Alaska Solar Rebates and Incentives
How Much Can You Save on Solar in Alaska?
Key Details
- Homeowners in Alaska can receive a 30% tax credit from the Federal Solar Tax Credit for solar installations.
- Net Metering allows for excess power sent back to the grid to be credited on future bills.
- Local governments have legislation allowing them to offer property tax exemptions for taxpayers with renewable energy systems.
- The Commercial Property Assessed Clean Energy (PACE) program provides financing methods with competitive interest rates
Alaska receives about 2061 hours of sunlight annually. The Solar Energy Industry Association ranks Alaska 49th in solar power generation in the U.S. About 17 Megawatts of solar power are generated in Alaska from 2 major solar installations.
As of 2023, Alaskan residents do not have the option to use 100% renewable energy sources. However, the state aims to generate half its total electricity needs from renewable sources by 2025.
According to the Energy Information Administration(EIA), about 31% of Alaska’s utility-scale generation is from renewable sources. Hydroelectric power accounts for 90%, with wind and biomass making up for the rest.
Alaska Solar Tax and Incentives at a Glance
| Alaska Solar Incentives | State or Federal | Program Overview |
| Federal Solar Tax Credit or Investment Tax Credit | Federal | Taxpayers receive a tax credit of 30% of the cost of installing their solar power system. |
| Net Metering | State | Homeowners with solar power systems can store and sell excess power to utilities for credit on their bills. |
| State property tax exemption | State | Alaska does not have a state program or legislation that allows local governments and municipalities to offer tax exemptions for taxpayers with renewable energy systems. |
Alaska has about 60 MW of wind power capacity located around the western and southern coasts. This accounts for about 7% of the state’s total renewable energy. Alaska also has the second-highest retail price for grid electricity at 20.02 cents per kilowatt-hour.
| State | Number of Solar Installations | Megawatts Installed | Average Cost of Grid Power (Cents/Kwh) | Average Cost per watts ($) |
| Alaska | 2 | 17 | 20.02 | 2.41 |
The Federal Solar Tax Credit in Alaska.
The Federal Solar Tax Credit credits Alaska taxpayers with 30% of the cost of their solar power system.
The average cost of a 6Kw system is $13,454 in Alaska. This means taxpayers can expect a tax credit of around $4,036.20. The following are some of the reasons it is beneficial to homeowners and taxpayers.
- It creates potentially large savings for taxpayers
- It is quick and simple to apply for
- It is available to any taxpayer who has a solar power system installed
| State | Cost of Installing a 6Kw System | Federal Tax Credit Value 2021 (30%) |
| Alaska | $13,454 | $4036.20 |
The Federal Solar Tax Credit is also referred to as the Investment Tax Credit.
Taxpayers in any income bracket are eligible, and there is no cap to its value. Currently, the Federal Solar Credit Tax is worth 30% of the cost of the solar installation. After ten years, by 2033, the value will reduce to 26% of the cost of installation.
Installations done in 2034 will receive a credit of 22% of their installation. The program is set to expire in 2035, so any installations after 2035 will receive nothing.
Expenses covered by the Federal Solar Tax Credit include the following items.
- The cost of all solar photovoltaic cells and panels
- Labour costs for onsite preparation and assembly during initial installation.
- Any developer fees, permit fees, and inspection costs.
- System balancing equipment, including any mounts, braces wiring, and inverter units.
- All energy storage devices, including batteries with a capacity of 3kw-h or more.
Eligibility for the Federal Solar Tax Credit.
To receive the Federal Solar Tax Credit in Alaska, taxpayers must meet the following criteria.
The solar power system must be new and about to be used for the first time. The Federal Solar Tax Credit in Alaska can only be claimed on the original installation.
The taxpayer must own the solar system in its entirety. The system must have been purchased outright or via financing. It does not qualify if the system has been leased and loaned.
The system must have been bought and installed between January 1st 2017, and December 31st, 2034.
The system must have been installed in the taxpayer's residence in the United States.
Taxpayers are also eligible if they purchased an interest in an off-site community solar project. The energy generated must be credited against and not exceed the taxpayer’s home power needs.
How to Claim the Federal SolarTax Credit in Alaska.
Claiming the Federal Solar Tax Credit in Alaska is a simple, straightforward process. It can be broken down as filling out and submitting the correct forms. The steps given below are a basic guide to applying for the tax credit in Alaska.
Step 1
Complete the installation process and determine eligibility. Remember that taxpayers must own the system and install it within a residence in the U.S. A full list of eligibility requirements is available from the Office of Energy Efficiency.
Step 2
When it is time to file taxes for the year, the system was installed to fill out IRS Form 5695. The form can be downloaded or printed out from the IRS website. This form calculates how much credit the taxpayer is entitled to. Instructions for Form 5695 can be found online on the IRS site.
Step 3
Complete the form clearly and accurately. Taxpayers may also need to include documents and contact information from their installation company. These documents will provide details about the cost and capacity of the solar system.
Step 4
Add the completed form and all necessary information when filling out normal yearly income tax returns. Everything should be attached to IRS Form 1040 when it has been filled and submitted. Taxpayers will find instructions for IRS Form 1040 online on the IRS website.
Completed forms from taxpayers in Alaska can be mailed to any of the following addresses.
Internal Revenue Service(with payments)
P.O. Box 7704
San Francisco, CA 94120-7704
Or
Department of the Treasury(without payments)
Internal Revenue Service
Fresno, CA 93888-0002
Net Metering in Alaska
The Regulatory Commission of Alaska(RCA) approved Net Metering regulations in October 2009. Subject to economic regulation, all electric utilities in Alaska were to offer net metering services.
Net Metering programs in Alaska require utilities to credit customers with solar systems for excess energy. This excess is returned to the power grid, and credit is given on future electricity bills. As long as it is not exhausted, the credit can roll over month to month indefinitely.
The value of the credit for the excess power will differ between utility companies. Most utilities will credit homeowners at the Small Facility Power Purchase Rate(SF PPR).
As of 2023, the small facility power purchase rate in Alaska is $0.08635 per Kwh. This was put in place on April 1st, 2022.
How to Enroll For Net Metering In Alaska.
Most of the time, utility companies who offer net metering automatically register eligible customers. In some cases, homeowners may need to register by themselves. Any person interested in Alaska net metering can follow the simple steps to sign up.
Contact your utility company to ensure the right meters and equipment for net metering are installed. If a bidirectional meter is not installed, one should be provided by the utility free of charge.
Find a reputable solar installation company. Make sure that the system and installation.
the company meets your budget and power requirements. Inquire if the company handles net metering for its customers. Many reputable solar system installers in Alaska handle this service for their customers.Have the solar power system installed and commissioned at your property. Make sure everything is installed and working properly.
After installation, check that the system is accumulating electricity credits as it should. There will be a section on the utility bill where this amount can be confirmed.
Net metering offers homeowners a great way to increase overall savings. This will come in handy during periods when power bills are high.
However, it should be noted that net metering is unavailable if the solar power system is off the grid. This is because off-grid systems cannot export excess power to the utility via the power grid.
Alaska Property Tax Exemption.
As of 2022, Alaska does not offer any property tax exemption on the state level. The state has, however, passed legislation permitting local governments to offer exemptions for renewable energy systems.
In 2020 Alaska enacted legislation Statute 29.45.050. This authorized municipalities to exempt residential renewable energy systems from taxation. This included solar, hydro, and wind power systems installed in taxpayers' residences.
Boroughs of Alaska, including the Kenai Peninsula, offer tax exemptions to residents with solar power systems. Applications can be made by written application via a form prescribed by the municipal assessor. The application must be filed no later than January 15th of the year the exemption is required.
Alaska Property Assessed Clean Energy Financing Program (PACE).
Property-assessed clean energy programs are programs that allow municipal districts to loan taxpayers money. These loans are granted to property taxpayers for renewable energy developments in the district. These include property upgrades or installations of renewable energy systems such as solar and wind power systems.
The municipality or tax district is repaid by a voluntary tax assessment on the property. The loans in these programs are associated with the property where the system was installed. This differs from other programs where the loan is associated with individuals who requested it.
Alaskan municipalities offer taxpayers the Commercial Property Assessed Clean Energy program(C-PACE). These are long-term financing methods for renewable energy systems.
These programs make renewable energy system investments for commercial builds more accessible and affordable. The following reasons make C-PACE programs a very beneficial investment in Alaska.
- C-PACE financing has competitive fixed interest rates, which are set by the current markets.
- The loans are associated with the building or property where the system is installed, not the person who initiated the process.
- C-PACE financing typically does not require any down payments.
- C-PACE financing boosts the municipality's economy by creating jobs and pushing private investment into the community.
C-PACE remains, at its core, a reliable source of affordable financing for property owners. It provides a way to make energy-saving, bill-reducing improvements to property in the area.
Local governments can meet their federal or state-mandated clean energy and energy efficiency standards. The local governments can achieve this without resorting to government funds as it is privately funded.
Alaskan Household Profile.
According to the EIA, Alaska has the second-highest total energy consumption per capita after Louisiana. In a report released in 2021, it was estimated that Alaska consumed about 874 million Btu.
The British Thermal Unit (Btu) is the unit for energy consumption.
One Btu is the heat energy required to increase the temperature of a pound of water by one degree Fahrenheit. One million Btu is the energy obtained from burning 8 gallons (approximately 37 liters) of gasoline.
Residences in Alaska consumed 74 million Btu, and commercial institutions consumed 79 million Btu. Transportation and industries in Alaska consumed 224.7 million Btu and 496.2 million Btu, respectively.
According to the U.S. Census Bureau 2021 reports, Alaska is home to an estimated 733,583 residents. These citizens made up 260,561 households, with an estimated 2.51 individuals per household. The report also stated that Alaska had 327,890 housing units. 65.7% of these housing units were occupied by their owners.
The median value for these owner-occupied housing was estimated to be around $282,800. Building permits in Alaska were issued to about 1,552 people in 2021. This could mean a small rise in housing units and a corresponding rise in energy consumed per capita. This rise will come from energy used for electricity and heating in any new buildings.
