Residential Solar Panels and Tax Credits - Where's The Info? Is It Worth It?

[TomCADem]

I recieved a flyer from Home Depot, and several random companies talking about a solar panel tax credit, and promoting solar panels for homes. However, I really haven't found anything that provides an estimate of how much money (aside from the tax credit) that I would save if I installed solar panels. In other words, would solar panels also lower my eletric bills?

Has anyone taking advantage of these programs? Is it worth it?

[seeviewonder]

1. I don't really know much about the tax breaks

but I know that you need to figure out the wattage you need to run everything in your house. You can calculate a good average from the kWh on your energy bill and use that to determine the watts you need from panels. This will also determine what size/price of panels you will need to buy. These things are not cheap upfront for an entire system, but in the long run it will payoff. Usually it will be paid off in about 10 to 20 years without a tax credit from what I've seen (my wife and I have considered solar for a year or two now).

The cool thing is that if you purchase a "grid-tied" system, you can actually sell the power you don't need (over what your energy needs are) back to the electric company. Think of it as actually being able to get paid by an electric company!

[Go2Peace]

9. The administration cut them.

this year. So make sure you get accurate info and not last years.

[TomCADem]

12. Here's Home Depot's Website - Says Tax Credit Ends In 2016

However, my real question is whether solar will cut my energy bills. The tax credit is nice, but what about the energy bills? I would hate to stick huge panels on my house only to get an immaterial cut in my energy bills, and a negligible impact on saving energy.

http://www.homedepot.com/webapp/wcs/stores/servlet/ContentView?pn=SV_HS_Solar_Power_Systems&langId=-1&storeId=10051&catalogId=1

<>

Photovoltaic System (Solar Panels)

MAKE YOUR HOME MORE ENERGY EFFICIENT & RECEIVE A TAX CREDIT OF 30% OF THE TOTAL IMPROVEMENT COST

Purchase and install solar panels from 1/1/09 - 12/31/16 and you may be eligible to receive a federal tax credit under the “American Recovery and Reinvestment Act of 2009”.

Visit homedepot.com/taxcredit and consult your tax advisor for more information.

[Statistical]

15. No they didn't. The tax credits were passed by Congress.

Obama can't simply "cut them".

They last until 2016.

[Go2Peace]

18. I stand (pleasantly) corrected. Thanks for the update!

I had read that they were on the "chopping block" at one point. Glad to hear that they are to continue. This program has kept a lot of people in the trades working.

[Statistical]

14. Most states don't allow selling power.

Most simply allow net metering.

Nice thing about net metering is you don't need to worry about peak power.
Calculating the array gets a lot simpler. You simply need array to produce energy in one year equal to energy consumption.


Solar Array size (in KW) * Insolation * 365 * de-rating = annual output

Or working backwards
Annual output / (Insolation * 365 * de-rating) = solar array size in KW

84% is good de-rating to start from (compensates for system losses due to wiring, AC/DC conversion, and voltage mismatch).

For me for example.
8000 kwh annually
4.95 solar insolation

A 1KW array would produce
Solar Array size (in KW) * Insolation * 365 * de-rating = annual output
1 * 4.95 * 365 * 0.84 = 1517 kWh per year (about 1/5th my total energy)

To produce 100% of my homes energy:
Annual output / (Insolation * 365 * de-rating) = solar array size in KW
8000 / (4.95 * 365 * 0.84) = 5.27KW

[marybourg]

2. I have solar hot water. Got both federal and state tax credits &

rebate from electric company. This is actually my 2nd solar hot water system. The 1st was 30 years old and was trouble free. This new one is a heat exchanger type and just a little more problematic, but very economical and plenty of hot water. If I didn't have this, I'd have an electric hot water heater, so this definitely is worthwhile for me. And I live in a hot, sunny place. As to producing electricity for household use with solar panels, I don't think the payback is there yet.

[Newest Reality]

3. One thing holding back domestic Solar is ...

good old Capitalism and market value.

Unfortunately, adding Solar and other alternative energy to your home does not increase your market value. So, even if savvy homeowners try to get off the grid and realize savings from it, the overall picture does not encourage this practice in terms of resale value.

Bummer. Thanks again to profit before essential and compelling pragmatism. It's really done us good so far ;)

[LeftyMom]

4. Where's that true?

Certainly not here.

[ProgressiveProfessor]

7. Water systems had a bad rep for a long time as being problematic

However grid tie systems are considered added value to the extent they lower your power bill.

[LeftyMom]

5. I'd call the utility and ask.

But I have SMUD and they're great about stuff like that. I don't know how helpful the for-profit guys would be at getting away from their services.

[ProgressiveProfessor]

6. I've done the solar thing a few times...with the tax breaks, rebates, credits etc, its a good thing

Helped a friend do one just recently. Between everything it was about 45% discount with payback in under 10 years, faster if rates rise. CA now mandates that the utilities buy extra power though the rate is still TBD and the expectation is it won't be very much. Utilities are also now allowed to take credit for homeowner grid tied systems when it comes to making their "renewable power" benchmarks.

Key thing to start with is to understand the solar available on your property. Its not just Lat/Long is buildings, mountains, neighbors, facing, etc. Next is to understand your power consumption. SCE and others have that information online for you, so its easy to determine. From there contact several contractors and see what the math looks like and if it works for you. Also read up on the California Solar Rights Act if you have CC&Rs or HOA in your neighborhood.

I have never had to pay for power where I currently reside...its nice.

[DesertFlower]

8. when i calculated mine after

taxes and rebates it would cost about $54,000.

my neighbor who has a bigger house had it done. she had to write a check for $98,000, but said after rebates and tax it's going to cost her $18,000. she gave me the name of the guy who did hers.

i have to ask her whether after she did her taxes that's all it cost. if so i would be interested in doing it in my house.

[European Socialist]

10. You need to think long and hard about collecting the tax credits...

Even if they give you till 2016. Half of the households in this Country have little or no tax liability. It's too bad only a few states have good leasing options.

[Gaedel]

11. Credits are not deductions

Deductions only have value if you have tax liability because they only reduce net taxable income.

Credits reduce taxes owed and if you do not owe taxes, become a refund.

[European Socialist]

13. but not all credits are refundable credits.

[Statistical]

16. Not all tax credits are fully refundable.

Please don't give out incomplete and potentially MASSIVELY expensive misinformation.

Tax credits are either
A) fully refundable. If you owe $1000 in taxes and have $5000 credit you get $4000 back.
b) not refundable. If you owe $1000 in taxes and have $5000 credit you only reduce tax liability to $0 (nothing back).

In this case:
http://energystar.custhelp.com/cgi-bin/energystar.cfg/php/enduser/std_adp.php?p_faqid=5582&p_created=1236028396&p_sid=D2uSJXFj&p_accessibility=0&p_redirect=&p_lva=5582&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX3Jvd19jbnQ9MSwxJnBfcHJvZHM9MCZwX2NhdHM9JnBfcHY9JnBfY3Y9JnBfcGFnZT0xJnBfc2VhcmNoX3RleHQ9NTU4Mg**&p_li=&p_topview=1

Question
How can I determine if I can collect the tax credit? Does it matter if I am getting a tax refund?

Answer
Whether or not you are getting a refund does not matter. What matters is your "tax liability" - which is the total amount of federal income tax you are responsible for paying.

These energy efficiency tax credits are technically "non-refundable" which means you can't get more money back in tax credits than you pay in federal income taxes (your tax liability). Check your last year's tax return to get a sense of your tax liability (line 61 on the 2008 1040 form, called "total tax"). You can claim all of your tax credits as long as your tax liability, is greater than zero after all tax credits have been applied.

[Statistical]

17. Here is a calculator that helps

There are a lot of variables
a) how expensive is the full system (including installation) in $$ per watt
b) how expensive is your current electrical power
c) how fast do you think power rate will rise (power inflation)
d) how much sun do you get (based on your location)
e) how much federal taxes do you pay each year (credit is NOT refundable)
f) does your state and/or utility offer further incentives

http://bpsolar.cleanpowerestimator.com/default.aspx

Currently for my area (VA) with 4.95 hours of peak sun per day and current solar prices even with the tax credit it isn't a very good investment.