Lost in all the talk of dropping oil prices and rising interest rates is news that is expected to transform the solar world, and the homes (and bank balances) of those who have (or want) solar energy. A federal tax credit that was set to expire at the end of this year was instead just extended for five more years.
"In a surprise move, U.S. lawmakers agreed to extend tax credits for solar and wind for another five years," said Bloomberg News. "This will give an unprecedented boost to the industry and change the course of deployment in the U.S."
The extension means "a 30% federal tax credit offered by the EPA and Department of Energy to encourage Americans to use solar power" for the next five years," said The Simple Dollar. "If you install Energy Star-approved solar power systems, the credit allows you to claim 30% of the cost as a tax credit for the year you installed it. That amount is taken directly off your tax payment, rather than as a deduction from your taxable income."
The increase in installed solar because of the extension is expected to be substantial.
"Solar will more than triple in size from just more than 24 GW of total capacity to nearly 100 GW by 2020. By that point, there will be enough solar installed to power 20 million American homes," said Ecowatch. "This seemingly routine legislation is historic because it brings the solar industry to the forefront of the conversation about American energy."
Capitalizing on trends
Bloomberg calls this "exactly the sort of bridge the industry needed" to continue absorption trends. With costs continuing down while usage works its way up, it's important to capitalize.
"The costs of installing wind and solar power have dropped precipitously—by more than 90 percent since the original tax credits took effect—but in most places coal and natural gas are still cheaper than unsubsidized renewables," they said. "By the time the new tax credit expires, solar and wind will be the cheapest forms of new electricity in many states across the U.S. The scale of the new projects will help push costs down further and will stimulate new investment that lasts beyond the extension of the credits."
Making solar affordable
Affordability—or lack thereof—has long been a knock on solar, discouraging many from exploring options to traditional energy. The cost of a solar panel can range anywhere from $650 to $900 per panel, according to Todd Davidson, from Clean Energy Collective. Incentives make them more affordable, but that's not the only financial advantage.
"Incentives play a big part. But even without incentives there is ROI, or return on investment," said green-energy consultant Steve Pope on The Simple Dollar. Not to mention the cost savings associated with lower electric bills and the potential for building equity in your home.
"From what we've seen about homes that go green, installing these assets increases the value of a house by 13%," said Pope. "It does make a difference when you're trying to sell a home. When you're adding solar power you're adding long-term value to your home."
RENEWABLE ENERGY CORPORATION
Those who want to add solar panels to their home or incorporate them into a newly built home have options other than buying them outright.
Power purchase agreement (PPA)- A PPA is a contract in which you pay only for your solar power. Because ownership of the system remains with the solar company, you don't pay for the equipment or installation.
Solar leasing- Lease your system instead of buy, just like you'd do with a car. Low and no-down payment options are available.
Low-interest loans- At a number of different solar companies, you can take out a low-interest loan for your solar system and make payments according to your solar production.
Is solar energy on your radar? Which options might you consider? Let us know in the comments.