What if you can save money for the next 25 to 30 years?
Yes!!! You heard it right. Imagine your financial situation staying strong despite the US going into a recession and the energy prices rising. Wouldn’t that be great?
Well, it is a possibility especially if you live in the State of New York.
Today, most homeowners are concerned about two pressing issues: rising energy costs and environmental degradation. Electricity and gas prices are spiking in tandem with increased energy demand and fuel prices; and not to forget the insane levels of pollution. On the flip side and as a concerned citizen, you may be seeing information about the new solar rooftop systems, their costs, and tax incentives provided by the federal government.
Every New York State homeowner can benefit from the two distinct government incentives for solar panels — Federal incentives and New York State incentives. These are arguably the best incentives in America.
In this article, a Solarblocks expert will discuss the "what, where, how much, how to get, and how it benefits you" of these incentives.
What Are The Government Incentives For Solar Panels?
Solar incentives are at the state level and the federal level. Every state in the United States is incentivizing homeowners, businesses, and commercial property owners to install solar panels on their rooftops right now. This could be with or without solar battery storage. Moreover, if you live in the State of New York, you are eligible for various solar incentives in NY as well. The picture below summarizes the kind of NY State solar incentives you can get.
State-Level: Solar Incentives in New York
These are the distinct NYC solar incentives that residents can enjoy:
- Net Metering
- Equipment Tax Credit
- Sales tax exemption
- Property tax exemption
- Property Tax Abatement
- Megawatt (MW) Block incentive
Under the net metering scheme, a homeowner can connect their rooftop solar panels to the utility grid. In this system, your energy consumption meter runs not only forward but also backward.
Solar panels generate maximum electricity in the daytime but most of this energy remains unused due to several reasons. In the evening or at night, we often need to draw more electricity from the grid and this happens in excess of what the solar panels can generate.
This is where net metering is useful. The excess energy that your solar panels generate during the day is exported back to the grid, making your energy consumption meter run backward. Simultaneously, the excess energy you need from the grid in the evening or at night is compensated through the use of a bi-directional energy meter installed in the house. The arrangement is called energy banking by the utility.
The energy export and import tariffs are fixed by the states. At the end of each month, when the net energy bill arrives, your exported energy will be deducted from the imported energy, resulting in a significantly low monthly electricity bill.
The amount of compensation varies based on the location (the state) and your utility providers. Solarblocks professionals can assist you with the exact net metering benefits and calculate the overall savings for you.
Net Metering Policy in New York State
The net metering policy in NYC is in transition now — from an older system to a new one. Homeowners can choose between the current transitional net metering program, known as "Phase One plus CBC'' and the VDER program. CBC stands for Customer Benefit Contribution and VDER stands for Value of Distributed Energy Resources or Value Stack.
Consider the following scenario: You installed a 10kW solar system that produces 1,000 kWh of energy per month. Now let’s say your monthly average household energy consumption is around 700 kWh. That means your solar system has generated an additional 300 kWh power (1000 kWh-700 kWh) each month. Your utility company will keep track of this, along with the accounting records, and act as an energy bank for you. All the information will appear on your utility bill for that month as 'banked energy’.
Now let’s delve into another scenario where your solar system generates 1,000 kWh of energy the following month, but your consumption increases to 1,300 kWh. In this case, the utility company will use the previous month's 300 kWh credit, and your utility bill for that month will reflect zero amount since your net consumption was zero.
Keep in mind that you have to pay a small amount for CBC charges per the area you reside in.
Equipment Tax Credit
You are eligible to get an equipment tax credit as part of the government incentives for solar panels for the following:
- If you buy the solar energy equipment
- If you have entered into a lease agreement for purchasing solar equipment
- If you have entered a power purchase agreement (PPA) for at least 10 years
This NY State solar tax credit is limited to $5,000 or 25% of your qualified solar energy system’s expenditure, whichever is lower. The good news is that if your tax liability is insufficient to claim the entire credit in the first year, you can carry it over to the following year.
Let’s say your solar system costs $25,000. Given the state’s sales tax rate of 4%, the tax rebate will be $1,000. This is just the state’s sales tax. Depending on the area you live in within NY State, other local taxes will be applicable per local regulations.
Disclaimer: This article is not intended for tax advice. For solar tax credits, always consult a licensed tax professional.
Sale Tax Exemption
As part of the NYC solar incentives, there is a sales tax exemption for residential solar systems. It can save you $1,000 on a system with a contract price of $25,000, considering the state's sales tax rate of 4%. It's crucial to understand that this exemption solely pertains to state sales tax, and local sales tax may still be applicable. Nonetheless, certain local jurisdictions, such as New York City, have also implemented sales taxes and use these tax exemptions.
Property Tax Exemption
Another great New York State solar incentive is the Property Tax Exemption. NYC offers a 15-year tax exemption for adding solar panels and other renewable energy systems to your home. This exemption only applies to the solar system's value and not the entire property value. For instance, if your home is worth $400,000 and the solar system adds $35,000 to its value, you'll only pay taxes on the original $400,000 assessment.
Property Tax Abatement
A property tax abatement enables a reduction in property tax payments over time. As part of the solar incentives in NY, the solar tax abatement is valued at 5% of the installed price of solar panels (post NYSERDA incentive) and is spread over 4 years. For example, you can save $5,000 in total property taxes in 4 years by utilizing this incentive.
For most homeowners, solar energy solutions are still new and capital-intensive, despite the costs coming down drastically. Therefore, to make solar more affordable and accessible, the State of New York has introduced the NY-Sun program.
NY-Sun provides incentives and financing options to help people save money on residential solar panels. It also offers major incentives to businesses for the purchase and installation of the same. This government incentive for solar panels varies across the state. Please keep in mind that the NY State solar tax credits or incentives are in addition to the federal tax credits and rebates that are discussed below. If solar battery storage is added, you may be eligible for an energy storage incentive in addition to the current NY-Sun program.
Federal Solar Tax Incentives: Tax Credits and Rebates
The federal solar tax incentives, also known as the investment tax credit (ITC), allow you to deduct 30% from your federal taxes for the cost of installing a solar energy system. This applies to homeowners as well as businesses.
It is clear that installing solar panels in New York provides some major benefits to homeowners and businesses alike. The various state-level government incentives for solar panels such as net-metering, equipment credit, and NY-Sun, in addition to the federal solar incentives (tax credits and depreciation benefits), help lower the overall system cost and reduce your energy expenses. Moreover, by installing solar panels, you are not only increasing the market value of your home but also contributing to the cause of saving the environment and reducing global warming.
For any questions, get in touch with our team at Solarblocks. Our experienced professionals will assist you in finding the best NYC solar incentives, and offer a seamless solar panel installation and maintenance experience. Get started here, with us, today.
Begin Your Journey From Today
Let your sustainable way of life begin here..
Begin Your Journey From Today
Let your sustainable way of life begin here..