Incentives are Expiring—The Time for Solar is Now!

In the last decade, solar equipment has become extremely affordable. Over the last 18-24 months, however, solar prices have stabilized due to refined manufacturing processes and demand catching supply.

At the same time, state and federal governments have created incentives to encourage wide scale adoption of solar. While solar incentives are important, they pale in comparison to the subsidies the fossil fuel industry enjoys.

Incentives are working

The two main incentives available to central coast residents are PG&E’s Net Energy Metering (NEM) program and the Federal Investment Tax Credit (ITC). The tax credit is a dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise pay the federal government.

The ITC is based on the amount of investment in a solar property so if your system costs $15,000 you would get a $4,500 tax credit. If you owed the IRS $5,000 in taxes, you could apply your $4,500 credit and owe the government $500. The solar tax credit is superior to other tax incentives that reduce taxable income instead of lowering your tax bill dollar for dollar.

Net Energy Metering (NEM) is the agreement between solar producers like homes and businesses and electrical utilities like PG&E. NEM rules stipulate that utilities must compensate solar producers for the electrons sent back to the grid. NEM rules are slated to change in 2016 but those who go solar now will be grandfathered in under existing guidelines for 20 years.

Low prices and enticing incentives…

…combine to make going solar the least expensive it has ever been. Solar is an investment and an asset that produces real value. In California, the Internal Rate of Return on a $10,000 – $20,000 investment into a solar system ranges between 10% to 20% with very little risk. Compare solar’s average IRR with the stock market that averages 6% year over year. It’s time to consider solar as an investment if you haven’t already.

Acting sooner than later is crucial…

NEM rules are worsening in 2016


As noted above, NEM allows you to sell your electricity back to PG&E at the same price they sell it to you. The utilities are unhappy with the current arrangement claiming that those with solar are getting too good of a deal. The utilities do benefit from NEM because solar production helps meet demand during peak times meaning they don’t have to turn on inefficient power plants.

When is demand for PG&E electricity the highest? In the middle of the afternoon… when the sun is directly above your panels… generating the most electricity. Most people are at work during this time meaning the home is using very little electricity but your solar system is generating a lot of electricity. 

Because PG&E charges the most for electricity during summer afternoons, homes with solar bank a lot of credit at that higher price during summer months. After dark and in the winter when there is less sun, homeowners redeem the credit they’ve built up in the sunnier months. Using your surplus in the winter goes further because PG&E charges less for electricity from November to April.

Tax Credit Deadline!

The tax credit will expire December 31st, 2016. In order to take advantage of the tax credit, your system must be installed prior to the deadline. Most companies have a waiting list for installation because so many people are going solar. Don’t wait until the last minuted to sign up.

The Time is Now

When the tax credit expires and the NEM rules change, the cost of solar will increase. There is no reason to leave money on the table by waiting. Solar is not like computer processers, it will not be 50% cheaper in five years and with expiring incentives it will be more expensive. Don’t miss out.

If you haven’t looked into solar, now is the time to learn if solar is right for you. In just a few minutes, we can tell you if you qualify for solar. We can also provide an estimate of your expected savings over the phone or in an email.

Thank you for reading and for your interest in solar energy