et’s explore some essential government programs for solar available right now.
Solar funding opportunities open for applications
Keep in mind that the following list is not exhaustive. The best way to learn about current federal solar incentives is to check the websites of federal departments, especially the U.S. Department of Energy website.
Investment Tax Credit1
The Federal Government’s Investment Tax Credit (ITC) helps homeowners and businesses deduct a part of their solar panel costs from their yearly taxes. In August 2022, President Biden signed the Inflation Reduction Act, which increased the amount and extended the timeline of the ITC. Those who install a solar panel system between 2022 and 2032 will receive a 30% tax credit. That will decrease to 26% for solar panel systems installed in 2033 and to 22% for panels installed in 2034. So if you installed a solar energy system in 2022 but haven’t claimed it yet, now you can claim a 30% deduction instead of 22%. Note that the taxpayer must own the solar panels; leased systems do not qualify.
Solar panel loans: FHA Program2
FHA (Federal Housing Administration) is one of the central government loan funds for solar systems. Currently, FHA offers an option called the Solar and Wind Technologies loan, or SWT. This program is designed for home buyers so that they can add the total cost of a new solar energy system to a regular FHA-insured mortgage. Compared to other programs like the Energy Efficient Mortgage program, the Solar and Wind Technologies loan offers higher project borrowing limits. To obtain this loan, firstly, make sure you request the FHA Solar and Wind mortgage. Next, your home must be appraised without the value of an added solar system. The amount financed for the energy system must not exceed 20 percent of the property’s appraised value. The SWT is folded into your mortgage, so you can make payments over the life of your loan, up to 30 years.
REAP (Rural Energy for America Program)3
The REAP grants from the U.S. Department of Agriculture help agricultural producers and small rural businesses purchase and install renewable energy systems. The funds can also be used to improve already existing equipment. Successful applicants can reimburse up to 25% of the total cost of their project, $2,500 minimum and $500,000 maximum. To qualify for this grant, the applicants must prove that at least 50% of their gross yearly income comes from agricultural businesses. Furthermore, you must prove that you can pay 75% of the project’s cost from your own funds. If you decide to apply for a loan or a loan and grant combination covering up to 75% of the total cost, you must be able to fund 25% of the project. If you have any outstanding delinquent federal taxes, debt, judgment, or debarment, you won’t qualify.
Solar panel fire risk can occur due to factors like faulty installation, electrical issues, or manufacturing defects, although incidents are rare and often preventable.
Solar funding programs that are currently closed to applications
Additionally, there are some other goverment opportunities for solar energy that are not available at the moment but have already significantly contributed to the affordability of many solar projects.
Green Retrofit Grants4
These grants were offered by the U.S. Department of Housing and Urban Development, often abbreviated HUD. The program aimed to help property owners in low-income areas improve their homes by using alternative energy systems, such as solar panels. This retrofit program was authorized by the American Recovery Act of 2009 to boost the economy and create jobs through sustainable development. The funds were disbursed via a $250 million budget and had to be spent within two years. Recently, HUD has started to design a new $1 billion Resilient Retrofit Program authorized by the Inflation Reduction Act of 2022. The program aims “to support energy and water efficiency retrofits and climate resilience of HUD-assisted multifamily properties.”
High Energy Cost Grants5
High Energy Cost Grants were sponsored by the U.S. Department of Agriculture (USDA). As part of its Electric Program, the USDA created these grants specifically for improving energy production in rural communities with exceptionally high energy costs. Eligibility was limited to solar, wind, biomass, and hydroelectric projects in communities with average home energy costs greater than 275% of the national average. The program began in 2000. Under the most recent solicitation in July 2021, grants ranging from $100,000 to $3 million (a total of $7 million) were available for a variety of activities, including buying, installing, improving, repairing, and replacing any alternative energy system that improved your electric production, transmission, and distribution facilities.
Renewable Energy Cost Grants6
The funds for Renewable Energy Cost Grants, also known as the Section 1603 Program, were disbursed by the U.S. Department of the Treasury. This incentive was created as part of the American Recovery Act of 2009 to increase investment in domestic clean energy generation. The Section 1603 program reimbursed individuals for some of the cost of installing clean energy systems, like solar panels, instead of tax credits. The applicants needed to have enough money to install the system because the payments were made only after the system had been placed in service. According to the data of the U.S. Department of the Treasury, this program disbursed over $26 billion to help finance 109,766 projects estimated to produce enough clean energy to power 8.5 million homes.