ennsylvania solar potential remains largely untapped due to somewhat higher costs that may discourage homeowners. However, by taking advantage of the state's solar incentives, you can make your photovoltaic (PV) setup wallet-friendly. In this article, we'll examine these incentives, showing you how to benefit from them to slash your expenses and step into a more sustainable future.
The Keystone State's Solar Scene
At first glance, the state may not strike you as a hub for solar power. With a history rooted in coal and nuclear energy production and recent ventures into natural gas fracking, its photovoltaic energy output seems almost negligible. In fact, only 0.43% of electricity in Pennsylvania comes from harnessing the sun’s power. However, a closer look reveals a budding industry that is slowly but surely gaining momentum.
Although the Solar Energy Industries Association (SEIA) ranks Pennsylvania 24th in the US for PV installations, with 1,036 MW of installed capacity, enough to power 124,232 homes, the state's photovoltaic sector is growing. SEIA forecasts that the state's PV capacity will triple to 3,048 MW within the next five years, making it the 16th fastest-growing market among US states.
This growth is fueled in part by the state government's ambitious goals for renewable energy. Following the release of the Solar Future Plan in November 2018, the state set an ambitious target of increasing solar energy generation from less than 1% to 10% by 2030, generating 10-12 gigawatts in the process.
Large-scale facilities are currently driving solar power expansion in the Keystone State. Projects like Whitetail Solar 1, 2, and 3 in Franklin County, developed by Lightsource bp and completed in 2020, provide 25% of the electricity used by Penn State University. Major corporations such as Lineage Logistics, Target, and Prologis have also embraced the sun’s power, with Prologis' 4 MW project in Easton ranking among the state's largest corporate PV initiatives.
Another noteworthy installation is the 17.5 MW Elk Hill Solar 2 in Peters Township, which powers more than 2,283 homes. Completed by Lightsource bp in 2020, this project exemplifies the large-scale solar initiatives taking root in the state.
As for PA homeowners, historically, they have been hesitant to adopt solar power. However, high electricity costs in the state—averaging 18.29 ¢/kWh, or 14% higher than the national average—are encouraging more residents to consider photovoltaics. Solar energy prices in Pennsylvania have dropped by 53% over the past decade and continue to fall, making PV panels an increasingly attractive option. Coupled with available incentives, the cost of installing the panels is becoming more affordable for homeowners. In the next section, we will delve into the costs and potential savings associated with residential solar power in the state.
Solar Costs and Savings in Pennsylvania
When considering the financial aspect of going solar in Pennsylvania, the costs may seem daunting at first glance. Find Energy reports that the state's average price per installed watt stands at $4.04, significantly above the national average of $2.95. A typical household in the state would require an 8kW photovoltaic system to fully cover their electricity needs, with the overall cost amounting to approximately $32,320. However, this figure could vary due to rebates and other influencing factors.
However, it's essential to think about the long-term benefits rather than just focusing on the initial investment. While the upfront expenses may be discouraging for some, solar energy can lead to substantial savings on utility bills. In fact, over the lifespan of a photovoltaic system, homeowners could see savings of more than $25,000, making the PV investment a financially sound decision in the long run.
Pennsylvania Solar Incentives
Now, it's time to explore the world of financial benefits and programs available to encourage the adoption of clean energy. Although the list of Pennsylvania solar incentives may not be overwhelmingly vast, they nevertheless can potentially save you a significant sum, possibly amounting to thousands of dollars. By embracing these opportunities, you can considerably reduce the burden on your finances.
Residential Clean Energy Credit
Homeowners who invest in PV technology can benefit from the Residential Clean Energy Credit, a non-refundable tax credit that offsets your income tax liability dollar-for-dollar. If the credit exceeds your tax liability, you can carry over the difference to the next year. For instance, a 30% credit on a $30,000 PV system will reduce your income tax bill by $9,000, effectively bringing down the system's total cost to $21,000.
This tax credit is available to all individual taxpayers in the United States, without any income limits, for qualifying photovoltaic equipment investments made to homes. However, if you purchase a photovoltaic setup through a lease or power purchase agreement, you won't be considered the system owner and won't be eligible for the credit.
The Residential Clean Energy Credit covers various energy-saving equipment, including solar powered generators, water heaters, and power storage equipment. Qualifying installation and labor costs are also included. However, the credit does not apply to leased systems or those used for heating swimming pools or hot tubs.
To qualify for the credit, energy-saving improvements must be made to your U.S. residence, which can range from a traditional house to a manufactured home that meets federal standards. Your PV equipment must be installed between January 1, 2017, and December 31, 2034, and be new or used for the first time. If you meet these criteria, complete and include Form 5695 with your federal tax return for the tax period when the PV system is first installed and made operational to claim your tax credit.
Alternative Energy Credits (SAECs)
PV energy adopters can take advantage of the state's unique Solar Renewable Energy Credit (SREC) program, locally known as the Alternative Energy Credit (AEC). This initiative encourages the growth of renewable energy by providing an avenue for PV panel system owners to earn revenue from the surplus power they generate and return to the grid.
Peak sunlight hours refer to the period when solar energy is most abundant, optimal for efficient utilization in solar power generation.
In 2023, the going rate for a Pennsylvania SREC is $48, and a typical 8kw array in Philadelphia can produce approximately 9 SRECs annually. This means homeowners can potentially earn around $432 each year. To take advantage of this opportunity, PV system owners must register with the local Alternative Energy Portfolio Standards (AEPS) and the Generation Attribute Tracking System (GATS). Your installer will guide you through the registration process.
The SREC program also offers flexibility and opportunities for social impact. Homeowners can choose to donate their SRECs to support clean energy projects in low- and moderate-income communities. Additionally, Pennsylvanians have the option to sell their SRECs in Ohio, albeit at a lower price.
Net metering is a game-changing policy, allowing homeowners to sell their extra solar generated electricity back to their utility company at the same rate they pay for it. This innovative approach creates a virtual energy bank on the grid, allowing homeowners to use their excess energy when their production declines.
Pennsylvania has been a leader in promoting net metering since 2008, when legislation required all investor-owned utilities to offer this service to residential customers with photovoltaic systems up to 50 kW. This policy ensures that homeowners receive full retail credit for any excess energy they generate, maximizing their investment.
PECO and Duquesne Light are two local utilities leading the charge in net metering rates. PECO offers some of the most attractive rates in the state, while Duquesne Light provides full retail rate compensation to residential customers.
Philadelphia Solar Rebate Program
Philadelphia homeowners have an exciting opportunity to earn a $200 per kW rebate for their photovoltaic system until 2024. An 8kW system could fetch them $1,600, a significant saving for any household. However, the rebate funds are limited, with only $500,000 allocated each year. This translates to a mere 500 families receiving the rebate annually. Thus, it's essential to act fast and apply before the funds run out.
Wrapping Up: Solar Accessibility Through Incentives in Pennsylvania
The Keystone State's transition towards clean energy may seem slow, but it's gaining momentum and proving to be a promising alternative to traditional coal and nuclear power. The state government has set ambitious goals, and the solar market is thriving, indicating a bright future for photovoltaics. For homeowners who are still unsure about making the switch, there are numerous government-backed initiatives available to make it worth their while.
Pennsylvanians can take advantage of various tools, from the Residential Clean Energy Credit to net metering and the Philadelphia Solar Rebate Program, to reduce the upfront costs of photovoltaic installations. They can even earn an income stream by selling surplus power back to the grid through Alternative Energy Credits (SAECs).
Despite the initial investment, solar power offers significant long-term benefits, including reduced utility bills and potential income from SAECs. Moreover, harnessing the sun’s energy can contribute to reducing the state's carbon footprint and promoting a more sustainable energy future.
With the Pennsylvania PV industry expected to grow exponentially, there's never been a better time to invest in your own installation. As costs continue to decrease and incentives become more attractive, homeowners can embrace the advantages of renewable energy, both economically and environmentally. So, seize the moment and join the solar revolution in Pennsylvania to start living a more sustainable lifestyle today.