Federal Solar Tax Credit
All California residents are eligible for the federal solar investment tax credit, or ITC, for installing PV solar panels and any other eligible solar equipment. Any reputable solar installer will assist in the process of claiming the ITC on your federal tax returns. Claiming the ITC deducts 26% of the total cost of your solar installation from the taxes you owe.
To be eligible for the solar tax credit, homeowners must own the solar energy system, either having paid for it in cash or by taking out a solar loan. Homeowners who lease solar panels are not eligible to claim the ITC.
Does California Have A Net Metering Incentive
Under Californias net energy metering incentive, investor-owned utilities are required to buy homeowners excess solar electricity at close-to retail rates.
The NEM 2.0 program, passed by the Public Utilities Commission in 2018, guarantees that homeowners going solar will be able to sell the excess solar electricity – typically produced during midday – for a period of 20 years.
This is an extremely valuable incentive selling your electricity to the utility at a good value is the easiest way to pay off your solar panel purchase quickly.
New California Law To Require Solar Panels On New Construction
A new California law set to take effect in 2020 is expected to make the price of new homes in the state thousands of dollars more expensive.
The law requires all new homes to have solar panels. California is the first state in the country to do so.
The law will reduce energy bills and emissions but it will raise the cost of a new home in an already expensive place to live.
Kiara Mota lives in San Luis Obispo with her two children.
At 20 years old, she hopes to buy a home sometime in the future but this new state law might make it harder.
“It’s already expensive to live in SLO and imagining doubling that up on houses and homes, it’s going to be way harder for us. We’re going to have to start saving like right now,” Mota said.
The California Energy Commission says they expect mortgages to rise by an average of $40 but monthly utility bills will decrease $80 for homeowners.
“The ability to get a payback through reduced energy costs makes it really affordable for the homeowner,” said Jeff Edwards, developer.
But solar panels cost money to install and Jack Hardy, President of Century 21 in Arroyo Grande, worries the price tag could keep away potential buyers.
“There’s no question in my mind, that 20 to 30 thousand dollar additional price tag is going to eliminate some of those buyers and it’s going to stop them from being able to buy a home,” Hardy said.
“I just hope people can keep in mind our generation and to keep in mind that we also want a home one day,” she said.
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Mandatory Solar In California
The types of buildings that are included in the proposal are, according to the New York Times, hotels, offices, medical offices and clinics, retail and grocery stores, restaurants, schools, and civic spaces like theaters, auditoriums, and convention centers.
The proposal also encourages electric heat pump technology for space and water heating, the use of electric appliances, and the installation of EV chargers. In other words, its working to get buildings off natural gas and support electric car charging.
Californias Building Standards Commission also has to give its stamp of approval, and its expected to include the mandate in the overall building code revision in December. If approved, then that gives the construction industry a year to prepare for the solar and storage mandate.
In 2018, California mandated that new single-family homes and multi-family dwellings up to three stories high must include solar panels from January 1, 2020.
According to the California Energy Commission:
Homes and businesses use nearly 70% of Californias electricity and are responsible for a quarter of the states greenhouse gas emissions.
Over the next 30 years, the 2022 Energy Code is estimated to provide $1.5 billion in consumer benefits and reduce 10 million metric tons of GHGs, equivalent to taking nearly 2.2 million cars off the road for a year. Expanded adoption of new energy-efficient technologies will help reduce costs of the technology over time.
Tips For Installing Residential Solar Panels
The Interstate Renewable Energy Councils consumer checklist recommends that homeowners:
Check your roofs exposure to the sun.
Decide whether leasing or purchasing panels is best for you.
Find out how your utility company will work with you and your solar panels, including how much credit you may receive for excess power.
Check your contractors reputation to be sure your system is correctly and safely installed.
Understand the terms of your agreement, including what happens if you sell your home and who is responsible for maintaining your system.
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How Sunshine And Expensive Electricity Increase Solar Savings
Solar arrays of all scales use the same building blocks: solar panels, which are also known as photovoltaic panels or solar modules. Since solar panels and other components are highly standardized, their installed costs show little variation throughout the US.
- Before deducting tax credits and incentives, a small residential system will typically cost $3 per watt of capacity.
- A medium-sized business installation will typically cost around $2/watt.
- Large commercial, industrial and utility systems can cost less than $1/watt.
On the other hand, sunshine and electricity prices are highly variable throughout the US, and both affect the financial return of solar power. Each solar panel produces more kWh per year in a sunny place, and expensive electricity increases the value of each kWh. California happens to have both conditions: the abundant sunshine boosts productivity, and expensive electricity makes solar energy very valuable.
Assuming a cost of $3/watt, a 6-kW solar power system costs around $18,000, which is reduced to $13,320 with the 26% federal tax credit. A system of this capacity can produce over 10,000 kWh annually in a good site, and electric tariffs above 20 cents/kWh are typical in California. Assuming annual savings of $2000, the PV system in this example has a payback period of 6-7 years, which is great for an investment that lasts over 25 years.
Does California Offer A Solar Tax Credit
For mandated PV requirements, building owners and business owners are still eligible for the federal solar investment tax credit to lower the overall cost of installing a system. The tax credit is applied to a fixed percentage of the total cost of the solar energy system. In 2020, all properties are eligible for a tax credit towards 26% of the system cost, which drops to 22% in 2021. Beginning on January 1st 2022, a 10% credit is only available on commercial systems.
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Pandemic Hits An Already
Prior to the Great Recession of 2008, California homebuilders completed the construction of nearly 200,000 single-family and multifamily units in a good year. Recovery has come slowly: The state has since clawed its way back to about 65 percent of that volume, says Raymer.
This year will bring another dip, with the state likely to build fewer than 90,000 new units in 2020, said Mike Hodgson, president at Consol, a California company that consults on efficiency and building standards.
The coronavirus pandemic is exacerbating existing and more serious difficulties for California’s housing market, including affordability and land availability, Hodgson says. And fewer new homes being built means the solar mandate is having a smaller impact than it ordinarily would, even though California is still likely to top the charts for residential installations overall.
I would not blame for the dip in the housing market, said Hodgson. Its going to be part of it. Is it going to be significant? Yes. But is it the big issue? No.
April was the “worst April in the history of us keeping statistics, says CBIA’s Raymer. The state issued just 5,383 permits for new units in April, compared to 10,572 in April 2018, according to data from the Construction Industry Research Board, the research arm of the California Homebuilding Foundation, which has tracked state permits since 1954.
California Leads Nation In Residential Solar Installation Rates Overall Homes And Total Capacity
Gavops analysis of latest solar installation data from SEIA and census data shows that California leads the nation at 44.92% of all homes installed with solar home. California also leads the nation with total homes installed with solar power at 6.3M total homes which contributes to the 24,464 MW of Solar capacity. The below chart shows the data for all the top 10 states with the highest installed solar capacity.
Nevada comes a close second at 44.44% of all homes installed with solar power. However, because they are a smaller populated state, they are number four ranked in terms of total solar power installed at 3,145 MW. The three next three states with the highest penetration of solar homes are Utah , Arizona and Massachusetts . The states with the lowest penetration of Solar homes, among the top 10 states with the highest solar capacity, are Florida , Texas and New York .
A lot of the adoption of solar systems is driven by government policies and incentives. For example, Californias recent rule for all new homes to have solar systems will further accelerate adoption. The excerpt from the government press release makes it clear
On the other hand, states like Texas do not offer any incentives for homeowners to invest in solar. This commentary from the Houston Chronicle makes clear some of the dynamics in Texas:
The content & opinions in this article are the authors and do not necessarily represent the views of AltEnergyMag
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State Challenges With Solar Power
Energy storage is becoming a more prominent issue because photovoltaic solar panels can only generate electricity during daylight hours and thermal solar installations can only store energy for up to 10 hours, leaving a window in which the state’s energy production must be generated from other sources . To remedy this, different sorts of power storage solutions have been proposed such as batteries, compressed air, and ice generation.
In April 2018, The San Diego Union Tribune reported that Recurrent Energy had proposed a large battery, a 350 MW system, to be installed alongside the proposed Crimson Solar Project. The battery will match the proposed facility’s nameplate capacity, and is several times larger than the 130 MW Hornsdale Power Reserve, the largest lithium battery in existence, which was created by Tesla and is located in South Australia.
Another issue is overproduction which is most common during the summer months. California’s solar production was so vast that by 2017, California had to pay Arizona and other states in the region to accept some of its electricity during peak production hours in order to provide relief to its grid.
Community Solar Project Participants
Additionally, some housing developments may sidestep rooftop solar projects if there is an associated community solar initiative available. What this means is that solar panels do not need to be installed on roofs in areas with little sunlight, too much shade, or other specific setbacks .
Instead, together the local utility and the California Clean Energy Commission can approve a shared community solar garden, in which residentas draw their electricity. Here, large arrays of solar panels are installed off-site with members of the new community purchasing their power from the large, collective installation. Every kilowatt hour of electricity purchased from the community solar project is then credited towards the propertys power bill, in the same way it would be if the solar panels had generated the electricity directly on site.
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Solar Panels On Additional Dwelling Units
In an effort to help pay the mortgage or accommodate extra family members, may California properties have 2 or more structures with people living inside. Most commonly an additional dwelling unit , also known as a carriage house, granny flat, and more, is added with a seperate entrance atop the garage or elsewhere on property.
Importantly, Californias Title 24 Building Energy Efficiency standards also apply to any ADUs on the property. This means that newly constructed additional residences on a property are also required to have photovoltaic solar panels. Due to their size, a carriage house is only likely to have the minimum amount of solar energy capacity required at about 8 panels for buildings that are less than 1000 square feet.
Past Solar Requirements For California Buildings
Before AB-178 was sworn in, the state of California had already been making green strides towards a future with solar energy. A few other other major oridiances that have been enforced in the Golden State.
- Since Jan 1st, 2014, all new Californian residneces and commercial buildings have been required to have a solar ready roof.
- Since Jan 1st, 2017, every residence or commercial building below 10 stories in San Francisco has been required to have PV solar panels or solar water heaters.
- Solar zones, most commonly on roofs, must be clearly identified in construction plans. Solar zones are required to take up no less than 15% of the roof area.
Essentially, California is a leading example of how purposeful legislation can lead to rapid renewable energy adoption. With a new generation designing only solar ready roofs, the record-setting mandates in San Francisco and statewide paved the way for AB-178 to be enacted.
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How Many Solar Panels Do You Need For Common Household Items
If you are considering solar energy for your home, you may also be asking how many panels are needed to power specific appliances. However, it is important to understand how solar generation works:
- Solar systems deliver most of their energy production in the hours around noon
- During the early morning and late in the afternoon, solar generation is much lower. This is because there is less sunlight reaching the panels
- Households have the highest energy consumption in the evening and early morning
Since solar panels depend on sunlight, you cannot control their electricity production. Powering home appliances directly with panels is impractical and potentially dangerous, unless you use a solar battery to store energy. If you connect home appliances directly to the panels and inverter, a dark cloud passing over your home will shut off the power. At night, you would have to switch to the local power supply anyway.
The most practical solution is synchronizing solar systems with the local power supply, which lets them operate as a single power source. When solar generation cannot power your home appliances by itself, the rest of the energy comes from the grid. If your panels have surplus production, you can send it to grid to get a credit on the next electricity bill.
This table considers the most power-hungry appliances found in homes. Most small appliances and electronic devices have a very low consumption, which does not even match the production of one panel.
On The Other Hand: The Case For The Mandate
Energy wonks and practitioners have also offered a variety of arguments in support of the mandate.
1) Political will is not fungible.
It is an eternal verity of politics that any new policy is met by wonks explaining why other policies would have been better. But California advocates and policymakers do not get to pick and choose policies like theyre shopping at a supermarket. There was a coalition for this.
As the Washington Examiner writes, the change had broad support from home builders, state political leaders, and solar advocates. Also, the CEC was able to make the change without legislative approval. And the costs are concentrated on builders and homeowners rather than the broad public.
All of that is true of an extremely limited set of policies. The right question isnt whether this change is better than some fantasy wonk bill, but whether its better than other policies that actually could have passed or, more likely, the status quo.
2) The CEC probably overestimated costs.
The CEC drew its cost estimates from a comprehensive, top-down report on global clean energy trends from BNEF. But there are many reasons to believe that it is substantially overstating what rooftop solar will cost Californians. BNEFs report includes the solar rooftop retrofit market, but costs are much lower for new construction, especially as it scales up.
3) Scale will bring innovation.
4) Cost reductions bleed over.
7) Solar will become more visible, familiar, and contagious.
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What Is A Solar Ready Roof
After a solar ready roof was required for any new construction in California, this let many people owning what a solar ready roof actually was. By definition, a solar ready roof
Is a specifically designed structure to easily accommodate solar panels. This means that it should be south facing, have plenty of available space, and contain minimal obstructions. The National Renewable Energy Laboratory has put together this overview for solar ready roof guidelines.
Solar Growth Predicted To Continue
As explained by the infographic and in our new report, Solar Power on the Rise, solar installations are likely to continue increasing at an impressive rate. Projections from the U.S. Department of Energy suggest were headed to almost 1 million homes by 2020 . If solar costs significantly decline from todays levels, DOEs SunShot study predicts that solar installations could grow to nearly 4 million homes by 2020.
There are several reasons for this transformation, like innovative financing and ownership structures that have lowered upfront installation costs. PV panel prices and related components have declined significantly, and the soft costs like labor and permitting have gone down as well. Many states have also enacted policies that provide homes and businesses with incentives to go solar, and some states, like California and Minnesota, have created programs to encourage solar installations in low-income neighborhoods.
As a result, new solar rooftops are popping up in more locations across the country and in neighborhoods representing a wider socioeconomic range than ever before. As discussed in our report , in 2011 and 2012, the largest number of residential solar systems installed in Arizona and New Jersey were in neighborhoods with median incomes of $40,000 to $50,000 and $30,000 to $40,000, respectively.