Have you ever thought about what you’d do if you won the lottery? I have. There are so many great ways that I’d spend the money (and not all of them selfish!). But, until now, I have come up short on every lottery ticket I’ve ever purchased. Then I discovered the power of the tax credit.
Earlier this year, my husband and I decided to “go solar.” We live in Orange County, and there’s no shortage of hot, sunny days—great for the beach, but not so great for our electric bill. So, when we heard about the Energy Policy Act of 2005, more commonly known as the “Solar Investment Tax Credit,” or ITC, we decided to explore solar energy.
What is the solar tax credit?
The ITC is a tax credit (not a reduction—there’s a huge difference) that provides an incentive of up to 30 percent of your costs on your federal tax return when you choose to power either your residential or commercial property with solar energy. “Essentially, the federal government is giving 30 percent of the paid cost back to the buyer based off of the initial solar cost,” explained Shane Perkins, co-founder of Legend Solar.
So, breaking it down into real numbers, Jeff and I paid $41,000 to purchase our solar panels and got about $13,000 back in a tax credit. We also financed the entire purchase with only $1000 down. So, our total output to “go solar” was $1000.
The tax credit will be valid at this rate until December 31, 2019, at which time it will decrease each year until December 31, 2021, when it remains indefinitely at 10 percent for commercial consumers and dissolves completely for residential.
How much can I save?
“You can save thousands each year with solar power,” said Brett Jarman, co-founder of RevSolar. “Consumers in states where energy prices are high (California, for example), have reported a savings of several hundred dollars each month.”
He’s not wrong. A study was conducted by NC Clean Energy Technology, in which they discovered that solar PV customers in America’s 50 largest cities who had invested in a 5 kW solar PV system saved on average between $44 to $187 per month during the first year.
We’ve had our solar panels for less than a year, and it’s already paying off for us financially. Our house is a little over 3000 square feet, In the summer, our average electric bill was running us about $500-$750/month. I know that sounds ridiculously high, but we live in California. Once we got solar, the price dropped to about $5 per month. Instantly.
Once we factor in the price of the solar panels, we figure that we’re still saving about $200 per month. And in twelve years, when the loan for our solar panels is paid off, we’ll be saving the full $500 per month.
There’s more. If we generate more power than we use, the power company will actually pay us money for the power.
So, whether you’re environmentally minded or just want to make thousands of dollars fast, exploring the power of solar energy may be worth your time. Jeff and I are taking that money to Fiji! Just kidding, we’re using it for a house payment, because we live in California. But we love it!
Latest posts by Amy Osmond Cook (see all)
- How to Save Thousands of Dollars in an Instant - November 17, 2016
- 4 Questions to Ask Your Solar Rep - August 29, 2016
- How Solar Power is Becoming a More Realistic Energy Option - August 1, 2016