Solar Rebates and Incentives in 2021 Explained
Who wouldn¡¯t like to cut down their energy cost? A safe guess is no one. Switching to solar energy is the perfect way for businesses and homeowners to lower their electricity bills, yet many are hesitant in taking the leap due to installation costs. This is where federal incentives, including solar rebates and tax credits come in.
The cost of installing solar PV systems has dropped significantly over the past decade due to continuous developments in solar technology. However, the lack of skilled labor and difficulties in securing permits means installation cost remains a major hurdle in switching to solar energy. Add to that the slowdown faced by the industry over the past year due to the pandemic, switching to solar would not have been a viable option for many. So, how will things change this year?
(Note: This blog will only discuss trends that would affect solar PV installations in residential and commercial sectors.)
Federal Incentives and Solar Rebates
As part of its plan to reduce reliance on fossil fuels and oil for generating electricity, the government is pushing both residential and commercial sector to fulfill their energy requirements by installing solar PV systems. Over the past decade, the US government has introduced several incentives, including solar rebates and tax credits to encourage people who want to switch to solar energy.
Despite last year¡¯s economic slowdown, federal incentives and rebates allowed residential and commercial consumers to switch to solar power. According to EnergySage, home solar installation increased by 7% in 2020. Apart from a reduction in prices of solar equipment, incentives offered by federal government, states and other authorities including municipalities and utility companies also played a role in the reported increase.
At the end of last year, the government decided to maintain the federal solar rebate ¡ª or the investment tax credit (ITC) ¡ª at 26% instead of reducing it to 22%. The incentive will enable people to save up to 26% of the total installation cost. The 26% rebate will stay in place until the next two years, after which the rate will come down to 22%.
Simplifying Solar Permits
One discouraging factor for businesses and homeowners who are looking to switch to solar energy is the complicated process of obtaining a permit. According to the Solar Energy Industries Association (SEIA), the painstaking process of obtaining a permit can add up to $7,000 to the installation costs.
This year, the government has plans to digitize the process by introducing the SolarAPP (Solar Automated Permit Processing). The online platform will help streamline the process by enabling authorities to conduct an instant review of solar installation plans, give immediate feedback to installers without having to personally visit the site in order to inspect the project. Through the
online platform, concerned authorities can run compliance checks to ensure installation procedures are in accordance with the rules.
According to the SolarAPP website, the platform integrates with the existing official software, allowing authorities to conduct an automated review of installation plans, track projects, approve permits and verify installation checklists.
Increased Funding and Friendly Measures
The solar industry may also see a boom under the current Biden administration that is striving to extend federal tax credits and provide funding to underserved communities who find it economically unfeasible to switch to clean energy.
The government might also remove tariffs imposed on solar panels by the previous administration, which is expected to help the solar industry boom.
An increase in solar installations is also expected after the extension of the 26% investment tax credit granted by government late last year. Added incentives like net metering, solar renewable energy certificates (SREC) and performance-based incentive (PBI). Depending on where they live, consumers may be able to avail added benefits offered by states and utility companies on solar installation.
The solar industry is constantly evolving and manufacturers are working on improving panel efficiency for increased power generation.
Companies are also focused on producing solar panels with higher wattage. Most panels currently produce 250-400 Watts of electricity, but that might increase exponentially. According to EnergySage, last year leading manufacturers created panels with wattage nearing 600W. Though these panels will take some time to reach commercial and residential sectors, the evolving technology indicates that the growth of the solar industry is nowhere near slowing down.
Another factor, which would encourage people to switch, is the manufacturing of solar batteries with increased storage capacity. In recent years, more cities are being hit by natural calamities that disrupt electricity generation and supply. Powerful solar batteries that promise uninterrupted provision of power for longer times will encourage more people to switch to solar energy.