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Government Incentives
Government incentives are available at the state and federal level.
The federal incentives include a 30% investment tax credit (ITC) for residential installations. Commercial installations are eligible for a 30% grant and accelerated depreciation.
The 30% ITC is a dollar for dollar offset of your tax liability. For example if you installed a $30,000 system, you would be allowed to offset your tax bill by $9000. If you couldn't use all of the credit in the first year, you could carry it forward to the next year. (Our disclaimer: We are not tax accountants. Do not rely on Sunriver Solar for tax advice. Please contact a tax professional.). A tax credit, therefore, acts as a dollar for dollar reduction in the cost of your solar system.
At the state level, incentives are offered both by the investor owned utilities (IOUs) and the municipally owned utilities (MOUs). The structure of the incentives offered by the IOUs (PG&E, SCE, and SDG&E) is consistent across the 3 IOUs. The structure of the incentives offered by the MOUs varies. Because there are so many MOUs, we cannot address each one here. If you are served by an MOU call us for more information.
The state incentives offered by PG&E, SCE, and SDG&E are governed by the California Solar Initiative, a program that became effective January 1, 2007. This program pays a grant to each person who installs a grid-tied solar electric system. The amount of the grant depends on the size of the system installed and the expected electricity produced. Generally one can expect the state grant to pay for approximately 20% of the cost of a system. However, the size of the grants are scheduled to go down as more systems are installed. From this point of view it is beneficial to install a system sooner rather than later.
Five year accelerated depreciation is available to commercial clients. For a system that carries a limited 25 year manufacturer's warranty on the PV panels, accelerated depreciation can be a substantial benefit and effectively reduces the cost of system installation. Again consult your tax professional for further information. (Indeed there are many panels currently in use for over 40 years.)
Sunriver Solar provides each of our clients with a detailed financial analysis in every proposal. Production estimates are made using the State of California's standard production estimation software that all installers must use to qualify for the state rebates. We provide simple payback analysis as well as the more complex discounted cash flow analysis and rate of return on your investment calculations. (As a note, the rate of return on solar systems is typically much higher than you can get in almost any but the most risky investments.)