Solar Power Incentives

The state and federal governments encourage residents to use safe, non-polluting renewable energy by offering incentives that lower the cost of installing solar power in homes and businesses. These incentives come in the form of rebates, tax credits, below-market rate loans, deductions and exemptions.

CALIFORNIA

California Solar Initiative (CSI)

Under the California Solar Initiative, effective January 1, 2007, this rebate provides renewable energy users with an immediate return on their investment. The rebate started at $2.50 per watt to defray the cost of buying and installing solar power systems of 30 kW or less. However, its dropping rapidly as more and more people go solar.  It's available to residents, businesses and agricultural enterprises connected to the grid in areas serviced by Pacific Gas & Electric Company, San Diego Gas & Electric Company and Southern California Edison Company.

Check the Statewide Trigger Point Tracker website to see the current rebate - click here.

Solar Tax Deduction

Residents who borrow money to buy solar energy systems can deduct 100 percent of the interest from their California income tax. The deduction is for loans from publicly-owned utility companies, but customers whose utility companies don't offer such loans may be able to deduct the interest of a home equity or home improvement loan.

Property Tax Exemption

Solar energy systems installed in California are not subject to property taxes.

Public Leadership Solutions for Energy Loan

This loan finances renewable energy systems in public buildings, such as those owned by cities, counties, special districts, schools and community colleges. Loans of $2 million or more with no maximum are available for the expected life of the project.

Solar Power Incentives In Other States

Check www.dsireusa.org for a state-by-state description of tax incentives for renewable energy.

FEDERAL SOLAR POWER INCENTIVES

Solar Energy Federal Tax Credit

Residents and businesses receive a tax credit worth 30 percent of the cost of buying and installing a photovoltaic system. This legislation is part of the Energy Policy Act of 2005 (Section 1336- 1337).

The latest renewable energy tax credit went into effect on January 1, 2009. At this time, for residential solar power systems you can take 30% off your taxes for the cost of the solar power system.

Federal Modified Accelerated Cost-Recovery System (MACRS)

Under the Modified Accelerated Cost-Recovery System (MACRS), 26 USC § 168, businesses can recover investments in solar and wind and geothermal property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. For solar, wind and geothermal property placed in service after 1986, the current MACRS lifetime class is five years.

Special 50% First year Depreciation Allowance

This IRS depreciation allowance, IRS Section 179, allows a 50% first year depreciation deduction for equipment placed into service. Check IRS publication 946 for more details.

Renewable Energy Systems Improvement Grant

Agricultural producers and rural small businesses may be eligible for a grant that pays up to 25 percent of the project costs. This program grants up to $500,000 per renewable-energy project. Awards are made on a competitive basis. Check the most current information on this and other funding programs at http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=US05F&State=Federal&currentpageid=1.

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