Most people understand that they can save money on their home or business’s electricity costs by switching to solar power. The electricity your solar energy system generates replaces the electricity you previously bought from your utility, which lowers your monthly utility bill. But did you know that you can make money from solar power?
Switch to Solar Makes It Easy!
Sorting through all the financial incentives for solar energy can be confusing. At Switch to Solar, we keep it simple, identifying appropriate incentives and doing all the paperwork for you. We’re all about making the entire process hassle free! That way, you can just sit back and reap the rewards.
Solar power is an investment. You buy solar energy just like you would buy a stock, bond or real estate, and during your ownership, it generates cash, ultimately paying back your initial investment and providing a return.
Unlike stocks, bonds or real estate, solar energy is virtually risk-free. In fact, investing in solar electricity for your home or business is about as safe an investment as purchasing a US Treasury bill.
On this page, Switch to Solar will show you have solar energy can make you money. However, we need to tell you that if you lease your system or pay only for the electricity, you are not eligible for the FITC, or many of the other the incentives listed here.
Federal Income Tax Credit (FITC) for Solar Power
The Federal government provides a tax credit to encourage you to switch to solar energy. Once your solar energy system is installed, you can claim a credit for 30% of its total installed cost.
This is a credit, not a deduction. It comes straight off your tax bill. Moreover, if your tax bill is less than the solar credit, you can carry over the difference to next year.
State Tax Rebates
Many states now offer rebates, which are cash payments for switching to solar energy. In Maryland, a homeowner is entitled to a $1,000 check for installing a solar electric system at home. In DC, the solar energy installation rebates vary by the size of the system and max out at $10,000.
Property Tax Credits
Many jurisdictions exempt solar energy systems from personal property taxes. Some jurisdictions, such as Anne Arundel and Harford counties in Maryland, actually go further and offer you a credit on your property taxes.
SRECs (Solar Renewable Energy Credits)
Many states require that a set portion of their electricity supply comes from solar energy. If electricity providers do not meet this quota, they are fined in proportion to their deficit.
Rather than invest in solar plants themselves, electricity providers such as Pepco, BGE and Potomac Edison can purchase SRECs from solar electricity producers. The utilities can then use the SRECs to satisfy their solar requirements. One SREC equals 1,000 kWhs of generated electricity.
Residential and commercial solar energy customers can sell your SRECs on the spot market for cash, or you can choose a longer-term contract with regular, fixed payments.
It’s important to underscore that selling SRECs is not the same as selling the electricity generated by your system. You use the energy, plus you receive cash payments because you are generating electricity from solar power.
Selling Electricity Back to the Grid
Another way to make money from your solar electric system is to generate more electricity than you need. When this happens, the excess energy automatically flows back to the grid, and you are credited for the energy at the same rate at which you purchase electricity from the grid.
Some jurisdictions limit the amount of energy you can sell back to the grid to no more than you buy from the grid over a given period, typically one year. However, in Maryland, you can sell back twice as much solar energy as you purchase from your utility.
Increasing Your Home’s Value
While you aren’t likely to realize this benefit in the short term, adding solar power to your home is proven to increase its resale value as well.
In areas where the technology has taken off, such as California, New Jersey and New York, evidence is mounting that solar substantially increases home values because the less energy a home uses, the more it increases in value.
A good rule of thumb is that the value of a home increases by $20,000 for every $1,000 saved in annual operating costs from energy efficiency.