Federal Tax Incentive For Solar: Spring Install

It wasn’t too long ago where we spoke about a Spring Harvest of solar. If you didn’t happen to read that post, a quick review will remind us that installing a solar PV system in the Springtime is frequently seen as “the BEST” time to install a solar system. We still believe, like other industry leaders, that the spring season is an ideal time. Also you don’t want to miss out on the Federal Tax Incentive for Solar. However, what we also believe, due to reader feedback, is that the term “solar harvest” was more confusing than education. That is why we decided a re-do was in order.

Solar at the Top of the Home Improvement Priority List

Home improvement projects keep many homeowners awake at night. As harsh winters turn in to warm spring days, people are motivated to dig into their dormant “to-do” list and get their homes into tip-top shape for fun-filled summer days. And since time and money are often constraints on our home-improvements plans, the argument of whether to install a residential solar panel system on a home is often debated. Yet, there is a myriad of reasons why solar improvements should be at the top of your home improvement projects list.

Solar is Affordable

In the early years of residential solar, solar panels were very expensive. Today, the average price per watt a homeowner pays is a little over $4.00. However, the average price per watt in the early years was much closer to $10.00. The cost of solar panels has fallen to a point where the investment return is often more than the investment return you can get on more traditional investment strategies.

Federal Tax Incentive for Solar

There is still a lot of talk about the solar tax incentives going away. And, we can’t sugarcoat the fact that they are going away. However, the 30% Federal Tax incentive is still available and can make a significant impact on the overall cost of the system with families who qualify. For example, the average size of a solar system in our community is 7.5kW, which averages about $28,500. However, if you consider the 30% tax incentive, the overall cost of the system for the homeowner is closer to $19,950. The Federal Solar Tax Credit of 30% will ultimately be reduced to 0% by 2022 for residential solar energy systems.

What if I Can’t Pay Cash?

There are a lot of competitive solar loan options available to people today. Many include $0 down offers, meaning homeowners can start saving on their utility immediately. It is not possible, and quite common, that people can buy solar panels for their home with a zero down finance package where the monthly repayment is less than the electricity savings received from the system. This allows a homeowner to start to grow a profit immediately from lower monthly payments and a $0 down investment cost. Plus, as power prices increase, and the solar loan is paid off, the monthly profit will grow.

Why Spring? Maybe Solar Systems Will Drop in Price in 2018

January 2018 brought forth new import tariffs on solar panels and solar cells that will have an inflationary effect on the price of solar panels. Although solar companies knew the tariff was coming, most companies could only stock-pile so many panels to evade the price increase. This means that as the year progresses, panels and installed systems will only increase.

This begs the question of the falling prices of solar panels. Price deflation does exist – however, it exists at a much smaller rate than it has in previous years. Solar Reviews research suggests that in 2017 solar panel costs fell less than 6%, a notable difference of previous rates of 7% and higher. Together with the increased cost of panels due to the tariff, any sort of cost deflation would be eaten.

Electricity Costs Continue to Increase

The other variable that just cannot be overlooked in asking why NOW for solar is that the cost of electricity will continue to rise. PG&E rates increase annually. From 2004 to present, the weighted annual increase is 5%. This takes into consideration variations of discount programs, which have seen an annual rate increase of anywhere between 3.34% to 6.37% for standard PG&E use tiers. In fact, nearly all ratepayers are currently paying greater than 50% more for the same amount of electricity in 2015 as they were in 2004. The start of 2018 came in with a 2.8% increase – which although not as radical as previous increases, still gave customers a notable jump in their utility bills. The opportunity for homeowners to own their own electricity production and evade future increases with PG&E creates a peace of mind that PG&E dependence just will not ever allow for. Looking into the future, PG&E reports predicted increases of at least 2.1% annually.

The Biggest Immediate Return on Investment

PG&E inflation, dropping panel costs, new import tariffs and disappearing tax incentives are all variables that can be accounted for throughout the year. So, the question really is, why NOW and why Spring?

The answer is simple. Spring has the greatest immediate return on investment because solar panels are incredibly efficient in the cooler sun of the Spring months. Plus, spring days are filled with sunshine, but typically the temperatures are not too hot or too cold, meaning you are not running your AC. This allows the homeowner with solar to overproduce the amount of energy they use in the month and roll back their meter. The benefit? When the hot summer months of summer are upon us, instead of having to pay for increased use of electricity, the banked energy from spring covers the use and your electricity bill still balances out to $0.

Additionally, wait times for solar arrays to be installed on your home are greatly reduced in the spring. As many homeowners recognize the urgency to go solar in the heat of July, the backlog of install dates has grown and you might not get a system up and running until the end of the summer months.

Are you ready to get started on your conversion to solar power? Contact us today to schedule your complimentary energy audit so our Energy Advisers can help determine what system size and panel structure are best for your energy needs.