There has never been a better time to set up your solar or wind (or both) generation system.
One way to lower electric bills is to gain some degree of energy independence. The way to do that is by installing renewable energy systems like photovoltaic panels, solar hot water heaters, and residential wind turbines. State and federal governments offer incentives to home owners for increasing the energy efficiency of their homes and for installing renewable energy systems to supply some or all of their electric power needs.
Federal Energy Tax Credits
One type of federal government support of energy efficiency and renewable energy for homes is energy tax credits. This works through your annual income tax return: Include the receipts for all qualified purchases made in the years along with the required IRS form,
According to the IRS, energy tax credits available to individuals are as follows:
- Equipment placed in service after December 31, 2016, and before January 1, 2020: 30%.
- Equipment placed in service after December 31, 2019, and before January 1, 2021: 26%.
- Equipment placed in service after December 31, 2020, and before January 1, 2022: 22%.
Below is a summary of the primary residential systems that are eligible for federal energy tax credits. More details about eligibility and equipment specifications can be found on the U. S. Department of Energy's Energy Savers website.
- Geothermal heat pump
- Credit applies to new and existing homes
- Credit applies to principal home or second home
- Equipment must be placed in service by December 31, 2016
- Solar Energy Systems
- Includes solar water heater installation as well as photovoltaic panel installation
- Credit applies to new and existing homes
- Credit applies to principal home or second home
- Equipment must be placed in service by December 31, 2016
- Wind Energy Systems
- Equipment specification is residential small wind turbines with nameplate capacity of not more than 100 kilowatts.
- Credit applies to new and existing homes
- Credit applies to principal home or second home
- Equipment must be placed in service by December 31, 2016
The Tax Incentives Assistance Project (TIAP) is sponsored by a coalition of public interest nonprofit groups, government agencies, and other organizations in the energy efficiency field. The TIAP website is an excellent source of detailed information consumers need to make use of the income tax incentives such as the federal energy tax credits.
Switching Made Simple
Compare rates from leading providers and make the switch in only a few minutes.
State Energy Tax Credits, Exemptions, and More
Many states, and the power companies, located in those states offer one or more incentive programs for homeowners who install renewable energy systems. The Database of State Incentives for Renewables and Efficiency (DSIRE) is supported by the U.S. Department of Energy as serves as a good first stop for getting information about energy tax credits, exemptions, and other incentive programs that are offered by different states, and, to a smaller degree, counties and municipalities.
The interactive U.S. map on the DSIRE home page allows a site visitor to easily drill down into the information for a particular state. Clicking any state delivers a list of incentives and policies that promote renewables and energy efficiency in that state. To view the incentives applicable only to residential energy projects, click “See Residential Incentives Only” at the top of the page. Links to required forms are provided, along with contact information for the state entities overseeing listed programs.
In the case of a photovoltaic array generating electricity for a home, some electric companies will "buy" extra electricity from the homeowner. In cases like this, the electric meter literally runs backwards! This can be a good strategy, especially in summer months when a system may be generating more electricity than the residence requires. One thing to keep in mind is that an electric company pays the homeowner a lower electricity cost per kwh than it charges them for power that it provides. Even so, this arrangement can have a very good impact on electric bills.