Utah Solar Rebates and Incentives

How Much Can You Save on Solar in Utah?

Key Points

• Homeowners in Utah can apply for a Federal solar tax credit of up to 30%.
• Net energy metering allows customers to offset the cost of utility power.
• Utah does not provide property tax exemption for residential or commercial solar systems.
• Utah offers a solar tax credit that gives homeowners up to 25% credit (capped at $400) on purchase and installation costs.
• Solar easement laws protect long-term access to sunlight.

Utah Energy Profile

Utah is one of the sunniest states in the US. It ranks 9th on the list of sunniest states in the country, with an average annual sunlight of 4,887 kilojoules per square meter (kJ/m^2).

Utah also ranks 12th in the US regarding the growth of solar energy in the state. As of 2023, there have been 63 installations, with 2,761 megawatts (MW) installed, enough to power up to 510,000 homes.

State and Federal Solar Incentives in Utah

How Cheap or Affordable is Solar Energy in Utah?

The US Energy Information Administration (EIA) reported that, as of 2021, the average retail cost of grid electricity in Utah is 8.34 cents per kilowatt hour (kWh). The average cost of solar panels per watt is $2.66.

The average cost for installing a 6 kilowatt (kW) solar system in Utah is $15,960. If you apply the 30% Federal tax credit, a homeowner can save up to $4,788, making the solar system cost $11,172.

The total energy consumption per capita in Utah was 74,030 kWh in 2020. The energy consumption of residences is 17,174 kWh, 15,122 kWh for commercial establishments, and 19,196 kWh for industrial establishments.

Federal Solar Tax Credit in Utah

The Federal solar tax credit is an incentive program that reduces the cost of solar purchase and installation for Utah residents. The program is officially called the Residential Clean Energy Credit, and it provides a 30% tax credit for purchasing qualifying equipment, including solar, wind, geothermal, and fuel-cell technology.

There is no limit as to the credit amount allowed. The amount of credit a person is eligible for is tied to their tax liability. Hence, it is important that you talk to a tax professional for guidance.

How it Works

The applicable tax credit depends on the year of installation. If the solar system was installed in 2020 or 2021, it would qualify for a 26% tax credit.

A solar system installed between 2022 and 2032 qualifies for a 30% tax credit. This is due to the Inflation Reduction Act, which extended the period that the federal solar tax credit would be in effect.

Solar systems installed in 2033 and 2034 will qualify for 26% and 22% tax credits, respectively. The credit program is expected to end in 2035 unless Congress decides to extend it.

Some of the expenses covered by the federal solar tax credit include:

• The solar cells or panels, including solar cells that power attic fans. It should be noted that it does not cover the fan itself.

• Contractor labor costs for activities like site preparation, assembly, or first installation. This includes developer fees, inspection fees, and permit costs.

• Obtaining the necessary 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 31 December 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.

The federal solar tax credit substantially lowers the cost of purchasing and installing a solar system in Utah. The average cost of installing a 6kW solar system is $15,960. The 30% tax credit reduces the cost of the system, helps the owner save, and quickens the system’s payback period. If you apply the Federal tax credit of 30%, a homeowner can save up to $4,788, making the solar system cost $11,172.

Eligibility

You must meet the following requirements to qualify for the federal tax credit:

• Your system is installed between 1 January 2017 and 31 December 2034
• The solar PV system is located at your residence in the United States.
• You own the solar system (i.e., you bought and installed the system with cash or through financing. If you lease or are using the system through third-party ownership, you will not qualify).
• The solar 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 Utah?

Claiming the Federal solar tax credit in Utah is relatively easy. Below are the steps required to claim the Federal solar tax credit:

• Complete your transition to solar energy.
• Seek professional tax advice to determine that you qualify for the credit.
• Obtain the IRS Form 5695 and complete the form with the necessary details. Instructions on completing the form are available here. You will need to provide information about your solar contractor, system, and site.
• Attach the form to your federal tax return (Form 1040 or Form 1040NR). Immediately after you have confirmed 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 Utah

Net metering is an energy generation incentive that helps maximize energy savings with solar panels over time. Net metering is a system in which solar systems or other renewable energy generators are connected to a public-utility power grid.

Excess power generated by the system is sent into the grid, allowing customers to offset the cost of utility power. When you create electricity for your house or company from your solar array, you minimize the energy you purchase from your electric utility.

It also reduces your monthly electric bill. If your system generates more energy than you require, the excess is sold back to the grid. That amount of energy is either taken from your monthly payment or applied to a future bill.

Utah’s state-regulated utilities are not mandated to offer net metering by the Public Service Commission (PSC). Hence, net metering may not be available for all residents and areas of the state.

To apply for net metering, you should contact your local utility company and inquire if they have a net metering program. If they have, you can ask for details regarding the program and installing a bidirectional meter at your home.

How to Enroll for Net Energy Metering in Utah?

Enrolling for net energy metering is an easy process because your solar installer usually does the registration for you. Below are the steps required to enroll for net energy metering in Utah:

Step 1. Contact your local utility company and ask about their net energy metering program.

Step 2. If they have a net metering program, ask what you need to do to register.

Step 3. Usually, registration involves three processes:

• Application and approval: You apply for net metering and interconnection to your utility company. You will need to provide all the necessary information requested. The application will be reviewed and may be approved or rejected. The decision-making period typically takes three to 10 business days.

• Installation and inspection: This involves installing your solar system. You will need a solar installer to confirm that a representative from the company will handle the net metering application for you.

• Bidirectional meter installation: Your utility company will install a bidirectional meter. This meter monitors electricity transmitted from your system to the grid and electricity supplied from the grid to you.

• After installing, confirm that credits are accruing on your utility bills. Contact your installer and utility company if the credits are not reflected on your utility bills.

Utah Property Tax Exemption

As of 2023, Utah does not provide property tax exemption for residential or commercial solar systems. The value of a property increases when a solar system is installed, which in turn, causes an increase in the property tax payable.

Some states offer property tax exemptions to ease the upfront financial cost of solar installation. Unfortunately, Utah does not offer such an incentive.

Utah Solar Tax Credit (Renewable Energy Systems Tax Credit)

Utah solar tax credit gives homeowners in the state that invest in solar up to 25% tax credit on the purchase and installation costs of the system. The tax credit is also available to commercial solar systems. The credit will be on the following year’s income taxes to reduce the solar costs of the homeowner.

As of 2023, the cap of the tax credit is $400. Generally, the tax credit varies based on the technology type and whether it is a residential or commercial installation.

Utah’s solar tax credit, officially called the Renewable Energy Systems Tax Credit, has been phasing down. The cap a person gets begins to phase down as follows:

• 25% capped at $1,200 until 31 December 2021
• 25% capped at $800 until 31 December 2022
• 25% capped at $400 until 31 December 2023
• Utah tax credit expires in 2024

The Utah Office of Energy Development administers the incentive program and processes tax credit applications. You can use the electronic application portal to make your tax credit applications. There is a non-refundable $15 application fee, which can only be paid with a credit card.

What Residents Need to Know About Utah Solar Easement and Access Laws?

Solar Easement

Utah solar easement laws are similar to the easement laws in most other states. By Utah Code, Title 57, Chapter 13, parties may voluntarily enter solar easement contracts designed to protect long-term access to sunlight. A solar easement is a written agreement between adjacent property owners to protect long-term access to the sun. The easement must be filed, duly recorded, and indexed in the office of the recorder of the County where the easement is granted. Once created, a solar easement runs with the land and does not terminate except for the conditions of the easement provided to that effect.

Any instrument that creates a solar easement must contain the following:

• A description of the affected properties.
• A graphical representation of the solar skyspace in question.
• Any terms or conditions that govern the grant or termination of the solar easement.
• Any provisions that compensate the burdened party or, if there is interference, the benefited party.
• Any other provisions required to carry out the instrument.

Solar Access

Utah’s solar access laws restrict the extent to which homeowners’ associations (HOA) can limit the installation of solar panels on the roof. By Senate Bill 154 (Solar Access Amendments), It limits the extent to which HOAs can block rooftop solar installation.

HOA restrictions for solar installations may not reduce the system’s output by more than 5% or increase the system’s cost by more than 5%. This regulation only applies to detached houses where the HOA does not control the roof, and HOAs with established solar policies prior to January 2017 are excluded from the statute.

Under Utah Code, Title 10, Chapter 9a, Section 610, land-use authorities have the power to refuse approval or renewal of HOAs or other private covenants that seek to prevent “reasonably sited” solar collectors. A city, town, or county council must approve this code into law for it to be effective.

Utah Property-Assessed Clean Energy (PACE) Financing

Utah has a Commercial Property–Assessed Clean Energy (C-PACE) Financing program. However, as of 2023, the state does not have a Residential Property–Assessed Clean Energy (R-PACE) Financing program.

Utah C-PACE is a program that assists property owners in obtaining private-sector financing to install building improvements that can reduce energy use and increase property value.

C-PACE projects are administered by Utah cities and counties through their C-PACE program, which can boost local economy through new investment, job opportunities, energy savings, and improved air quality. The program is supported by the Governor’s Office of Energy Department.

Capital providers in the open market supply C-PACE financing. The financing is secured by a voluntary energy assessment and assignable lien imposed on the owner’s property and reimbursed to the capital provider.

The loan period is usually determined by the usable life of the improvements and can last up to 30 years. C-PACE may enable property owners to make significant upgrades to their properties because the long-term financing can cover up to 100% of a building’s modernization project cost and frequently requires no money down.

The energy savings from the project may outweigh the C-PACE payments, resulting in positive cash flow for the property owner, whose refurbished building may be more valuable following a C-PACE project. The property owner can compare term sheets from different private capital sources to secure the best terms, including interest rates and other fees.

In Utah, C-PACE is also accessible to real estate developers who design and build buildings with more energy-efficient equipment than is required by the commercial energy code. The financing may assist developers in filling gaps in their financing plan.

C-PACE financing is available based on the property, not the owner. The underwriting criteria considered by the C-PACE capital provider include, but are not limited to:

• The estimated market value of the property (assessed or appraised).
• The amount of equity in the property owned by the owner.
• Recent mortgage and property tax payment history of the owner.
• The monetary value of the proposed eligible energy improvements.

There are two requirements that the properties must meet to qualify for C-PACE financing. These requirements are:

1. The property must be located in the jurisdiction of a governing body that has authorized C-PACE.
2. The property must have one of the following uses:

• Commercial
• Mining
• Agricultural
• Industrial
• Manufacturing
• Trade
• Professional
• Private or public club
• Lodge
• Business
• Dwelling purposes.

Renewable energy systems that qualify for financing include those with up to 2 MW capacity and those above 2 MW capacity that serve loads that the public utility does not already serve.

Coal and natural gas contribute the largest percentage to Utah’s electricity generation. According to the EIA, in 2021, coal accounted for 61% of the state’s total electricity net generation, and natural gas fueled 24%. The remainder of Utah’s in-state electricity generation was almost entirely derived from renewable energy sources, mostly solar power.

Renewable Energy in Utah

Renewable energy resources contributed about 15% of Utah’s in-state electricity net generation. Solar energy produced more electricity in Utah than any other renewable resource in 2021.

All solar installations, including small-scale (less than 1 MW) and customer-site solar panel systems and utility-scale (1 MW or greater) solar array farms, accounted for around two-thirds of Utah’s renewable energy.

Other renewable energy sources contributing to the state’s electricity net generation include wind, hydropower, geothermal, and biomass.

Wind contributed 13% to Utah’s electricity net generation through the state’s five farms. These farms function with about 400 MW generating capacity.

Hydropower produced about 12% of the state’s renewable energy generation. As of 2023, Utah has 29 utility-scale hydroelectric plants. The three geothermal facilities produced up to 6% of the state’s renewable electricity generation. Biomass contributed 1%, mainly in the form of landfill gas at facilities in the population centers in the state.

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