Photovoltaics (PV) Basics and How to Afford a System
Let’s talk Photovoltaic (PV) basics for a minute. Photovoltaics is the science behind the most popular form of harnessing solar energy. Historically, since it was the best energy source for their satellites, the space programs were the largest supporters of PV technology. Over the years the photovoltaics industry has grown and has since been powering electronics, cars, houses, commercial buildings, and helps supplement power grids. Years ago thermal solar products for heating water were often the first choice. Now, PV arrays are the most popular due to the improved technology, price, and aesthetics of the systems.
How does a photovoltaics system work? Well, PV cells convert sunlight directly into electricity, and the cells are typically obtained in panels that are installed on the roof of a home.
How do I afford a system?
Affordability is always the top concern when looking into adding a solar panel system. Not everyone has the ability to pay cash upfront on their own. Luckily, new financing options have made it possible to go solar with literally $0 down. In Florida, banks large and small are becoming more open to offering solar panel loans. This is because solar panel systems add great value to a homeowner’s property. Make sure to understand the terms when considering a loan. All in all, even though you will be making regular loan payments, you will still be saving money on your utility bill each month.
What about the 30% tax credit?
There is a lot of information out there regarding the investment tax credit (ITC), also known as the federal solar tax credit. Here’s a breakdown on what it is and how it works. This is a tax “credit” not a “deduction.” A tax deduction lowers your overall amount of taxable income. You can’t get money back from a deduction. A tax credit directly decreases the amount of tax you owe. The ITC was established by the Energy Policy Act of 2005. It was supposed to expire at the end of 2007, but because of its success in supporting the US transition to a renewable energy economy, Congress has extended it multiple times and it is now available through the end of 2021. This means any system, residential or commercial, installed January 1st, 2022 or later won’t benefit.
The tax credit is only eligible for those who own their solar energy system. So, if you have a loan and are still paying on it, you do not qualify. Both the residential and commercial ITC are equal to 30 percent of the basis that is invested in eligible property which have commenced construction through 2019. The ITC then steps down to 26 percent for projects that begin construction in 2020 and 22 percent for projects that begin in 2021. After 2021, the residential credit will drop to zero while the commercial and utility credit will drop to a permanent 10 percent.
All things considered, now is the time to install your solar energy system. The tax credit and financing options are incredibly beneficial, but in the end your utility bill and increased home value are what it’s really about. Be sure to speak with your WattSun Solar installer about what would be best for you!