SOLAR INCENTIVES FOR HOMEOWNERS

Federal Solar Tax Credit for Solar Photovoltaics (Residential)
Full Information Here: Energy.gov

What Is It:

• In August 2022, Congress passed an extension of the ITC, raising it to 30% for the installation of which was between 2022-2032. It will decrease to 26% for systems installed in 2033, and to 22% for systems installed in 2034. The tax credit will expire starting 2035 unless Congress renews it. 
• The federal residential solar energy credit is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar PV system paid for by the tax payer. 
• The installation of the system must be complete during the tax year.
• There is no maximum amount that can be claimed.

Who Is Eligible:

• Your solar PV system was installed between January 1, 2017 and December 31, 2034. 
• Your solar PV system is located at a residence of yours in the United States. 
• Either:
  • You own the solar PV system (as the purchaser)
  • Or, you purchased an interest in an off-site community solar project
• The solar PV system is new or being used for the first time. (only for "original installation" of solar equipment)

What Expenses Are Included:

• Solar PV panels or PV cells
• Contractor labor costs for onsite preparation, assembly, installation, permitting fees, inspection costs, and developer fees.
• Balance-of-system, equipment, including wiring, inverters, and mounting equipment
• Energy storage devices that have a capacity rating of 3kWh or greater.
• Sales taxes on eligible expenses

How Do You Claim It:

• ​After seeking professional tax advice and ensuring you are eligible for the credit, you can complete and attach IRS Form 5695 to your federal tax return. 
• Instructions are available here. 

FAQ:

• What if the solar panels aren't on my roof, but somewhere else? You can still claim the credit as long as they generate electricity for your residence.
• What if I financed my solar system instead of paying for it up front? If you financed the system through the seller of the system, and are contractually obligated to pay the full cost, you can claim the federal solar tax credit based on the full cost of the system. 
• Is there a dollar or lifetime limit on the tax credit? No, there is neither a dollar limit, nor a lifetime limit on the tax credit. 
• Is the cost of roof replacement eligible for a tax credit? SOMETIMES. Traditional roof materials and structural components that serve only a roofing/structural function do not qualify for the credit. Solar roofing tiles and solar shingles may qualify. 

USDA - Renewable Energy for America Program (REAP)
Full Information Here: USDA.gov 

What Is It:

• The program provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements. 

Who Is Eligible:

• Agricultural Producers
  • An entity directly engaged in production of agricultural products where at least 50% of the gross income comes from agricultural operations.
• Rural Small Businesses
  • Must be located in eligible rural areas, and one of the following:
    • Private, for-profit entity (sole proprietorship, partnership, or corporation)
    • A cooperative
    • An electric utility that provides service to rural consumers and operates independent of direct govt control
  • Must meet the Small Business Administration size standards in accordance with 13 CFR 121.
• Must have no outstanding delinquent federal taxes, debt, judgment, or debarment.
• Must be in an eligible area: projects must be located in rural areas with populations of 50,000 residents or less.

What Funding is Available:

• ​Loan guarantees on loans up to 75% of total eligible project costs
• Grants for up to 50% of total eligible project costs
• Combined grant and loan guarantee funding up to 75% of total eligible project costs
  • Loan guarantee percentages are published annually in a Federal Register notice, and REAP loans approved in Fiscal Year 2024 will receive an 80% guarantee.

How May the Funds Be Used :

• Funds may be used for the purchase and installation of renewable energy systems, such as:
  • Biomass
  • Geothermal for electric generation or direct use
  • Hydropower below 30 MW
  • Hydrogen
  • Small and large wind generation
  • Small and large solar generation
  • Ocean (tidal, current, thermal) generation
• Funds may also be used for the purchase, installation, and construction of energy efficiency improvements, such as:
  • High efficiency HVAC
  • Insulation
  • Lighting
  • Cooling and refrigeration units
  • Doors and windows
  • Electric, solar, or gravity pumps for sprinkler pivots
  • Switching from a diesel to electric irrigation motor
  • Replacement of energy-inefficient equipment
• Energy Efficiency Improvement applications must contain an Energy Audit or Energy Assessment (depending on total project costs). 

How Do You Get Started:

• ​Applications for this program are accepted year-round at your local office.
• We are located in Area 3, and the office is in Harrisonburg at 1934 Deyerle Ave. Our Area Director is Steven Davis. 
• Additionally, questions can be directed to our Rural Development person:
  • Tracey Krespach
  • Richmond, VA
  • (804)287-1606
  • [email protected] 

FAQ:

• What are the interest rates for the loan guarantee?
  • Interest rates are negotiated between the lender and borrower, may be fixed or variable, and may not be adjusted more often than quarterly.
• Are there fees of the loan guarantee?
  • There is an initial guarantee fee, currently 1% of the guaranteed amount. There is also a guarantee retention fee, currently 0.25% of the outstanding principal balance, paid annually. 
• What are the grant terms?
  • Renewable Energy System Grants:
    • $2,500 minimum
    • $1 million maximum
  • Energy Efficiency Grants
    • $1,500 minimum
    • $500,000 maximum
• Are there additional requirements?
  • Applicants must provide matching funds if applying for a grant only. More information at the USDA page linked at the top.
  • Applicants must provide at least 25%  of the project cost if applying for a loan.
  • All projects must have technical merit and utilize commercially available technology.
  • All projects require an environmental review prior to award or construction.
• Why does USDA Rural Development do this?
  • This program helps increase American energy independence by increasing the private sector supply of renewable energy and decreasing the demand for energy through energy efficiency improvements. Over time, these investments can also help lower the cost of energy for small businesses and agricultural producers.

SRECS - Solar Renewable Energy Certificates
More Info Here: epa.gov and dominionenergy.com

​What Is It: 

• A renewable energy certificate (REC) is a market-based instrument that represents that property rights to the non-power attributes of renewable electricity generation.
• Solar RECs (SRECs) are created for every 1,000 kilo-watt hours of electricity generated by a solar energy system. 
• The owner of the SREC is the person or entity that owns the solar system, or ability to generate electricity from solar. 
• Many states (including VA) have created SREC markets to spur the development of solar by requiring electricity suppliers (like Dominion) to purchase SRECs produced by in-state solar systems as part of their obligation under the state's Renewable Portfolio Standard (RPS). Virginia's RPS.
• Through the purchase of SRECs, electricity suppliers are ensuring that their products meet the RPS-mandated amount of solar power. 
• The monetary value of an SREC in these state markets is determined by supply and demand, with demand largely driven by electricity suppliers. 
• As of 2024, in Virginia, the current going rate for one SREC sold is around $45.00. However, similar to the stock market, the SREC rates will go up and down year to year, due to supply and demand. 

Who Is Eligible:

• Anyone who owns a solar system in a state that participates in SRECS - like Virginia.
• This applies to homeowners and business owners.

FAQ:

• How often do I get paid?
  • Many people think that since they generate solar energy on a monthly basis, they will get paid for SRECs monthly - however this is not accurate. 
  • SRECs are purchased, by Dominion, whenever they need to purchase them, and this is not regularly, though it is often annually at least. 
  • So you can likely make some money from this annually, but it's best not to depend on this as a regular monthly income source. 
• Can I do this myself? 
  • You can technically hold on to your SRECs and try to sell them yourself, however this is not recommended, for two reasons. 
  • First, Dominion is extremely unlikely to seek out individual solar system owners to purchase SRECs from, preferring to purchase in bulk, or from larger producers whenever possible. 
  • Second, working with an SRECs aggregator (who can bundle many SCRECs together and sell them for a better price, and ensure they are sold because there is large volume, offers you a better chance to ensure you sell yours regularly. 
  • For this reason, Green Hill Solar partners with an industry SREC aggregator that we are able to sign clients up with who are interested. 
• Does this in any way affect my monthly electric bill? 
  • No, this is separate from your electric bill and is available to anyone, whether they are a Dominion customer or not - so long as you own a solar system. 
• If the going SREC rate is $45.00, do I get $45.00 for every SREC I sell? 
  • There are some fees associated with selling your SRECS through an aggregator (which we use), so your payback will be a bit lower than the going market rate.

How Do I Get Started?

• When we are getting you set up with a new solar system, we will have a conversation with you about SRECs, and if you are interested, we will initiate the process for you and do most of the paperwork involved. There is one form that will need your signature, but otherwise it is a relatively simple process for you as we take care of the rest. 
• If you have a system that is older and are not set up with SRECs, and you are interested, contact us today to get started.