Financial Benefits of Solar Electricity - Generating Systems
The economic viability of solar in many states of this country has never been higher, due to the aggressive cash rebate programs sponsored by those states, an underlying Federal tax incentive, emerging markets for Solar Renewable Energy Credits (SRECs), and rejuvenated efforts in solar industry R&D which have increased the equipment's efficiency and power output while lowering the cost of components.
The Federal government recently removed a $2,000 cap on its 30% tax credit - this means that the full 30% of the net cost of a PV system, after state and local incentives, can be refunded to you when your taxes are filed.
States such as Connecticut, Massachusetts, and Rhode Island are offering cash rebates on the cost of a solar electric system, matching a portion of system costs on a per-watt basis.
Furthermore, there is a tax credit typically worth $1,000 in Massachusetts and all three states have exempted PV systems from sales tax.
The combination of State and Federal incentives can in many cases reduce the net cost of a photovoltaic system to roughly 50% of its total cost! SRECs (Solar Renewable Energy Credits) are an additional emerging financial incentive for owners of solar electric generating systems.
Electric utility companies are required by law to purchase these credits on auction from the owners of PV systems which are grid-interconnected.
SRECs substantially improve cash flow and other financial metrics of a system, in many cases slashing the time to breakeven in half! Compared to other investments, a solar system is a clear winner.
It drastically outperforms conservative investments such as a savings account or bond fund, and matches the historical rate of return of the stock market.
However, the financial returns of a PV system (in the form of reduced electric bills) are guaranteed, whereas there are certainly no guarantees when investing in stocks (the S&P 500 is essentially unchanged in the last 10 years).
A PV system for your home or business offers a locked in electric rate for that portion of your demand which is offset by your array's production.
This is not only a hedge against inflation, but a hedge against future increases in electric rates from your utility, which have been trending at more than twice that of inflation! If electric rates continue to increase at their recent rate, they will double in about 15 years.
As electric rates rise, your monthly savings in the form of cash not spent on your bill will actually grow.
Speaking of cash flow, once a solar array is built and connected to your home you start reducing your electric bill immediately.
Because your electric bill is lowered, in essence the cost of operating your home has decreased...
and will be decreased as long as the sun shines on that system.
Therefore, compared to a neighbor without solar, the value of your home actually increases because it is cheaper to pay your bills each month.
Studies suggest that your home value will increase $20,000 for every $1,000 of annual electric bill savings.
In most cases, this immediate increase in value is greater than the net cost of your PV system.
The Federal government recently removed a $2,000 cap on its 30% tax credit - this means that the full 30% of the net cost of a PV system, after state and local incentives, can be refunded to you when your taxes are filed.
States such as Connecticut, Massachusetts, and Rhode Island are offering cash rebates on the cost of a solar electric system, matching a portion of system costs on a per-watt basis.
Furthermore, there is a tax credit typically worth $1,000 in Massachusetts and all three states have exempted PV systems from sales tax.
The combination of State and Federal incentives can in many cases reduce the net cost of a photovoltaic system to roughly 50% of its total cost! SRECs (Solar Renewable Energy Credits) are an additional emerging financial incentive for owners of solar electric generating systems.
Electric utility companies are required by law to purchase these credits on auction from the owners of PV systems which are grid-interconnected.
SRECs substantially improve cash flow and other financial metrics of a system, in many cases slashing the time to breakeven in half! Compared to other investments, a solar system is a clear winner.
It drastically outperforms conservative investments such as a savings account or bond fund, and matches the historical rate of return of the stock market.
However, the financial returns of a PV system (in the form of reduced electric bills) are guaranteed, whereas there are certainly no guarantees when investing in stocks (the S&P 500 is essentially unchanged in the last 10 years).
A PV system for your home or business offers a locked in electric rate for that portion of your demand which is offset by your array's production.
This is not only a hedge against inflation, but a hedge against future increases in electric rates from your utility, which have been trending at more than twice that of inflation! If electric rates continue to increase at their recent rate, they will double in about 15 years.
As electric rates rise, your monthly savings in the form of cash not spent on your bill will actually grow.
Speaking of cash flow, once a solar array is built and connected to your home you start reducing your electric bill immediately.
Because your electric bill is lowered, in essence the cost of operating your home has decreased...
and will be decreased as long as the sun shines on that system.
Therefore, compared to a neighbor without solar, the value of your home actually increases because it is cheaper to pay your bills each month.
Studies suggest that your home value will increase $20,000 for every $1,000 of annual electric bill savings.
In most cases, this immediate increase in value is greater than the net cost of your PV system.
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