9 Out Of 10 Southern Californians Are About To Miss Out. Are You One Of Them?

solar energy cost frustrated woman

If you haven’t heard yet, changes are coming to the solar industry which will affect solar energy cost. Some of these changes have already occurred in Southern California, and some of them are right around the corner. Solar rebates are disappearing, net energy metering is about to change and the federal solar tax credit is ending soon. Because of all these changes, a lot of Southern Californians are about to miss out on some serious savings. But don’t let that happen to you.

Solar Energy Cost Will Be Higher For People In the Future

Solar energy investments may be more expensive in the future because the solar tax credit is expiring, solar rebates are going away and net energy metering is changing. But it’s possible to lock into some of today’s savings for the next 20 years. Those who go solar now, before these changes go into effect, can still get a great deal on solar.

What Is the Solar Tax Credit?

The Investment Tax Credit (ITC) is a dollar-for-dollar reduction in federal income tax for anyone who purchases solar panels for their home or business. The amount credited is equal to 30% of the purchase price of your solar system. It doesn’t work like a solar panel rebate, and it’s not a tax deduction. It saves you money on your solar energy cost by functioning as dollars you don’t have to pay the IRS, or that the IRS will refund you in April if you’ve overpaid. In order to receive the solar tax credit, you have to have enough tax liability. So, if for some reason you don’t pay income taxes, you won’t be eligible to receive this solar panel tax credit. It’s also important to note that this credit is given to whoever owns the solar system, so if you installed your system with a solar lease or a Power Purchase Agreement, the leasing company receives the credit since they’re the ones who actually own the system.

What Is the Purpose of the Solar Tax Credit?

The purpose of the solar tax credit is to save homeowners money on their overall solar energy cost. The U.S. government created the federal solar tax credit to encourage people to reduce their carbon emissions and make a positive impact on the environment by switching to clean energy.

Why Is the Solar Tax Credit Ending?

The solar tax credit was originally passed by Congress in 2006. Since then, it’s been given new life twice. Unless Congress decides to pass it again, which is unlikely, it expires for residential solar buyers on December 31, 2016, and drops to 10% for commercial solar.

Why Are Solar Rebates Disappearing?

One example of a solar panel rebate that’s no more for all Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison territories is the California Solar Initiative Rebate. The reason? It’s been all used up in Southern California. Due to the high number of homes that have gone solar in this region, solar rebates are disappearing because they’ve already reached their caps. And new solar rebates aren’t being created to take their place.

Why Are Solar Programs Like Net Energy Metering Changing?

Net Energy Metering, which is the billing mechanism used by utilities for solar customers, is changing soon. The current net metering program recognizes the solar energy a home produces to be of equal value to the electricity the home draws from the utility grid at night and on cloudy days. With the current program, solar customers enjoy full retail credit rates for the electricity they generate and send back to the grid. But that’s about to change.

On October 7, 2013, Governor Brown signed Assembly Bill 327, which gave the utilities until December of 2015 to develop a new net energy metering agreement. Unfortunately, the California Public Utilities Commission (CPUC) has been unable to come to a decision on net metering, so they'll miss this deadline. AB 327 also allowed utilities to set a cap of 5% of their aggregate customer peak demand for the current program – for SDG&E that equates to 607 megawatts of installed solar. This 5% cap is expected to be reached by the first quarter of next year, which is sooner than anyone originally anticipated. After the cap is reached, net metering 2.0 will take its place. While no one knows for sure yet what that will look like, the utilities have made it clear they’re unwilling to allow all of the benefits of the current program to continue, which will negatively affect solar energy cost.

Is Solar a Better Investment Now or In the Future?

The answer is now. Due to the expiration of solar rebates, the end of the solar tax credit and the changes to net energy metering that are coming soon, solar energy cost is about to rise. Cost will likely rise not because changes to manufacturing or solar panel efficiency will negatively affect solar energy cost, but because the coming changes to the federal solar tax credit and net energy metering, as well as the lack of solar rebates, will hit homeowners’ bottom lines and increase the amount of time it takes for them to experience their ROI. All of this means right now is the best time to invest in solar.

Can I Still Take Advantage of Current Solar Programs and Lock In the Benefits?

The new net metering program isn’t expected to go into effect until around March of 2016, so there’s still time to lock in the benefits of the current program. If you go solar now and make it into the current program, you’ll be grandfathered in for the next 20 years. So going solar before net metering 2.0 is in effect equals a lot of savings. You also have until the end of 2016 until the solar panel tax credit expires. Going solar before this federal solar tax credit ends will equal thousands of dollars in savings, so don’t wait until it’s gone to make the switch!

What Is the First Step To Going Solar Now?

Interested in going solar now before the upcoming changes hit? Request pricing from us today and see how much solar can save you! We’ll talk with you about your family’s energy needs and ensure that your system produces as it should, for years to come. Lock in your solar energy cost now!