Kansas Solar Rebates and Incentive

How Much Can You Save on Solar in Kansas?

Key Details

• Federal Solar Investment Tax Credit provides a one-time tax credit of 30% of solar system cost.
• Kansas exempts value added by a solar system from property taxes for 10 years.
• Net Metering credits allow customers to receive full electricity credits for all energy transmitted to the grid
• Local Incentives may be available in the form of rebates and incentive programs from local agencies, municipalities, and utility companies.

Kansas Solar Energy Profile

Kansas is one of the sunniest states in the US. As of 2023, the state ranks 8th in the country, with an average annual sunlight of 4,890 kilojoules per square meter (kJ/m^2). Despite this, Kansas ranks 44th in the country regarding the growth of solar energy in the state.

As of 2023, the state has three solar installations generating 110 MegaWatts (MW) and over 15,000 homes powered by solar. However, the projected growth of 1,734 MW by 2028 is expected to rank the state 29th in the country.

Kansas Solar Tax and Incentives at a Glance

How Cheap or Affordable is Solar Energy in Kansas?

According to the US Energy Information Administration (EIA), as of 2021, the average retail cost of grid electricity in Kansas is 10.47 cents per kilowatt hour (kWh). The average cost of solar panels per watt is $2.39.

The average cost for installing a 6 kilowatt (kW) solar system in Kansas is $14,340. Homeowners get to save $4,302 with the Federal tax credit value of 30%. Hence, they cost $10,038 after the tax credit.

In 2020, the total energy consumption per capita in Kansas was 1_06,765 kWh_. The energy consumption of residences is 21,716 kWh, 20,309 kWh for commercial establishments, and 38,949 kWh for industrial establishments.

Renewable Energy in Kansas

EIA reported in 2021 that renewable energy resources contributed 45% of Kansas’s in-state electricity net generation. The state’s renewable energy resources include wind, solar, biomass, and hydropower.

Wind contributes the largest percentage to Kansas’ energy generation. Because of its wide plains, Kansas has one of the best wind power potentials in the country. The state ranks within the top five states that generate the most wind energy in the country.

As of 2022, Kansas had about 8,250 MW of installed wind-generating capacity. Being one of the sunniest states, Kansas has great solar energy potential. And it has impressive hydropower potential.

Kansas has about 3,500 offshore wind resources (turbines), with each turbine having an average height of 267 feet. These wind turbines can generate 7MW and power over 1.5 million homes. Kansas has only one operating hydroelectric plant, with a capacity of 7MW. It is privately owned by the Bowersock Mills & Power Company.

Residents can purchase 100% of their electricity from renewable energy sources in Kansas.

Federal Solar Tax Credit in Kansas

The federal home solar energy credit allows a taxpayer to claim a tax credit for a portion of the cost of a solar system that the taxpayer purchased and installed. It is generally a renewable energy tax credit. The system must be fully installed during the tax year. There is no cap on the amount of a claim.

Solar systems that are installed in 2020 or 2021 qualify for a 26% tax credit. However, with the Inflation Reduction Act, Congress extended the federal solar tax credit to 30% for solar installation between 2022 and 2032. In 2033 and 2034, the percentage of systems installed will fall to 26% and 22%, respectively.

If Congress does not extend the tax credit further, it is expected to end in 2035. It should be stated that systems installed on or before December 31, 2019, were eligible for a 30% tax credit.

The federal solar tax credit covers the following expenses:

• Solar PV cells or panels (including those that power attic fans. It does not cover the fan itself).
• Contractor labor costs for site preparation, assembly, or first installation, including developer fees, inspection fees, and permit costs.
• Equipment for the balance of the system, including inverters, wiring, and mounting devices.
• Energy storage devices with a capacity rating of 3 kilowatt-hours (kWh) or greater (for systems installed after December 31, 2022). The energy storage devices are nevertheless subject to the installation date requirements even if they are installed in a tax year that is later than the one in which the solar energy system was installed.
• Sales tax on allowable costs.

This federal solar tax credit reduces the cost of purchasing and installing a solar system in Kansas. The average cost of installing a 6kW solar system is $13,353. The 30% tax credit substantially reduces the cost of the system, helps the owner to save, and quickens the payback period of the system.

Eligibility

You may qualify for the federal Kansas tax credit for solar panels if you meet the following requirements:

1. You installed your solar system between January 1, 2017, and December 31, 2034.

2. Your solar system is installed at your residence located in the United States.

Either:

• You own the solar system. That is, you bought the solar system with cash or through any financing options. You did not lease the solar system or use a power purchasing agreement to purchase the system, or </p>

• You bought an interest in an off-site community solar project if the electricity produced is applied to and does not exceed your home’s electricity consumption.

Note: According to a statement from the IRS, a specific taxpayer may claim a tax credit for investing in an off-site community solar project. However, other taxpayers may not rely on this document, often known as a private letter ruling (PLR), as precedent. Also, if all of your electricity comes from community solar projects, you are ineligible.

3. The solar PV system is new or being used for the first time. The credit can only be claimed on the “original installation” of the solar equipment.

How Do I Claim the Federal Solar Tax Credit in Kansas?

Below is a general overview of how you can claim their Federal solar tax credit in Kansas:

• Determine that you qualify - You should make sure that you are eligible. You should also obtain professional tax advice to ensure you have a sufficient tax liability to use the federal tax credit to reduce the amount of taxes you owe.
• Fill out IRS Form 5695 - The form is available online, and instructions on completing the form are available here.
• Attach the form to your Form 1040 or Form 1040NR - Immediately you have verified your federal solar tax credit information from Form 5695, you use that total on your Form 1040 to lower your tax liability.

Net Energy Metering in Kansas

Kansas’ net metering policy is for customers of the state’s investor-owned utilities (IOUs). It is a renewable energy incentive in Kansas. The policy allows small-scale generators to receive credit for the electricity they produce.

If you generate excess energy from your renewable energy source, like solar, the IOU is required to give you full credit for all the kWh transmitted to the grid. However, the IOUs cannot carry over your credits indefinitely. Your credits expire after 12 months. Hence, you will need to size your energy generation system properly.

The two IOUs in Kansas are Evergy and Empire District. They are required to provide net metering and a bi-directional meter to interested customers for free on a first-come, first-served basis until the rated producing capacity of all net-metered systems equals 1% of the utility’s peak demand for the preceding year. The bi-directional meter is used to monitor electricity transmitted to the IOU and electricity supplied by the IOU.

Kansas’ law does not require electric cooperative and municipal electric providers to offer net metering. However, several have chosen to provide some form of net metering at the request of their boards and members.

You should contact your local electric cooperative or municipal electric provider to get information about their net metering plans.

A customer-generator is the owner or operator of a net metered facility which:

• is powered by a renewable energy resource, including wind, solar, hydropower, dedicated crops for energy production, fuel cells using hydrogen produced by a renewable energy resource;
• is situated on the property that the customer-generator owns, operates, leases or controls;
• is interconnected and operates in parallel phase and synchronization with an affected utility and complies with the safety standards established by the affected utility;
• is primarily designed to offset all or part of the customer-generator’s electrical energy needs;
• features a mechanism, certified by the utility, that, in the event that service to the customer-generator is interrupted, automatically disables the unit and interrupts the flow of electricity back onto the supplier’s electricity lines.

Net metering in Kansas is restricted to relatively small generators. There are two categories based on the time of interconnection agreement:

1. For customer-generators that started using a renewable energy resource under an interconnection agreement with the utility before July 1, 2014:

• Residential customers may generate electricity subject to net metering up to 25kWh
• Non-residential customers may generate electricity subject to net metering up to 200kWh.

2. For customer-generators that started using a renewable energy resource under an interconnection agreement with the utility after July 1, 2014:

• Residential customers may generate electricity subject to net metering up to 15 kWh
• Non-residential customers may generate electricity subject to net metering up to 100 kWh;

The energy that a customer-generator generates in excess of their monthly use is called net excess generation (NEG). There are three ways NEG applies:

1. For customer-generators that started using a renewable energy resource under an interconnection agreement with the utility before July 1, 2014:

• A one-to-one credit for NEG is applied each month to the customer-energy generator’s consumption in the subsequent months.
• On March 31 of every year, any NEG credit that is still in a net metering customer’s account expires.

2. For customer-generators that started using a renewable energy resource under an interconnection agreement with the utility on and after July 1, 2014:

• NEG is credited to the customer at the conclusion of each billing cycle at a rate equal to 100% of the utility’s monthly system average cost of electricity per kilowatt hour.

3. For all customer-generators, from January 1, 2030:

• NEG will be credited to the customer at a rate of 100% of the utility’s monthly system average cost per kilowatt hour at the conclusion of each billing cycle.

How to Enroll for Net Energy Metering in Kansas?

Contact your IOU, electric cooperative, and municipal electric providers to inquire about their net metering enrollment process.

Kansas Property Tax Exemption

Kansas provides property tax exemption for residential owners of solar systems. The law exempts renewable energy equipment from property taxes of ten (10) years immediately following the taxable year in which the installation of the solar system was done. Generally, the renewable energy sources that qualify for this tax exemption include wind, solar, biomass, hydropower, geothermal, and landfill gas.

All you have to do to enjoy this tax exemption is to apply for the exemption. You should speak to your solar installer about the process or visit your municipal office to find out more information.

Kansas Property-Assessed Clean Energy (PACE) Financing

As of 2023, Kansas does not have a Property-Assessed Clean Energy (PACE) Financing program in place. The state has not enacted any legislation regarding the program. The state also does not have any PACE program developed or in development. Generally, Kansas does not have any enabling legislation that enables efficiency and renewable energy measures to qualify for funding.