California is one of the nation’s leaders in residential renewable energy. However, this does not necessarily mean high costs for homeowners. In fact, the vast majority of homeowners within the state claim federal tax credits and state solar power rebates. Let’s look at the tax credits and rebates that are available here in Palm Springs.
Federal Tax Credit
Since the enactment of the Emergency Economic Stabilization Act of 2008, $18 billion in federal tax incentives have been allocated toward renewable, clean power and related energy efficiency improvements. Solar power installations and improvements fall under this federal tax umbrella. Specific solar energy technologies covered include:
• Solar-electric systems placed in service after 12/31/2008: no maximum
• Solar water heaters placed in service after 12/31/2008: no maximum
The Federal Solar Tax Credit covers 30% of the total cost of solar panels (photovoltaic systems) and solar water heaters . Existing homes and new residential constructions qualify under IRS guidelines. Homeowners may apply this credit to an installation made at their principle home or at their second residence; however, rental properties do not qualify. It is important that home owners understand that the 30% tax credit reduces total tax liability instead of simply serving as a deduction. Additionally, any excess credit can usually be applied to the next tax year. Tax credits for this program end in 2016 (form 5695 is used for Residential Tax Credits).
California State Rebates
Palm Springs also benefits from two statewide programs that are provided through the California Energy Commission. Homeowners are afforded rebates through the California Solar Initiative (CSI) and the New Solar Home Partnership (NSHP).
California Solar Initiative (CSI)
The CSI program is available in Palm Springs through Pacific Gas and Electric. All PG&E customers are eligible for solar power rebates. Rebate amounts will vary according to the size of the installed solar system along with its exact specifications. Low-income homeowners can apply for an equivalent program called Single Family Affordable Solar Housing (SASH). SASH is provided through the non-profit organization Grid Alternatives. Consequently, nearly any Palm Springs homeowner that has roof or ground space, which obtains unobstructed sunlight, can qualify for cash back incentives through the CSI.
New Solar Home Partnership (NSHP)
Additional cash rebates are available through the NSHP program. These rebates defray the initial costs associated with solar energy product installation. Palm Springs homeowners that install solar efficient products also enjoy added value to their home’s worth. Lastly, California residents do not have to pay property tax on increased values due to solar improvements.
Palm Springs Net Metering
Palm Springs residents are also able to receive net metering through PG&E. When owners install solar panels, they will have a special bi-directional meter, which is still connected to the city’s power grid. It is quite possible that the solar panels will produce more power than is being used the homeowner. If this occurs the meter will account for the difference and sends power back into the city’s grid. PG&E’s net metering keeps record of how much energy residential solar power systems generate over the course of a year. If the solar panels create more power than is being used, PG&E pays the homeowner for the energy generated but not consumed.
All of these programs help homeowners to decrease the initial costs of installing solar energy products and provide long term benefits. Energy conscientious homeowners can even make a profit from efficient solar power installations.