (DOER) SREC program. Note: appropriate, approved tracking must be utilized in order to qualify to sell SRECs. MassCEC reserves the right to conduct post-installation inspections of PV projects prior to approval for payments.
The New York State Energy Research and Development Authority (NYSERDA) provides an incentive eligible installers for the installation of approved, grid-connected photovoltaic (PV) systems. The base incentive is $0.90/watt (W) for the first 50 kilowatts (kW) of installed capacity per meter. Larger systems will also receive a second tier incentive of $0.50/W for installed capacity over 50kW and up to 200kW per meter. Customers who pay the state’s RPS charge are eligible to participate in the PV Incentive Program. T
The maximum capacity supported by the program is 25 kilowatts (kW) for residential systems and 200 kW for non-residential systems. Incentives are only available to eligible installers, and incentives must be passed on in full to customers. PV systems must be sized to meet specific site energy needs (local load or demand) and may not exceed 110% of the demonstrated energy demand for the site, taking into account any other on-site electrical power generation systems. Incentive levels will be reduced in proportion to potential output losses of greater than 20%. NYSERDA will hold the title to renewable energy credits (RECs) associated with the system’s energy production for a period of three years, after which REC ownership will revert to the customer/generator.
Reference: State Incentives Database
New Jersey Clean Energy Program (NJCEP): Solar PV Incentives
As described below, once a solar PV system is installed and operational, a certification number is issued that allows the owner to register with the SREC tracking system.
“After successful completion of the local inspection and utility interconnection, the registrant or installer must submit a final paperwork packet, which includes the utility interconnection application and the local inspection’s UCC certificate of approval. When final paperwork packet is deemed complete, a letter containing the New Jersey Clean Energy SREC certification number will be sent to the system owner.
The Solar Renewable Energy Certificate (SREC) tracking system enables account holders to track solar energy system production from individual generators. SRECs are issued to account holders based on recorded or estimated production of the solar energy system. Once your solar energy system has been installed and your online SREC tracking system account has been established, SRECs will be deposited into a named bank account, based on either estimated or actual reported energy production. The SREC tracking system also records the sale of SRECs from generators to purchasers.”
How SREC’s are calculated:
For every megawatt (mW) produced by a solar PV system (1000 kilowatt hours) an SREC is generated and can be traded. The average residential system will generate 6-10 SRECs per year. The average commercial building will generate 30-100 SRECs per year. SRECs are currently trading on the FLETT exchange from $575 – $675 per SREC. This New Jersey SREC trade value is currently the highest trade value among all state SREC programs in the country. This solar PV revenue is what makes the solar alternative in New Jersey so attractive.
What Drives the SREC NJ market?
The NJ clean energy SREC program has been in existence since 2001. SREC’s are a tradable energy commodity purchased by brokers and sold to NJ electric utility companies on behalf of businesses and homeowners. As of 01/01/10 the state of NJ renewable energy “Required Portfolio Standard” (RPS) for NJ electric utilities is 10% of electric power production. As of 2021 the NJ RPS changes to 22.5% of electric powered production. The current NJ penalty is $658 per mW (1,000 kW) short of the NJ “portfolio requirements” The state penalty creates the market for the SREC. SREC’s trade approximately 10% below the state PRS penalty. The NJ SREC penalty is reduced by 3% per year based on current legislation resulting in a reduction in traded value by the same.
NEW JERSEY SOLAR PV PURCHASE INCENTIVES
NJCEP solar PV purchase incentive for residential homeowners:
No Purchase incentives are currently available for residential solar PV systems.
NJCEP solar PV purchase incentive for commercial buildings owners:
No purchase incentives are currently available for commercial solar PV systems.
NJCEP solar PV incentive for non-profit organizations:
There is a purchase incentive equal to $0.75 per kW.
There is a property value increase for installations of solar PV equipment however there is no increase to the assessed value as all alternate energy systems and components are exempt from property tax assessments at local, state, or federal levels.