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Solar Resource Center


Will Solar Work for You?

Going solar works for residential property owners if

  • You own your home
  • Your electric bill is more than $150 per month
  • Your roof faces to the south, east or west
  • Your proposed solar installation has good sun exposure between 9 am and 4 pm.

• Does Solar Power Make Financial Sense for You?

Homeowners often wonder whether solar power installations are cost effective. In most cases, when your monthly electric bill is $150 or more, going solar is a no-brainer.


Here is a breakdown of solar financing options


BuyLeasePPA
Overview

Purchasing a renewable energy system means paying for it up front. You can purchase the system from an approved contractor or manufacturer. Another option is financing the system through a bank loan. You own the entire system, which most manufacturers guarantee for up to 25 years.

Leasing allows you to “rent" the renewable energy system for a set time period. Generally, you pay a fixed monthly rate no matter how much energy the system produces each month.

Similar to leasing, a third party owns and maintains your renewable energy system. Typically, you pay for the electricity generated at a rate per kilowatt-hour (kWh), which your agreement specifies.

Benefits
  • Lower monthly electricity bills.
  • Greater return on investment.
  • Increased home value.
  • Minimum 10-year warranty.
  • Possible 30 percent federal investment tax credit and other deductions.
  • Lower monthly electricity bills.
  • No large, upfront investment.
  • Typically, no costs for system operations, monitoring and maintenance.
  • Fixed monthly rate, regardless of how much electricity is produced.
  • Typically break even or saves money in the first year.
  • Typically, performance guarantees provided.
  • Lower monthly electricity bills.
  • No large, upfront investment.
  • Typically, no costs for system operations, monitoring and maintenance.
  • Fixed rate per kWh produced.
  • Typically break even or saves money in the first year.
  • Typically, performance guarantees provided.
Additional costs
  • Expensive components, like the inverter, might need replacement after the warranty.
  • Extended service agreement for maintenance, repairs and insurance.
  • The monthly price of your lease might increase over time.
  • Rates per kWh typically increase over time.
Risks
  • You are responsible for maintenance costs.
  • A performance monitoring system might be necessary as an add-on service to monitor your energy production.
  • Might cease to provide contracted operations and maintenance if the lease provider goes out of business.
  • You must consider purchase or buy-out options in your contract.
  • Might cease to provide contracted operations and maintenance if the lease provider goes out of business.
  • PPAs usually include long-term commitments of over 25 years.
  • You must consider purchase or buy-out options in your contract.
Advice

You might be able to finance your purchase of a solar or renewable energy system by taking a home equity loan or secure line of credit. Both options may be eligible for tax deductions. Speak with your tax advisor before you purchase.

Agreements are long-term, with specific fees that might increase over time. Understand any changes in your monthly rate over the lifetime of the solar lease agreement. Ask about your purchase options. Prepaid leases might also help reduce your monthly payments.

Agreements are long-term, with specific fees that might increase over time. Understand any changes in the price per kWh rate over the term of the PPA contract. Ask about your purchase options.


Here is a video from PGE describing Net Energy Metering (NEM).

Keep in mind residential customers will be using the TOU-A plan described at the .50 sec mark.


What is the Federal Solar Tax Credit (ITC)?

It is tax time so whether you are loving or hating Uncle Sam, it is a good time to highlight the Solar Tax Credit. Converting a home to solar electricity has enormous savings and environmental benefits. And the 30% Federal Solar Tax credit only sweetens the deal.

(This is general information only, please consult with a tax professional before making any tax credit related decisions.)

Is the ITC really sunsetting?

  • 2016 – 2019: The tax credit remains at 30 percent of the cost of the system. This means that in 2018, you can still get a major discounted price for your solar panel system.
  • 2020: Owners of new residential and commercial solar can deduct 26 percent of the cost of the system from their taxes.
  • 2021: Owners of new residential and commercial solar can deduct 22 percent of the cost of the system from their taxes.
  • 2022 onwards: Owners of new commercial solar energy systems can deduct 10 percent of the cost of the system from their taxes. There is no federal credit for residential solar energy systems.

(This is general information only, please consult with a tax professional before making any tax credit related decisions.)

1. Solar Tax Credit is only available when the solar power installation is purchased

To claim the 30% solar tax credit, the solar power system must be purchased. The IRS is clear that any portion paid using subsidized energy financing, (i.e leases or power purchase agreements, PPAs) cannot be used to figure energy property credit. Solar Leases and Solar PPAs are considered subsidized energy financing, and they get the tax credit because they retain ownership of that solar power system.

When researching home solar power and considering solar financing options, be sure to review all options including cash, loans (private and HELOC), and other lines of credit. Viewing multiple option and their tax credit implications is the best way to discover how the tax credit will help yield the best price and long-term savings.

2. Calculate the 30% Solar Tax Credit from Net System Price

The solar tax credit is calculated as 30 percent from the net system price. The net price is the purchase price for equipment and labor after any rebates, discounts, promotions, or other state incentives have been deducted. As with most tax credits, the IRS does not allow double-dipping.

Here is an example to show net price calculation:

Gross price ex: $20,000

Less local rebate: $600

Less installer promotion: $500

Net solar price to report to the IRS: $18,900

For specific IRS guidance on the renewable energy tax credit see Form 5659, Residential Energy Credit.

(Talk to a tax professional about tax credit implications on your tax return)

3. The Solar Power Approval Date Determines The Tax Credit Year

The solar tax credit can be claimed for the tax year that the system is installed and approved to operate. To be safe, it is best to use the date that the utility interconnection occurs, not just the date the installation finishes. The interconnection inspection by the utility authorizes the system to be turned on and start generating electricity.

The IRS language is slightly unclear, but after 30 years in the solar business we have learned to be conservative on this date. This question typically arises when solar projects start later in the year (think September/October). Due to several factors like permitting, weather and scheduling, projects can be unintentionally delayed during winter months. Get ahead of weather and potential delays, and start research and solar bids in the spring and summer.

4. The IRS Allows Carryover on the Solar Tax Credit

In the event that a homeowner does not have the tax appetite to redeem the full 30 percent tax credit in a single calendar year, the IRS, as of 2014, allows a carryover in order to help tax payer monetize as much of the solar tax credit as possible. (Talk to a tax professional about tax credit implications on your tax return.)

5. The Solar Tax Credit is Available Through 2019

The 30%, uncapped solar tax credit was passed as part of the 2009 American Recovery and Reinvestment Act. Recently Congress has agreed to extend the solar ITC at the current 30% rate through 2019, after which it will fall to 26% in 2020, 22% in 2021 and 10% in 2022.


About Residential PACE

Easier on your budget, better for your home PACE is an easy-to-use financing solution that allows you to make home improvements with no money down. Financing is paid back over time as part of your property taxes and qualification is based on the equity in your home, not your credit. PACE features a speedy approval process, flexible payment terms, and access to trusted home improvement contractors that Renew Financial has carefully screened. With PACE, you can install solar panels, replace windows and doors, upgrade your roof, or make other energy-efficient and home safety improvements.


FAQ

1. What is YgreneWorks™?

Ygrene’s award-winning YgreneWorks program enables property owners to make energy efficiency, renewable energy, climate resiliency and water saving improvements to residential, multifamily, commercial and agricultural buildings with 100 percent, no money down PACE financing. Payments are incorporated into and repaid over time through property taxes with terms of up to 30 years, depending on service area and type of improvement. If you sell your property, payments may transfer to the new owner, just like your property taxes. (Property taxes are legally transferable when you sell your property, however, some mortgage lenders may require full repayment (payoff) of any remaining PACE special tax/assessment upon sale or refinance.)

2. What is PACE financing?

Named one of the top 20 “world-changing” ideas by Scientific American magazine, property assessed clean energy (PACE) is a simple, effective way to pay over time for a wide range of energy and water saving, renewable generation and climate resiliency improvements to our built environment—which has all sorts of benefits.

According to the EPA, improving the energy efficiency of your home or business can help lower high utility bills, improve comfort and reduce greenhouse gas emissions. And by improving your home’s energy and water efficiency, you may be able to increase its value.

While PACE programs are enabled by state legislation and must be approved by your local government, YgreneWorks is not a government program.

3. What types of property improvements qualify?

Hundreds of energy and water saving PACE-eligible improvements (and associated installation costs) qualify under YgreneWorks, including energy-efficient heating and cooling, windows, doors, roofing, insulation and ducts, pool pumps, water heaters, drought tolerant landscaping and solar. In certain areas, PACE financing is used to install electric vehicle charging stations, make water conservation and seismic upgrades, as well as storm and wind protection improvements.

4. When will I make my first payment?

Your first payment (and all future payments) will be incorporated into your property taxes, and will appear as a line item on your annual statement delivered by your County Tax Assessors office. The date it appears on your property tax statement for the first time depends on the date your PACE improvement contract funds. PACE improvements funded on or before June 30 of this year appear in the year’s property tax statement; PACE improvements funded after June 30 of this year will appear in next year’s property tax statement.

5. What is my payment schedule?

Your annual PACE special tax/assessment will be added to your property taxes as a line item on your annual (or semiannual) statement. You can pay it in one of two ways: Pay your property tax bill directly to your tax collector on the due date in lump sum annual or semiannual installments.

Spread your payments out monthly by increasing the reserves in an existing (or new) mortgage escrow account.

Contact your servicer or lender directly to set this up.

6. How do I qualify?

It’s easy. First check your property eligibility. If your property is in one of our service areas, you can apply online with us in just a few minutes. YgreneWorks financing is based on the equity available in your home or property (among other factors), and not on credit (FICO) score, proof of employment, income or financial statements.

7. Will you pull my credit report?

Yes. While we do not use your credit (FICO) score as a factor in determining eligibility for financing, we do pull your credit report to confirm certain underlying criteria.


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