How Much Can You Save on Solar in Pennsylvania?
Pennsylvania receives 3,939 kilojoules (kj) of average sunlight annually. As of 2023, the number of solar installations in Pennsylvania stands at 53. Solar generation increased from 260 megawatts (MW) in 2015 to 1,002 mW in 2022.
Solar energy is a major source of renewable energy in Pennsylvania, producing 11% of the state's total renewable electricity in 2021. Within the same year, Pennsylvania generated about three-fourths of its solar energy from small-scale generating systems like rooftop solar panels and other solar generating facilities.
Pennsylvania Solar Tax and Incentives at a Glance
|Pennsylvania Solar Incentives||State or Federal||Program Overview|
|Solar Investment Tax Credit (ITC)||Federal||With the help of this program, you get to deduct 30% of the cost of installing solar panels from your federal taxes.|
|Property-Assessed Clean Energy (PACE) Financing||Federal||The PACE program allows residents to take out loans to finance the up-front cost of your solar panel system and then repay the costs.|
|Solar Renewable Energy Certificates (SRECs)||State||This program offers financial credits for surplus energy that your solar panels produce.|
|Pennsylvania Net Metering Program||Local||Pennsylvania's net metering program allows homeowners to earn credits by selling any excess electricity your solar panel generates back to the grid.|
|Philadelphia Solar Rebate Program||Local||This program offers $0.20 per watt for residential projects and $0.10 per watt for commercial ones, with a $100,000 cap per solar project.|
How Cheap or Affordable is Solar Energy in Delaware?
According to the US Energy Information Association (EIA), the average retail cost of grid electricity in Pennsylvania (as of 2022) is 9.97 cents per kWh. In comparison, the average cost of solar panels per watt stands at $2.38.
|State||Number of solar Installations||MW Installed||Average cost for grid power (2021)||Average cost per watt|
|Pennsylvania||53||1,002||9.97 cents per kWh||$2.38|
If you're using a 6 kilowatt (kW) solar system in your home in Pennsylvania, you're likely to pay an average installation cost of $15,420, which saves you about $3,392 after deducting your federal tax credit.
|State||Cost of installing a 6kw system||Federal tax credit value 2021 (22%)|
According to the 2020 Energy Information Administration (EIA) data, the total energy consumption per capita in Pennsylvania is 262.7. The state's residences recorded 65.4 in energy consumption, commercial establishments (40.4), industrial establishments (96.5), and transportation (60.4).
Renewable Energy in Pennsylvania
In 2021, Pennsylvania's renewable energy sources (wind energy, solar energy, hydropower, and biomass) produced 3% of the state's electricity. Wind was the largest renewable energy resource in Pennsylvania, producing about two-fifths of the state's renewable electricity.
Another major renewable energy source in the state is hydropower, which accounts for three-tenths of Pennsylvania's renewable electricity. The state is blessed with two pumped storage hydroelectric plants, one of which has 452 MW of generating capacity and the other with 1,070 MW of capacity.
With over 83,000 miles of rivers, streams, and dams, Pennsylvania has the capacity to generate more than 600 MW of hydropower.
The federal solar tax credit, also known as an Investment Tax Credit or ITC, offers a dollar-for-dollar reduction in iincome taxes, allowing homeowners to reduce the cost of their solar system by 30%.
In 2020 and 2021, the ITC was set at a 26% rate for solar panel systems installed within this period. In August 2022, Congress raised the rate to 30% for solar systems installed between 2022 and 2032.
This rate is scheduled to drop to 26% for systems installed in 2033 and 22% for systems installed in 2034. Unless it is renewed again, the federal tax credit is set to expire in 2035.
You are eligible for federal solar tax credit in Pennsylvania if you meet any of the following requirements:
Even if you don't purchase your solar system outrightly, you may still take advantage of the tax credit with a solar loan or even a solar lease in some cases.
When you sign a lease or power purchase agreement (PPA) with a solar installer, you can't claim the tax credit directly. But you may be able to enjoy any leasing discounts related to the credit that the solar installer receives.
Here is a quick step-by-step guide on how to claim your solar tax credit in Pennsylvania:
Net metering allows you to earn full credits on your power bill for any excess electricity that you sent to the grid. With this program, you can enjoy the full benefits of your home solar power and also maximize your long-term energy savings.
In Pennsylvania, net metering came into operation after the passage of the 2004 Alternative Energy Portfolio Standards Act (AEPS). The Act defined how residents who own small renewable facilities like home solar panels can connect to the grid, and how they can get paid for the clean energy their system produces.
Pennsylvania law requires all electric utility companies in the state to purchase excess renewable energy from eligible system owners at the full retail rate. This means that you can participate in the state's net metering program, as long as you're a customer of any utility company in Pennsylvania.
These include companies like FirstEnergy (Penn Power), Duquesne Light Company, and Pennsylvania Electric Company (PECO).
Enrolling for net metering in Pennsylvania is an easy process and won't require much effort from you. Here are a few steps to take when setting up for net metering:
In addition to solar rebates, Pennsylvania offers financing programs like the Property Assessed Clean Energy (PACE) to help with the costs of solar. PACE financing provides long-term and low-interest loans to residential or commercial property owners to pay the up-front cost of their solar panel systems. The repayment is done through a voluntary property tax assessment collected by local authorities in Pennsylvania.
Payment is made over a specified timeframe, usually 10 to 20 years. Keep in mind that a PACE assessment is a debt of property, meaning the debt is attached to the property and not the property owner. The obligation to repay the loan may therefore transfer with property ownership, especially if the buyer has agreed to assume the PACE obligation.
As of 2023, Pennsylvania doesn't offer sales tax exemptions to solar owners. This exemption excludes you from paying any state sales tax after buying solar panels, solar batteries, and other types of solar equipment.
In states where it's offered, a sales tax exemptions can help reduce the total costs of purchasing a solar system, making it more affordable to go solar. However, although Pennsylvania doesn't provide sales tax exemptions, residents can still enjoy discounts wih the 30% federal tax credit.
As of 2023, Pennsylvania doesn't offer property tax exemptions for homeowners with solar panel systems. With property tax exemptions, you can exclude the added value of your system from the valuation of your property for tax assessment purposes.