ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Types of Incentives for Residential Solar Photovoltaic Systems

Updated on May 18, 2016
A rooftop solar PV system.
A rooftop solar PV system. | Source

Incentives for Solar PV Systems

Installing a solar photovoltaic system for your home is a sizable investment. You can expect to pay around $4,000 dollars of every installed kilowatt, but with favorable conditions you can get a payback period of less than 5 years. After that, you will get free energy from your PV system for decades.

Solar power offers carbon-free energy, and urban areas typically have a huge rooftop area available for it. Governments have realized that providing incentives for homeowners to go solar is a great way to increase the adoption of renewable energy, and these incentives typically take one of the following forms:

  • Solar rebates
  • Tax credits
  • Tax exemptions

Solar Rebates

Solar rebates are cash backs for installing a solar PV system, typically offered by electric utility companies trying to meet renewable energy goals (PV systems installed by homeowners count toward their goals).

For example, if your local utility company offers a 15% rebate and you spend $16,000 on a solar PV system, they will give you back $2,400. Your initial investment has just been reduced to 85% of its original value!

As you might guess, rebates are common in countries with a strong renewable energy policy. Electric utility companies are given a deadline to get a specific percentage of their energy from renewable sources, and it is cheaper for them to incentive homeowners than to install all of that solar power capacity themselves.

Tax Credits

A tax credit allows you to deduct a portion of your solar PV system's cost when you file your next tax declaration. In the USA, the best-known example is the 30% investment tax credit from the federal government. As its name implies, the ITC allows you to deduct 30% of your PV system's cost from your taxes. For practical purposes, all solar PV systems only cost 70% of their sale prices until 2020, which is the current expiration date for the ITC.

The good thing about tax credits is that you can use them even if you purchased your PV system with a loan. If you have access to favorable loan terms, you can install a solar PV system with no cash out of your pocket and still get a huge tax deduction within one year!

Tax Exemptions

This term is self-explanatory: a tax exemption means that a specific tax does not apply when you purchase a solar PV system. Unlike tax credits, which allow you to deduct a portion of the investment from taxes you would normally pay, tax exemptions are not paid at all.

With solar PV systems, two types of tax exemptions are common:

  • Sales tax exemption
  • Property tax exemption

The good thing about tax exemptions and tax credits is that you can combine them! For example, you still get the 30% federal tax credit even if the PV system in question was purchased free from taxes.

Incentives for Solar Power

Which of these incentives do you consider to be more effective?

See results

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)