Federal tax credits for the installation of solar power equipment remain in effect, and there is significant money to be saved.
This guide to the Federal solar investment tax credits gives you what, how, and how much can be saved when you install solar electric panels or BiPV solar tiles aka solar photovoltaics or a solar hot water system on your residence. Saving money at tax time has never been easier – and this is a very good time to consider going solar.
What is the Federal Solar Investment Tax Credit?
Since Congress passed the Energy Policy Act of 2005, the Residential Renewable Energy Tax Credit has allowed homeowners to deduct a percentage of the installed cost of a solar PV system for their home. It was originally set to expire after 2007 but has since been extended several times. The current expiration date is December 31, 2032. Will it be extended again? Probably, but it’s a risk to wait.
When evaluating whether residential PV solar panels are worth the cost, there are 10 main factors you should consider as part of your cost-benefit analysis. Let’s dive right into it.
Let’s face it, domestic electricity costs are rising rapidly across the nation, especially in Los Angeles, California where residential electricity rates have increased by over 10% from June 2020 to June 2021. Across California, prices have risen by 7% in the same time period.
There is no reason to expect that the rapid increase in electricity and home energy costs will be curtailed any time soon. In fact, with the rapid adoption of sustainability and ESG policies such as moving away from coal and fossil fuels, domestic energy costs are likely to continue to rise over the next decade, especially in states with limited natural resources.
A growing adoption of electric (BEV) and plug-in hybrid electric (PHEV) vehicles also puts an increasing demand on the electric grid and existing infrastructure. Expanding and upgrading the existing infrastructure to support rapidly rising number of BEVs and PHEVs on the road will likely continue driving up electricity rates over the next 5-10 years. – These dynamics are projected to accelerate as states like Washington, Oregon, California, and others incentivize or mandate policies that foster adoption of electric vehicles by 2030 and/or beyond.
This is an interesting time to consider adding a solar power system to your home because solar energy is no longer getting cheaper (due to a broader and ongoing price inflation), while the range of available solar options for homes is continuing to expand. Today, your options are no longer limited to the traditional photovoltaic (PV) solar panels.
Global Solar thin film panels on a standing seam metal roof. Source: Global Solar
Thanks to the advancements in solar technology, you can now opt for the so-called thin-film solar panel laminates designed to adhere to standing seam metal panels or to flat roof surfaces (membranes) like PVC, TPO, EPDM Rubber, without the need for any roof penetrations. Thin film panels feature peel-and-stick adhesive that eliminates the need to drill holes in the roof.
What’s in this guide: This guide compares innovative thin-film (TF) photovoltaic laminates to traditional PV solar panels with respect to balance of system (BOS) costs, pros and cons, available options, and more.
Did you know? The cost of residential solar energy panels has dropped by over 50% since 2010. The current average cost of a residential PV solar panel system hovers between $2.80 and $3.50 per installed watt. This is before the federal solar tax credits from the federal government.
US PV solar system pricing by market segment. Source: Wood Mackenzie
For example, today, a typical 6kW PV solar panel system costs approximately $18,000-$19,440 before the applicable federal tax credits and local incentives are applied.
Before we break down residential PV solar system options, this table offers a quick comparison.
