Making the switch to solar is a big decision, but it's one that more and more people are making daily. With the Inflation Reduction Act (IRA) passed into law recently, going solar has become even more financially advantageous.
In a nutshell, the IRA's goal is to combat inflation by lowering the cost of prescription drugs, healthcare services, and solar energy. Most notably, it puts a premium on promoting renewable energy as a cost-effective and environmentally friendly option.
The IRA was created to provide American families and businesses with substantial energy savings, economic incentives, and health benefits. According to the White House, the IRA is projected to:
Wondering if going solar is right for you?
Read on for everything you need to know about solar panel installation and the IRA's impact on solar tax credits.
The IRA aims to reduce inflation by cutting taxes on solar products and solar energy systems and offering a tax credit to those who install panels. This means that not only is investing in solar now more affordable, but it can also save you money in the long run through lower energy bills.
One of the most significant impacts the IRA has on solar is regarding tax credits. The IRA reinstates and extends federal solar tax credits, including the residential Investment Tax Credit (ITC).
As such, homeowners who choose to go solar between 2022 to 2032 will be eligible for a 30% deduction from their federal income taxes. Excess tax credits accumulated prior to a solar systems installation may also be carried over to the following year.
Even nonprofit organizations, such as churches, charities, and schools, will now be able to benefit from solar tax credits. Because they are tax-exempt, the IRA has implemented a "direct pay" option for nonprofits that have solar installations, allowing them to receive cash in place of tax deductions.
Tax credits and rebates offered through the IRA are not just limited to individuals and nonprofits. The IRA also includes a tax credit for those who build or invest in community solar projects.
These solar system installation projects may be leased or bought in part by individuals or groups, allowing participants to earn credit off their energy bills. The credit they get will be based on the amount of electricity their share of the community solar project generates.
So the big question is, "Why go solar?" Aside from the financial benefits of tax credits and solar net metering, there are many reasons why investing in solar is a smart choice. Here's a quick guide on the basics of solar and why it's good for your home, business, and the environment.
A solar panel functions by utilizing photons, or particles of light, to create a flow of electricity. They comprise numerous smaller units called photovoltaic cells, which convert sunlight into electricity. Thus, many cells working together form one solar panel.
There are different types of panels:
Compared to other types of panels, this type costs the most but is also more efficient in converting solar into electricity. Monocrystalline panels are easily recognized by their uniform appearance, as they're made from a single, continuous crystal structure.
The cells in polycrystalline panels are generally less expensive than monocrystalline solar panel cells because they're produced from silicon fragments as opposed to a single, unadulterated silicon crystal. The result is a less complicated and cheaper cell manufacturing process for companies and customers.
The cost of a thin-film solar panel varies depending on the type of panel. Unlike monocrystalline and polycrystalline varieties made from a single type of material, thin-film panels are made from multiple materials. The most common type of thin-film panels are cadmium telluride (CdTe), but they can also be made of amorphous silicon (a-Si) or copper indium gallium selenide (CIGS).
The cost varies based on the solar panel’s type, size, and efficiency. In general, commercial solar installations tend to cost more due to larger system sizes and higher equipment costs. However, with tax credits and other incentives factored in, the cost of going solar can be reduced significantly.
The average cost for a commercial installation is around $200,000, but smaller and mid-sized businesses may have significantly smaller and inexpensive systems costing upwards of $50,000.
For residential solar installations, the average cost is around $15,000. However, the cost can be as high as $40,000 or as low as $10,000, depending on system size and location.
The first step to going solar is researching and finding a reputable and experienced solar energy company. Solar installers will need to assess your property, estimate the installation cost, and determine what incentives and tax credits you qualify for.
After finding the best solar company for your needs, the installer will take care of obtaining permits and scheduling installation. The solar panels will then be mounted on your roof or property, and the solar system will be connected to the grid.
While most solar companies only take care of solar installations, it's best to find one that also offers roofing and solar maintenance services. This ensures a comprehensive renewable energy solution for your home or business.
At AMECO Solar & Roofing, we offer an end-to-end solution that includes permits, installation, roofing services, solar maintenance, and everything in between. As the leading provider of solar panels in California for 48 years, clients know that when they work with AMECO, they work with the best.
With the help of a dedicated project manager that walks them through everything from initial inspections to design and installation, clients can rest easy knowing their solar system is in expert hands. Visit our website to learn more about how we can help you go solar. You can also check out our Estimate Calculator to get started on your solar journey.