Solar Incentives in U.S. States

Federal Tax Credits and Investment Tax Credits

First, the U.S. government offers generous tax credits for solar projects. Under current regulations, qualifying solar system installers can take advantage of a federal tax credit of up to 30%. This policy directly reduces the financial burden on households and businesses, making solar investments more cost-effective. Additionally, for commercial investments, an investment tax credit (ITC) exists, providing investors with additional tax benefits.

Solar Incentives by State

In addition to support at the federal level, each state in the U.S. has developed solar incentives that are unique to their situation. Below is a list of local solar incentives by state.

Arizona Solar Incentives

Arizona is known as the "Sunshine State" for its abundant sunlight resources, making solar systems a popular choice for home energy efficiency. The state offers a variety of solar incentives, including:

• Residential Solar Income Tax Credit: A tax credit of 25% of the installation cost, capped at $1,000.
• Solar Sales Tax Exemption: provides a 100 percent sales and use tax exemption on solar and battery technologies.
• Solar Property Tax Exemption: provides a 100% property tax exemption on the increased value of solar and battery technology.
• Net Metering Policy: Solar owners are compensated for excess production based on the Resource Comparison Proxy (RCP), which is currently about 50% of the retail electricity rate.

California Solar Incentives

California is ideal for solar applications due to its high energy costs and abundant sunlight resources. Despite the relative popularity of solar energy, California still offers incentives such as:

• Self-Generation Incentive Program (SGIP): provides subsidies of up to $1,000 per kWh of capacity for battery storage.
• Property Assessed Clean Energy (PACE) financing: provides solar financing through property tax assessments.
• Municipal Solar Incentives: such as the Rancho Mirage Energy Authority's $500 solar allowance and the Sacramento Municipal Utility District's $150 DAC-SASH GRID allowance.

Colorado Solar Incentives

Colorado passed a Clean Energy Act in 2023 that provides financial support and a streamlined permitting process for local solar projects. In addition, the state offers the following incentives:

• Solar Sales Tax and Property Tax Exemption: provides 100 percent sales, use, and property tax exemptions for solar and battery technologies.
• Residential Energy Upgrade (RENU) Loans: low-cost, long-term financing up to $75,000 is available.
• Energy Smart Colorado Renewable Energy Rebate: Pitkin and Eagle Counties offer a rebate of 25% of the cost of a solar project, capped at $2,500.

Florida Solar Incentives

Florida is known for its abundance of sunshine and booming rooftop solar industry. Incentives offered by the state include:

• Property and sales tax exemptions: 100 percent property and sales tax exemptions are available for solar and battery storage systems.
• Net Metering Policy: compensates for excess solar production at retail electricity rates.
• Municipal solar incentives: such as Boynton Beach's Energy Advantage Rebate Program, which offers subsidies of up to $1,500 for systems 5 kW or larger.

Illinois Solar Incentives

Illinois has made solar more economically attractive by introducing incentives such as the Adjustable Block Programme (ADP). The programme provides one Renewable Energy Credit (REC) for every 1,000 kWh of solar production, which can be sold on the market for cash. In addition, the state offers net metering and the Illinois Solar for All programme for low-income households.

Maryland Solar Incentives

Maryland offers a variety of solar and battery incentives, including:

• Sales and Property Tax Exemption: Provides a 100% exemption on solar purchases and on the increased home value of solar equipment.
• Residential Clean Energy Rebate: provides rebates of up to $1,000 (seeking to increase to $5,000 in legislation).
• Energy Storage Income Tax Credit: provides a state income tax credit of 30% of the total cost of the battery, capped at $5,000.

Massachusetts Solar Incentives

Massachusetts offers a state tax credit and rebate programme, as well as a generous municipal rebate programme. The state's SMART rebate programme provides reimbursement for each kilowatt-hour of production based on utility and system specifications. In addition, the state offers a 15 per cent tax credit on project costs, capped at $1,000.

New York State Solar Incentives

New York is probably the best state for solar energy in terms of the incentive programmes available to homeowners. In most cases, you can pay for more than half of the cost of your project with some form of incentive.

• State Tax Credit: Residents can receive a state tax credit of up to 25% of their solar expenditures, up to $5,000.
• NY-Sun Program: offered through NYSERDA, you can earn up to 20 cents per watt of solar capacity installed.
• Sales Tax Exemption: 100% state sales tax exemption on solar equipment.
• Property Tax Exemption: 15-year property tax exemption for the value solar adds to your home.
• Net Metering: Two options are offered: Stage 1 plus CBC or Value of Distributed Energy Resources (VDER) or Value Stack.
• PSEG Long Island Battery Storage Bonus: Compensates for battery discharges during summer peak power demand.

New Jersey Solar Incentives

New Jersey may have the most valuable incentive in the U.S. with its successor, the Solar Energy Incentive (SuSI). Combined with federal solar tax credits, Garden Staters can reduce the cost of solar by more than 50%.

• State Sales Tax Exemption: 100% exemption from state sales tax on solar purchases.
• Property Tax Exemption: 100% property tax exemption on the increased value of solar PV systems.
• Successor Solar Incentive (SuSI) Program: This is one of the most valuable incentives in the United States. Homeowners can earn and sell SREC-IIs that produce a value of $85 per MWh of electricity for 15 years.
• Net Metering: residential solar owners are compensated for their excess production of electricity at retail rates.

State of Texas Solar Incentives

With plenty of sunshine and little shade, Texas is tailor-made for rooftop solar energy. However, most incentives are implemented at the local and utility level, not at the state level, so it's worth taking an extra minute to research incentives in your area.

Property Tax Exemption: the Texas Comptroller's Office offers a property tax exemption based on the increased value of solar energy systems.

Local Government and Utility Incentives:
Most solar incentives are implemented at the utility level, including:

• Austin Energy (Austin Energy) rebates of up to $2,500.
• San Marcos Electric Utility (SMTX) rebates of up to $2,500.
• Up to $6,000 rebate for AEP Texas North Company's SMART Source Solar PV programme.
• Up to $5,000 rebate for AEP Texas Central Company's SMART Source Solar PV programme.
• Oncor Electric Delivery offers rebates on eligible solar and battery projects.
• Garland Power & Light buys back $0.0669 per kWh of excess solar.
• Denton Municipal Electric (DME) averages incentive amounts of $4,000 in solar rebates.
• New Braunfels Utilities up to $3,000 in solar rebates.

Please note that solar policies may change over time and policies for specific areas may differ from state policies. It is recommended to contact an expert consultant for the most up-to-date details.

This resource is a work in progress and does not yet cover every state and solar incentive.