Cost of Solar, Financing, Lease Options

How much does solar energy really cost?

A solar lease or solar financing program lowers the cost of solar!The typical residential solar system will cost between $15,000-$25,000 once solar rebates and incentives are taken into account. However, this is a small price to pay given that you will probably spend over $72,000 on electricity over the life of your solar system. With solar energy’s popularity rising, some companies have even started offering solar lease options, where the installation requires no out-of-pocket expenses.

The true cost of your solar system depends on the applicable Connecticut solar state rebates and your utility’s incentives, as well as the type of solar installation. Qualified installers will be familiar with your local incentives and the permitting process- ensuring that you receive optimal returns from your investment.

What about government tax incentives and rebates?

A fantastic thing about installing solar power in the United States is that there are many state and federal tax incentives and rebate programs that make solar power for your home affordable. The certified solar installer you choose will be up to date on all applicable incentives and rebates. Here is a brief rundown on the basics:

  • Municipal and Utility Rebates: Check out the Database of State Incentives for Renewables & Efficiency to discover your municipality’s and utility’s rebates.
  • Individual State Rebates: States often offer flat amount rebates or a progressive system of rebates based on the size of your solar system. Detailed, comprehensive information on your state’s rebates can also be found at the government’s Database of State Incentives for Renewables & Efficiency
  • Property Tax Exemptions: States often also exclude the value of a solar energy system from your annual property taxes. In example, if your new solar system adds $25,000 to your home value, that $25,000 will not be counted toward your assessed home value when paying property taxes.
  • Federal Tax Credit: The Investment Tax Credit (ITC) allows individuals to deduct 30% of the cost of a solar energy system from personal federal income taxes;

What are the current Connecticut solar incentives and how do they work?

Connecticut created the Connecticut Clean Energy Fund (CCEF) in 2004 which was designed to support the statewide adoption of solar power and other renewable energy sources. Connecticut also mandated a small surcharge to be added to electric bills to provide funding for CCEF. This surcharge began in 2000 at $.0005 per kWh and has subsequently risen to $.001 per kWh. This generated approximately $32 million annually.

Effective July 1, 2011, the CCEF became part of the newly created Clean Energy Finance and Investment Authority (CEFIA).  CEFIA’s mission is essentially the same as CCEF which is to promote, develop and invest in clean energy and energy efficiency projects. The following are just some of the highlights of available CEFIA incetives:

  • Residential Solar PV Rebate System – CEFIA offers up to $15,000 in incentives per residence, based on customers’ expected electric usage up to 10kW. Residents receive $1.75/watt for the first 5 kW, then $1.25/watt for the next 5kW. There is $3 million available in this funding round and as of November 2011, over 90% of the funds had been allocated.
  • On-Site Renewable Distributed Generation Program – This program is limited to commercial, industrial, nonprofit, schools, local government, state government, low income residential and institutional applicants located within the Connecticut Light & Power (CL&P) and United Illuminating (UI) utility territories. Incentive amounts are not set; rather they are designed to help applicants “break even” with a “reasonable rate of return” on their renewable energy investment. Unfortunately, the program is now closed to PV projects. CCEF announced at the end of December 2011 that they had received 42 applications for the PV program and the grant determinations would be made in March 2012. This program is currently open only for Fuel Cells, Small Wind, Biomass, Landfill Gas, and Hydro.
  • ARRA Commercial Solar PV Program – In October, CCEF turned on funding for this program (after it ran out of money in 2009 for awarding over $77 million) through the extremely generous grant program of the American Reinvestment and Recovery Act. Funding is technically available through April 12, 2012, but the $3 million in subsidies is expected to be exhausted much sooner. Applications are reviewed on a rolling basis and this funding will go quickly. CCEF has already asked for an additional $8.9 million in state money for the program, but is still awaiting approval from the Department of Public Utility Control.

Besides the CEFIA, there are a number of local and low interest loan programs as well as rebates for appliances offered through the state and the utilities. Through a combination of these programs, Connecticut has made significant strides at going solar. With the U.S. solar market’s projected growth and Connecticut’s high electric rates, it is important that Connecticut continues its dedication to renewable technology, even with inconsistent government funding.

Please note that all of these rebates programs are not permanent, rather, they are dependent on available funds and are subject to change. So if you are a homeowner or commercial property owner and you are interested in solar in Connecticut, please act sooner rather than later to take advantage these rebates!

Does Connecticut have “net metering”?

On top of the state subsidy, the entire state of Connecticut has a net metering policy which means that you only pay for the net amount of electricity that you use. With net metering, solar customers are able to “bank” the excess electricity their solar system generates (up to 2 MW) and carry over kilowatt-hour credits to use the following month. At the end of the year, the utility pays the customer for any remaining kWh credits. Photovoltaic customers have the added bonus of having their annualized net excess generation calculated on a time-of-use basis, meaning that for energy that their home provided to the grid during peak periods, they will receive a larger financial benefit. Currently, Connecticut’s two investor-owned utilities — Connecticut Light and Power Company (CL&P) and United Illuminating Company (UI) provide the bulk of the net metering opportunities for the state.

Does Connecticut have any more tax incentives for solar?

Connecticut’s government has also even gone so far as to exempt the value of a Class I (solar, wind, etc.) renewable energy source from an owner’s property taxes. Unlike other home improvements, you do not have to pay increased property taxes even though the value of your home will increase with a solar electric system. In Connecticut, there is also an exemption from sales tax for the sale or lease of solar energy electricity generating systems and a federal investment tax credit worth up to 30% of total system costs.

If I can’t afford the up-front installation expenses right now, are there any financing options that can help me?

Yes, there are! Our solar partners offer a wide variety of fantastic solar financing options that will help offset the up-front installation expenses. In some cases, your monthly financing payment will even be less than your energy savings; it’s almost like being paid to install solar! Because low interest rates are available, a home solar energy system can be a great investment to your property value. Your certified solar installer will have all the information on available solar financing options. However, make sure you ask about the following:

  • Home Equity Loans: When you borrow against your home’s equity.
  • Solar Lease: When you lease the solar panels for a fee over a set length of time.
  • Power Purchase Agreement: Similar to a lease agreement, where the solar provider/installer installs the system on your home/office at their expense, but here, the solar provider sells electricity to you at a fixed contractual price over a set length of time.

**Interested in a $0 electrical bill? Get a free Connecticut solar assessment from qualified installers in your area!**