Incentives Available To Help Pay For A Renewable Energy System

Educating yourself on solar panels purchase in your state can be a difficult task. Every state has different rebates to support a solar panel system purchase. Here is an overview of the basic programs available to some homeowners as of 2011.

Rebates

Rebates are typically refunded to the solar panel system owner, after the installation is complete. This rebate can sometimes be assigned to the solar panel system installer, which helps mitigate the out of pocket expense for the homeowner. Another rebate is available to every state of the union is the 30% tax credit. This is a non-refundable tax credit, which means there must be a tax liability for this credit to be credited. It is possible that one may claim this tax credit over a period of years until it is depleted or expires, whichever comes first. See your accountant for the specifics.

SREC or Solar Renewable Energy Certificates (sometimes called: Credits)

These are basically publicly traded commodities sold to buyers who are required to produce a certain level of renewable energy, but have fallen short of their required goal. Rather than pay the penalty, they are allowed to purchase these certificates from regular folks, who create renewable energy. Understand, that these utilities companies are not purchasing the electricity itself, rather the certificate that proves that the holder of the certificate created 1000 kilowatts of renewable energy. By purchasing your SREC, they can claim that they created the energy, and be that much closer to being compliaant with their renewable portfolio requirement. This is a very abstract concept, and one cannot to expect to understand the concept of SREC in one sitting. As an example, a solar pv system in NJ, would fetch over 600 dollars for each SREC. This means that an average size solar pv system in NJ would 4,000-6,000 dollars per year in SREC dollars. This is why solar panel system New Jersey can pay for themselves within 4-5 years. In a home equity loan scenario, positive monthly cash flow from the solar panels in NJ can be created immediately and will continue on for 15 years.
Some utilities and other entities are willing to buy your SREC’s up front, which is an additional way to limit your initial out of pocket costs. They will typically offer you somewhat less than the current market price for the SREC, but of course they are taking on the risk of what the future value of the SREC will be.

Feed-In Tariffs

Feed-In Tariffs are not as popular in the United States, because they are simply hard for us to stomach that someone in our free country would be forced to pay far above the going rate for a product or service. It is like someone telling you that you had to pay 15 dollars for a 5 dollar foot-long. Feed-In Tariffs forces an energy supplier to buy renewable energy, significantly higher than the market price. The idea is to help pay back the owner of the solar panels for the cost of their system. At the end of the day, SREC’s do the same thing, in a seemingly kinder and gentler way. Somehow we are more used to fees and penalties in the USA as opposed to being forced to pay too much for something against our will.

These incentives have served to prime the pump of renewable energy device manufacturing. The more technology advances the less expensive renewable energy systems will be to produce. Hopefully, the renewable energy systems industry will be able to stand on its own two feet in the not so distant future.

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Posted under Build Your Own Solar Panels

This post was written by assistant on March 3, 2011

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