Oklahoma Solar Rebates and Incentives

How Much Can You Save on Solar in Oklahoma?

Key Details

• Oklahoma Residential Clean Energy Credit provides a tax credit of up to 30%.
• Net energy metering is available in Oklahoma through investor-owned utilities (IOUs)
• Property tax exemptions are not available for solar systems in Oklahoma.
• Commercial Property–Assessed Clean Energy (C-PACE) financing is available in Oklahoma.

Oklahoma Energy Profile

Oklahoma ranks among the sunniest states in the country. With an average annual sunlight of 4,912 kilojoules per square meter (kJ/m2), it ranks seventh on the list of sunniest states in the country.

Oklahoma also ranks 45th in the United States in terms of solar energy growth. As of 2023 there have been four installations totaling 101 megawatts (MW) enough to power over 11,500 residences.

According to the US Energy Information Administration (EIA), in 2020, Oklahoma’s total energy usage per capita was 116,818 kWh. It's residential energy usage was 20,837 kWh, commercial energy consumption was 16,500 kWh, and the industrial energy consumption was 47,946 kWh.

How Cheap or Affordable is Solar Energy in Delaware?

According to the US Energy Information Administration (EIA), the average retail cost of grid energy in Oklahoma is 8.52 cents per kilowatt hour as of 2021. (kWh). Solar panels cost $2.62 per watt on average in the state.

In Oklahoma, the average cost of installing a 6-kilowatt (kW) solar system is $15,720. A homeowner can save up to $4,716 by applying for the 30% Federal solar tax credit, making the solar system cost $11,004.

Oklahoma residents can purchase 100% of their electricity from renewable energy sources.

Renewable Energy in Oklahoma

According to the EIA, Oklahoma’s main electricity generation sources are wind and natural gas. They account for over four-fifth (80%) of the state’s electricity net generation.

Wind energy generated the largest proportion of Oklahoma’s net generation, with over 41% of in-state utility-scale net generation in 2021.

Natural gas accounted for about 40% of Oklahoma’s net electricity generation, making it the state’s second-largest source of net electricity generation. Other main electricity-generating sources in the state include coal and hydroelectric power.

Generally, renewable sources contributed to over 45% of in-state electricity generation in Oklahoma in 2021. Over 90% of the state’s renewable energy generation came from wind energy in 2021. Other renewable energy resources that contributed to the in-state generation include hydropower, biomass, and solar energy. Solar energy accounted for less than 0.4% of Oklahoma’s renewable electricity generation.

As of 2023, Oklahoma has 13 wind farms with over 2 gigawatts (GW) operating capacity. The state has 10 hydroelectric power plants that contribute different amounts to the state’s electricity net generation.

Federal Solar Tax Credit in Oklahoma

The Federal Solar Investment Tax Credit, officially called the Residential Clean Energy Credit for residential systems, allows you to deduct 30% of the total solar system cost from your federal taxes.

For example, a solar energy system installation that costs $18,000 out of pocket will be eligible for a tax credit of $5,400. There is no restriction as to the credit amount permitted. The amount of credit a person qualifies for is tied to their tax liability.

The tax credit was established in 2005 and was scheduled to expire in 2021, which was later changed to 2024. However, the Inflation Reduction Act (IRA) passed by Congress in August 2022 has extended the period that the tax credit applies to 2032 and increased the credit rate to 30%.

The applicable tax credit depends on the year of installation:

• Solar systems installed on or before 31 December 2019 qualify for a 30% tax credit;
• Solar systems installed between 2020 and 2021 qualify for a 26% tax credit.
• Solar systems installed between 2022 and 2032 qualify for a 30% tax credit.
• Solar systems installed in 2033 qualify for a 26% tax credit;
• Solar systems installed in 2034 qualify for a 22% tax credit;
• The tax credit will expire in 2035.

Eligibility

The eligibility criteria for the Federal tax credit include:

• Your solar system must be installed between 1 January 2017 and 31 December 2034.
• Your solar system must be installed in your residence located in the United States.
• You must own the system. This means you either bought the solar system with cash or through any means of financing. If a third party owns the system, you will not be eligible to get the tax credit. Alternatively, you will qualify if you purchased 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: The IRS has stated that 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, known as a private letter ruling (PLR), as a precedent. You would also be ineligible if your electricity came from community solar projects.

• Your solar system must be new or is being used for the first time. The solar tax credit only applies to “original installation” of solar equipment.

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

Claiming the Federal solar tax credit in Oklahoma is relatively easy. You have to complete one form to get access to the tax credit. Below are the steps you should take to get the tax credit:

• Step 1. Complete the purchase and installation of your solar system.

• Step 2. After installing and commissioning your system, get a copy of IRS Form 5695. The form is for claiming residential energy credits for renewable energy systems.

• Step 3. Complete the form with the necessary information, including your solar system size and cost details. You should also provide information about the company or contractor that carried out the installation of the system. You can get instructions on completing the form here.

• Step 4. File the form along with your taxes (Form 1040 or Form 1040NR) or give the form to your accountant at the end of the year.

Net Energy Metering in Oklahoma

Net energy metering in Oklahoma is a solar incentive program that helps owners benefit from the maximum value of owning their solar system. This incentive monitors the excess electricity that the solar system generates and transmits to the grid through interconnection.

The system owner gets credits for each kilowatt-hour (kWh) of electricity transmitted to the grid. The more electricity produced and transmitted, the more credits and money saved on future utility bills.

The Oklahoma Corporation Commission (OCC) oversees energy costs and net energy metering in the state. It mandates all investor-owned utilities (IOUs) to offer net energy metering to all customers.

However, the IOUs are not required to purchase the excess electricity of every customer. Hence, while a customer can request that their utility purchases their excess electricity, the utility decides if they want to purchase it. Not all utilities accept customer applications for net metering in the state. The IOUs in Oklahoma include:

• Liberty Utilities (used to be Empire District Electric Company),
• Public Service Company of Oklahoma, and
• Oklahoma Gas & Electric (OG&E).

Also, the amount of credit a customer gets from electricity produced and transmitted is not guaranteed. It varies from time to time.

How to Enroll for Net Energy Metering in Oklahoma?

Enrolling in net energy metering is usually a simple process in Oklahoma. Most reputable solar installers in the state will handle the interconnection application process for you, making enrollment almost automatic for most homeowners.

Residents can complete enrollment with the following steps .

• Step 1. Check with your utility company to see if you are eligible for net energy metering. The program is required for investor-owned utilities, but electric cooperatives and municipal utilities may also participate. You should also ensure that you have a bidirectional meter installed. Most homes have already been upgraded to include one, but if you do not have one, you can get one installed for free.

• Step 2. Find a solar installer in your area to handle the net energy metering application. Most reputable companies will do this for you, but you must confirm your desire to be enrolled due to the fee involved.

• Step 3. Finish up your solar home project.

• Step 4. Monitor your energy bills for a month or two after installation to ensure your credits accrue. If you are not, contact your installer to determine the source of the problem.

Oklahoma Property Tax Exemption

Oklahoma does not have property tax exemptions for installed solar systems. Property tax exemptions enable homeowners and businesses to exclude the added value of a system from the taxation valuation of their property.

A solar system can significantly increase the value of your home. A property tax exemption makes installing a solar system on a residential or commercial property more economically feasible. Unfortunately, as of 2023, there are no property tax exemptions for solar systems in Oklahoma. Hence, your property taxes will almost certainly rise as a result of solar conversion.

Oklahoma Property-Assessed Clean Energy (PACE) Financing

While Oklahoma has a Commercial Property–Assessed Clean Energy (C-PACE) Financing program, the state has no Residential Property–Assessed Clean Energy (R-PACE) Financing program.

Oklahoma C-PACE financing is a type of long-term, low-interest rate financing with no upfront costs for building owners who want to modernize building energy infrastructure, lower energy costs, and increase asset value. C-PACE is a dependable source of affordable financing for commercial and industrial building owners to make money-saving and energy-saving improvements to their buildings. C-PACE can finance up to 100% of the costs of these improvements. Private lenders make the financing available and secured by an assessment against the property.

C-PACE is financing repaid through a special assessment contract between the C-PACE capital provider, the benefitted property owner, and the county. The financing’s legal status as a tax assessment secures the financing provided by a private capital provider, allowing such providers to provide low-cost, fixed-rate, long-term financing.

Capital providers bill and collect the annual C-PACE assessment payments directly from the property owner. Counties are not responsible for billing and collecting C-PACE assessment payments on behalf of the capital provider.

Oklahoma C-PACE financing is available based on the property, not the owner. C-PACE is available for commercial properties, including industrial, agricultural, office, and multifamily properties (with a minimum of five dwelling units) and non-governmental, tax-exempt properties owned by nonprofit organizations, private schools, religious institutions, and hospitals. Cannabis cultivation facilities are ineligible for C-PACE. Government-owned properties, single-family residential properties, and properties in residential zones are also not eligible for C-PACE financing.

The funds obtained from C-PACE financing must be used on eligible expenses, which may fall into energy efficiency, alternative energy sources, water conservation, and building resilience.

You can contact the C-PACE Program Administrator for more information.

State Sales Tax Exemptions in Oklahoma

Oklahoma does not have a state sales tax exemption program. A sales tax exemption means homeowners and businesses are exempt from paying state sales tax on their solar panel systems.

When you consider the falling cost of solar equipment and installation and the 30% Federal tax rebate, there are compelling reasons to go solar. Unfortunately, as of 2023, Oklahoma has no sales tax exemptions for solar systems. As a result, you will be required to pay sales tax on your entire solar energy system.