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The Federal Solar Tax Credit
With the current federal solar tax credit program, you can claim up to 30% of the cost of your new solar system, including both equipment and installation. Unlike the old credit, which capped out credit payments at $2000, the credit now has no upper limit. Combined with state and local rebates, this can make a huge difference in the cost of a new solar system.
Who qualifies?
First of all, you need to owe federal taxes to be able to get a credit. The credit just reduces the amount of tax you will have to pay, so if you don’t have any tax liability, the credit can’t help you (it will, however, roll over into the next year, so if you are liable then, you can apply it at that point). It applies to solar systems installed in existing homes, new constructions, as well as second residences, but doesn’t apply to rentals. The credit is available for systems installed from 2009 through 2016. For installations before 2009, the old limit of $2000 applies.

If you choose a solar lease or solar power purchase agreement (PPA) the credit will actually go to the company you’re working with, rather than to you. That is because you are not paying for the equipment yourself. However, some companies like may pass on the savings to you by offering free installation. You will get the immediate benefit of a lower cost without having to file any paperwork.

Only new equipment qualifies for solar grants. Used solar equipment usually does not qualify.
It’s a credit not deduction!

 “What is the difference between a credit and a deduction?”

Unlike deductions, which take money off your taxable income and vary in value depending on how much you make, a credit reduces your tax bill by a set dollar amount. Let’s say your taxable income is $80,000 and you’re in the 25% tax bracket. Your tax liability would be $20,000. If you had a $5,000 deduction, that would reduce your taxable income to $75,000, and your tax would be $18,750 — a savings of $1,250. But if, instead, the $5,000 is a tax credit, then it is subtracted from your tax, and you would pay a tax of $15,000 — an additional savings of $3,750.

Calculating the credit

A taxpayer may claim a credit of 30% of qualified expenditures for a system as federal solar tax credits. Please consult a friendly qualified tax professional to calculate the credit you’ll receive. You’ll be using IRS Form 5695. Generally, entities which are tax-exempt or do not file taxes do not qualify for federal solar tax credits. However, they may qualify for state or local incentives.

Rolling over unused credit

If you don’t have tax liability, you can roll over your credit into the next tax year. You can also roll over a portion of the credit if you’re only able to use some of it. The credits can be rolled forward until at least 2016, but it’s not yet clear if they will be available for use after that point.

Other solar incentives
States often also offer tax incentives, grants, or loans. Eight states offer rebates as well. For example, in California, one program helps lower-income homeowners get solar panels for a reduced cost or even for free. Solar system owners can also benefit from net metering (when utilities pay for excess electricity going back into the grid) and Renewable Energy Credits / RECS (Read more about Solar Renewable Energy Credits or SRECS)

For Detailed Individual State Incentives Programs Please Visit: www.dsireusa.org


California Solar Initiative (CSI)
The California Solar Initiative (CSI) is the solar rebate program for California consumers that are customers of the investor-owned utilities - Pacific Gas and Electric (PG&E), Southern California Edison (SCE), San Diego Gas & Electric (SDG&E). Together with the rebate program for New Solar Homes and rebate programs offered through the dozens of publicly owned utilities in the state - the CSI program is a key component of the Go Solar California campaign for California. It’s a 10 year program launched in Jan 2007 and will last until end of 2016.

All residential and non-residential (commercial, agriculture, government, non-profits etc) solar system owners are eligible for CSI incentives based on qualification and requirements.

There are two types of CSI incentives a system owner can apply for: EPBB or PBI.

EPBB (Expected Performance-Based Buydown) is an upfront lump-sum incentive payment available only for smaller systems. The EPBB incentive is a capacity-based incentive that is adjusted based on expected system performance calculated using an EPBB calculator that considers major design characteristics of the system, such as panel type, installation tilt, shading, orientation, and solar insolation available by location. A system size has to be equal to or less than 30kW CEC-AC to qualify for EPBB. Systems larger than 30kW CEC-AC can take PBI.

PBI (Performance Based Incentive) is paid based on actual performance over the course of five years. The PBI is paid on a fixed dollar per kilowatt-hour ($/kWh) of generation basis and is the required incentive type for systems greater than 30 kW in size, although smaller systems may opt to be paid based on PBI.

NOTE: In the beginning of the CSI program, all systems 100kW and greater were required to take the PBI incentive. In January 2008, all systems 50kW and greater were required to take the PBI incentive. As of January 2010, all systems 30kW and greater are required to take the PBI incentive.

Systems sizes less than or equal to 10kW CEC-AC are required to receive the EPBB payment.

NOTE: The CEC-AC rating is the product of the number of PV panels, the PTC rating per panel and the inverter efficiency. These two incentive types are explained in more detail in the table below.
CSI Incentive Types
The table below shows the rebate levels available at various steps
CSI Incentive Levels as adopted in D.06-12-033
More information is available at: www.gosolarcalifornia.ca.gov www.dsireusa.org


ISEA Renewable Energy Credit Aggregation Program (RECAP)
The Illinois Solar Energy Association offers the Renewable Energy Credit Aggregation Program (RECAP) to Illinois solar photovoltaic (PV) system owners, providing them with an opportunity to receive payment for their solar Renewable Energy Credits (SRECs).  Before the RECAP program was implemented, only large energy producers had the ability to sell their SRECs. This program was created in 2008 to provide an additional revenue stream for small PV system owners and to support Illinois solar development.

RECAP is an annual program and requires a yearly application.  Applications are accepted on a first come, first served basis and will be closed when the cap is met. 2012 RECAP Request for Application will open in the last quarter of 2012.  An announcement will be emailed to members.

RECAP is a partnership with Community Energy, Inc (CEI).   The aggregated SRECs from RECAP are used to supply the solar portion of the award winning City of Naperville Renewable Energy Program.  This partnership is the first market example of SREC transactions within Illinois. 

In  2012, CEI and ISEA expanded RECAP to supply the solar RECs for RE-Power Illinois.  RE-Power Illinois is the only 100% Illinois wind and solar electricity product available to ComEd and ARES customers in ComEd territory.  Click here to learn more about RE-Power Illinois and how you can switch to 100% IL renewable energy.

Solar photovoltaic systems have two outputs – electricity and solar renewable energy certificates (SRECs).  For every 1 MWh (1000 kWh) of solar electricity generated, one SREC is attributed.  SRECs are tradeable, non-tangible pollution abatement rights.  They are not paper certificates that you receive from a utility, but rather a system created to distinguish energy produced from renewable sources that don't create pollution.
To qualify for RECAP, you must meet the following criteria
Be an active member with ISEA (Individual membership for a residential system, business membership for a commercial system)  Join Now

Own and operate an Illinois grid-tied solar photovoltaic system with any utility in Illinois (must be net metered)

System size must be 10 kW alternating current (AC) or smaller

Level 1 or related interconnection

Own SRECs and have not otherwise sold or delivered them to another party (No 3rd party SRECs accepted)
Ability to monitor solar electricity production on a quarterly basis (1/1-3/31, 4/1-6/30, 7/1-9/30, 10/1-12/31)
Once your application is approved, you are committed to selling your SRECs to ISEA
1 application per member per year
System must be installed and operational before applying
All applicants are required to provide proof of system
ComEd Net metering application

ComEd Interconnection and Net metering information
Net metering information and application
Net metering information and application


Residential Solar and Wind Energy Systems Tax Credit
Arizona's Solar Energy Credit is available to individual taxpayers who install a solar or wind energy device at the taxpayer's Arizona residence. The credit is allowed against the taxpayer's personal income tax in the amount of 25% of the cost of a solar or wind energy device, with a $1,000 maximum allowable limit, regardless of the number of energy devices installed. The credit is claimed in the year of installation. If the amount of the credit exceeds a taxpayer’s liability in a certain year, the unused portion of the credit may be carried forward for up to five years.

Qualifying technologies include solar domestic water heating systems, solar swimming pool and spa heating systems, photovoltaic systems, photovoltaic phones and street lights, passive solar building systems (trombe walls, thermal mass, etc.), solar daylighting systems (excluding conventional skylights), wind turbines, and wind-powered pumps.
Incentives/Policies for Renewables & Efficiency
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