In 2015 alone, the state of New York invested $773 million in solar installations, a growth rate of almost 63 percent. This represents a total of 242 MW in additional capacity, securing its rank as 7th across the nation. Currently, the total capacity across the state has reached over 802 MW, allowing solar power to provide electricity to the equivalent of 136,000 homes.
Increased efforts in the solar power industry through 2020 should increase the states ranking from 7th to 5th, with an estimated capacity of 3,007 MW. Efforts across the state support over 600 solar-oriented businesses include more than 70 manufacturers and just shy of 180 contractors and installers.
Even though state support for solar energy is fairly strong, it is still important to consider all of the implications before going forward with a solar power system installation for your own home. Often, the upfront costs are notable and may feel out of reach to many. However, there are benefits and incentive programs that can make these costs more manageable.
To guide you through the decision-making process, here are some key considerations regarding the choice to invest in a solar energy system for your home in New York.
The state of New York has taken a very aggressive stance regarding the implementation of renewable energy systems. As of 2017, the Renewable Portfolio Standard set forth by the state's government requires utility companies to reach a goal of 50 percent of the state's power to be generated by alternative means by the year 2030. This is a reflection of the strength of the state's policies relating to energy creation and use for the years to come, and can lead to significant incentives for homeowners willing to explore renewable energy sources like solar energy system installations.
However, the 50 percent goal does not include specific requirements for solar energy, which can make some homeowners nervous about proceeding. But it is important to realize that solar energy systems are often an easier solution for residential properties when compared to other sources like wind energy.
|Local Rebates||$400-$800 per kW|
|Tax Credits||25% up to $5,000|
|Performance Payouts||None :(|
|Property Tax Exemptions||100%|
|Sales Tax Exemptions||100%|
Since the new 50 percent goal wasn't put into place until 2015, the growth in the solar power industry across the state is experiencing significant expansion. And, as more companies enter the sector, price reductions may also occur due to increased competition.
Overall, the state of New York's stance on solar power can be seen as highly favorable, making it an excellent choice for homeowners interested in pursuing alternate energy sources for their home electricity needs.
New York has chosen to offer a combination of programs to qualifying homeowners to encourage solar power installations on residential properties. The first form comes a traditional incentive for residential solar energy systems. Homeowners can receive funds based on their associated residential block structure.
Blocks are divided first by regions, such as Long Island, Con Edison, or Upstate. Then each region is split into individual blocks. Incentives vary depending on the MW targets associated with these smaller areas. That means individual homeowners need to identify their corresponding block to determine the rates and requirements that apply to them.
In addition to the traditional incentive program, the state of New York also offers additional incentives to individuals that meet certain income guidelines. This helps make solar energy systems more affordable to individuals with lower incomes. Income limits vary by county, so it is also important to review these criteria to determine if you qualify for additional incentives before proceeding with an installation.
The state also connects residents with loan options to help facilitate more solar installations. Residents may qualify for amounts up to $13,000 or $25,000 depending on whether higher cost-effectiveness standards are met. Repayment periods can also vary, ranging from five to 15 years.
Borrowers interested in securing a loan will receive options based on their creditworthiness, including an examination of their credit score, and that will ultimately determine whether a loan is approved as well as the associated interest rate.
Two residential installation repayment options are available including an on-bill recovery option. Required payments for these loans are connected to the borrower's utility bill, helping to ease the repayment process through greater convenience. Additionally, payments will not exceed the estimated utility savings based on the specifications surrounding your residential solar energy system capacity. Traditional financing is also available through the state's loan servicer.
An additional incentive offered by the state includes a Solar Energy System Equipment Credit. This tax credit can equal 25 percent of the total cost of equipment up to an amount of $5,000. The tax credit is considered nonrefundable, but remaining balances can be carried over for up to five years or until the credit is fully realized, whichever comes first.
Based on the comprehensive nature of the state-based programs, local homeowner incentives are highly limited. However, it is important to review information from your local municipality and utility provider to determine if additional funds may be available.
Additionally, certain locations offer exemption from local sales tax for products associated with a qualifying solar power installation. Depending on local tax rates, the savings can be noticeable. However, they may not be high enough to be considered a determining factor in the decision to go solar.
It is also important to note that increases in one's property value based on the installation of qualifying solar energy systems may not be used in the determination of property taxes. Depending on the local property tax rate, and considering that taxes are an ongoing requirement, these savings can be beneficial over the long-term.
All qualified taxpayer's who install an approved solar energy solution may be eligible for significant tax incentives from the federal government. As of 2017, homeowners can receive a tax credit in an amount that is equal to 30 percent of the qualified costs incurred during the purchase and installation of solar systems, including equipment costs and labor related to the project. However, the tax credit is only available when the solar equipment is installed on a primary residence and is not available for rental properties or vacation homes.
Additionally, there is no limit regarding the size of the tax credit as long as the solar energy system qualifies based on standard guidelines. That means, regardless of the total costs involved, every applicable scenario results in a full 30 percent credit to the taxpayer. But, like the state tax incentives, these credits are considered nonrefundable. However, any amount not used during the initial tax year will carry over to the next. This means taxpayers will either receive the full value of the credit over the course of one to two years or as much of the credit as can be applied during the two tax-year timeframe.
While the current tax credit is set at 30 percent of the costs associated with the system and its installation, that amount is scheduled to change over the next few years. For example, installations completed between January 1, 2019, and December 31, 2020, will only qualify for a tax credit in an amount equal to 26 percent of the total costs. Further, installations that occur between January 1, 2021, and December 31, 2021, will only receive a credit equal to 22 percent of the total costs.
Currently, there is no tax credit schedule beyond 2021. However, that could change should new legislation create new credit standards for subsequent years. It is important to note that it is possible all tax credits will cease once the previously mentioned time frame lapses, so failing to act before the end of 2021 could mean there is no tax advantage offered by the federal government for installing a solar energy system.
One of the biggest incentives associated with solar energy systems is the savings associated with your monthly utility bill. Currently, New York has an average rate of $0.17 per kWh, making it a fairly expensive state based on electricity costs. Often, that makes savings more noticeable than states with lower rates and can be a significant factor when deciding whether installing a qualifying system is right for you.
As of 2015, the average amount of electricity used by U.S. households reached 10,812 kWh over the course of one year. That means a New York household that uses the average amount of electricity pays $1,838 a year, or approximately $153 per month, on electricity alone.
To help make the potential of solar more accessible, it is important to understand that a 250-watt solar panel that receives four hours of full sunlight during a 24 hour period creates 1 kWh. So, that one panel can save an amount equal to $5.10 over 30 days, or $62.50 during the course of one year.
Choosing to install five solar panels saves $25.50 during a 30 day month, resulting in a total of $310.25 during a year. Increasing the installation to 20 panels creates savings of $102 and $1,241 respectively while 30 panels can save $153 every 30 days or $1,861.50 in one year. That means a household that uses the U.S. average amount of electricity can essentially eliminate their utility bill with 30 panels based on the above calculations.
However, it is important to note those figures are an example only. Different solar panels have different capacities and rates of efficiency. Additionally, your household may use more or less than the average amount of power consumed. To fully understand your savings, you need to review your average electricity bill as well as the capabilities of the panels you are considering.
While your electricity bill may essentially vanish once your installation goes online, it is important to consider how long it takes to recoup the costs associated with the system, especially if you chose a loan to help make the costs more manageable. The exact amount of time required to reach equilibrium varies depending on numerous factors, especially since tax credits have differing values based on your tax bracket.
However, you can estimate your return based solely on electricity savings. For example, if you paid $15,000 in cash for your solar energy system and installation, your annual savings of $1,861.50 a year (based on national average usage and average kWh costs in New York) means you will recover your investment in around eight years. And, since maintenance costs during that period are often low, you can likely begin turning a profit before having significant expenses related to maintaining the system. You can also enjoy a life expectancy of 20 to 40 years for the system, meaning you may enjoy up to 32 years or more of profit from your original system.
It is important to remember that the decision to install a solar energy system is ultimately yours. You will need to examine your specific situation to determine the long-term value and assess short-term costs. In most cases, it is best to review your average usage and then consult with a solar professional to get the details regarding your options. That will allow you to make a decision with the most accurate information available.
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