Solar is an excellent option if you are looking to lower your energy bills and reduce your carbon footprint. However, it’s essential to understand that solar panels aren’t free and can be a significant investment.
Fortunately, there are ways to reduce your solar payback period and increase the overall value of your system. Among them is net metering, which lets you produce more electricity than you use and sell it to the utility company.
How Much Can You Sell to the Grid?
Your local power market depends on how much you can sell to the grid. Some utilities offer buyback rates, while others charge a premium for their services.
The best part about selling your excess solar energy back to the utility is you get credit for it as well. Your electricity provider tracks how many kilowatt hours (kWh) of power are uploaded to the grid and issues you a corresponding credit for each kWh. It makes for a tidy sum at the end of the month and is one of the most eco-friendly ways to power your home or business.
However, figuring out how to return your energy to the grid is more challenging than it sounds. There are various things to consider, including your energy bill, how much electricity you’re generating, and whether or not you can qualify for incentives from your utility company.
Ask your provider for more information. They should be able to tell you about any relevant perks and give you some unbiased recommendations. You may also want to investigate your state’s net metering regulations and their rules for selling your electricity. Several tax credits are also available for converting your home to a solar power system. The best advice is to consult a professional like A&G Electric and take advantage of whatever incentives you can find!
Net Metering
Net metering is one of the best ways to get real value from your solar system. It is where you sell any excess power you produce to the grid, and your utility company pays you for it at retail price – usually much lower than what you pay them for electricity.
Another reason you should look into net metering is that it can help reduce the stress on your utility’s grid. Utilities often need help to balance the demand for energy with available resources, which can cause more frequent power outages.
In net metering programs, you can send the extra power your solar panels generate during the day to the grid in exchange for banked energy credit you can use later. It will save you money on your monthly electric bill and can be especially useful in winter when your electricity bills are higher because of heating costs.
Most states allow you to rack up credits from your excess generation throughout several billing periods rather than using them all in one. It is like rolling over your cell phone minutes monthly to build up your credit during the summer and use it in the winter when you need more electricity.
Utility Incentives
Often, utilities offer incentives or rebates to help their customers lower energy costs and improve efficiency. These incentives may be based on a rate of return for a specific investment, such as LED light bulbs, or they may include performance criteria, such as savings goals over time.
These incentives can reduce the cost of energy-efficient equipment and provide more incentives for a business to invest in more energy-efficient systems. Utilities, local governments and state and federal agencies often offer incentives for energy and water conservation and demand reduction.
Some of these incentives also provide tax credits. You can learn more about these incentives by researching your state’s policy and contacting your utility company.
In addition to rebates, you can also earn money by selling electricity back to the grid. It is called net metering and occurs when your home or business produces more power than it consumes.
This excess energy is fed back into the grid and sold to your local power provider at a lower wholesale price than you paid. Depending on your state’s policies, you could profit from this.
In addition to net metering and selling excess energy back to the grid, solar panels can earn passive income through schemes like Smart Export Guarantee (SEG). You’ll get paid for every unit of electricity you feed into the grid – even if you don’t use it!
Tax Credits
Many people may need to realize they can save hundreds or even thousands of dollars a year by taking advantage of tax credits. Not to be confused with deductions, credits reduce your final tax bill dollar for dollar. They also do not depend on a taxpayer’s marginal tax rate, which rises with income.
Most state and local government rebates for installing solar power systems are only available for a limited time, so getting in on them while funds are still available is best. These incentives can significantly reduce your solar installation costs depending on your state.
In addition, some states allow homeowners to sell the excess electricity their solar panels produce back to their electric provider. It enables solar customers to avoid paying almost all their electric bills and further helps them recoup the cost of their solar system.
In addition to these state incentives, solar companies can earn up to 30% of the value of a solar power system by taking advantage of the investment tax credit. Individuals and businesses can claim this credit, scheduled to expire in 2034, for installing solar arrays and solar water heaters.
