Virginia explains: How can you save on residential solar energy?

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Fraudulent Internet To sue and dubious “qualification” surveys about solar installations in Virginia abound on the Internet, but it’s difficult to find clear, accurate information about what the state and federal governments are doing to promote cleaner energy use.

With a price similar to that of a used car, Virginia homeowners looking to make a financial investment in solar panels are faced with a tangle of tax exemptions, loans, rights and utility programs.

The costs (and benefits) of switching to solar energy

The solar marketplace EnergySage estimates The average price for residential solar power in Virginia ranges from $12,325 to $16,675 for a 5-kilowatt system, which is on the smaller end of a system size. The most common systems are between 8 and 10 kilowatts, but it depends on the size of the roof. For a 9-kilowatt system, the average cost is approximately $26,100 before state tax breaks.

EnergySage estimates that the average Virginia solar system pays for itself in approximately 12 years by reducing or eliminating a household’s electric bill and saving customers approximately $21,000 over 20 years compared to simply purchasing energy from a traditional electric utility. A solar system usually lasts about 25 years.

The nonprofit Solar United Neighbors, which helps organize solar cooperatives, evaluates bids from installers and advocates for increased solar accessibility, estimates the payback time to be shorter: between eight and 11 years, according to Ben Hoyne, program partner in Virginia.

These estimates assume an upfront payment for solar and a 2 to 3 percent annual price increase for non-solar electricity.

This is how solar pays off

Those with residential solar power can save money, although most systems don’t offset 100 percent of a home’s use of clean energy.

Once the solar system installation is complete, homeowners can trade energy back and forth with their energy company net measurement. Net metering is the system It counts power inflow from the grid and power outflow from roof panels, allowing solar owners to build up credits for the excess electricity produced by the panels during the day.

Because the meter installed in your home keeps track of how much electricity is being used, it also calculates how much is offset by generation and fed back into the grid, potentially reducing or even eliminating your energy bill depending on the generating capacity of the system.

The state requires for-profit regulated utilities like Dominion Energy and Appalachian Power to comply with net metering rules at fair rates. This means that the energy fed into the grid is given the same evaluation as the energy drawn from the grid.

Dominion has too to get entered the residential solar installation business with a subsidiary called BrightSuite.

Some utilities in Virginia charge monthly “Standby Fees‘, intended to compensate them for the loss of customers whose plants generate too much excess electricity. However, the statute prohibits standby charges for residential solar systems in the Appalachian Power and Old Dominion Power territories.

federal tax incentives

For individuals interested in installing solar panels, the greatest financial support is upfront provided through the state residential solar investment tax credit, which offers a 26 percent credit for systems installed between 2020 and 2022 — meaning you can deduct 26 percent of the cost of system installation from your income tax on filing. For this 9-kilowatt system, the loan would reduce the cost to $19,314.

For systems that complete their installation in 2023, the credit is 22 percent, after which it expires without further action by Congress.

This credit requires solar customers to have some tax Liability and require customers to pay for the system in full, either in cash or through financing. For example, a couple under the age of 65 who earn less than $25,100 together would not be eligible for the tax credit.

Financing options for private solar systems

If paying for the system requires a loan from a bank or other financial institution, potential customers must also consider the fees and interest payments associated with borrowing.

Solar customers who are homeowners may be able to take out a home equity loan. The interest Prices for a long-term loan for a solar array from Clean Energy Credit Union, a financial institution that exclusively provides credit and financing services for clean energy investments, is currently around 5.5 percent.

“Many installers have their own internal funding or a partnership with a lender,” Hoyne said. However, he cautioned that while interest rates are important, contract and upfront payments are also crucial. “Someone could have a really good price, but also [if] You pay $5,000 in fees, [it] doesn’t matter that this rate is really good.”

Some locations have solar co-ops where potential customers can join a large group of others in the area to use their bargaining power to negotiate better prices with installers. Low-income households may also be able to enter into a power purchase agreementwhich works like a lease, with private equity investors paying for the system and homeowners paying the investors rather than the utility.

Rooftop solar array on the Iron Works Cycling & Outdoor Adventure building at Big Stone Gap, one of the few commercial rooftop solar arrays in the area. (Iron Works Cycling)

State Protection and Local Taxes

At the community level, Virginia law applies prohibits Prevent homeowners associations from banning the installation or use of solar panels, although they can set “reasonable restrictions” on size and placement. In 2020, legislation was updated to provide clear guidelines on adequacy and prevent associations from enacting rules that increase installation costs by 5 percent or reduce projected energy production by 10 percent or more.

Under Virginia law, solar systems have a separate tax classification from real estate or personal property. For the rest of this yearmunicipalities have the option to exempt their residents from paying taxes on these devices.

At present, the cities of Alexandria, Hampton, Roanoke, Suffolk, Lynchburg, Harrisonburg, Charlottesville, Petersburg, Fredericksburg, Winchester, and Lexington, in addition to Fairfax, Prince William, Loudoun, Chesterfield, Albemarle, Hanover, Fauquier, Pulaski, Giles, and Scott, offer the counties to such Tax exemptions according to a Database from the Weldon Cooper Center for Public Service at the University of Virginia.

From January 1, 2023, all private solar systems under 25 kilowatts will are considered a separate asset class and are exempt from local taxation.

Shared solar – an inclusive alternative

A potential solution to reduce the cost of solar energy and increase its accessibility is to participate in what is sometimes referred to as a community solar program common solar. This programs Allow multiple households to purchase a portion of the electricity generated by a solar array, allowing people and apartment dwellers who cannot install a system on their roof to purchase clean energy and receive credit for doing so.

“Most of the people who can get solar power are homeowners, so that shuts out a lot of people,” Hoyne said. This includes apartment or multi-family dwellers, those who move too frequently to realize the long-term viability of solar power, homeowners with roofs or house orientations that are not suitable for panels, or people who cannot afford installations.

In 2020 the General Assembly necessary Dominion and Old Dominion Power develop joint solar programs. The State Corporation Commission recently set the minimum bill for Dominion customers — the amount customers still have to pay to cover energy generation costs — at $55, causing some legislature and advocate to lament that it is too expensive to be widely accessible.

Solar United Neighbors pushed for a much lower minimum bill of $10, and Hoyne said that $55, which he believed was the “highest in the nation,” was “not a positive development” and “against the intent of the legislature.” infringed”.

An expanding market

Though cost reductions for solar technologies have far exceeded modest projections — by about 15 percent a year between 2010 and 2020, according to an Oxford University meta-analysis – a report of the Weldon Cooper Center for Public Service argues that associated “soft costs” such as permits, inspections, labor, taxes and grid connection account for 63 percent of the total cost of residential solar PV installations.

The average hardware cost in 2018 was about $0.99 per watt, while EnergySage did the grand total costs in the Commonwealth as of July 2022 $2.90 per watt.

Part of the difficulty in finding reliable information on residential solar costs is due to the multitude of factors that go into it, all of which result in large costs variations in prices for different systems and different installers.

Hoyne points to the relative newness of the solar industry as a reason for the “disjointed” nature of online information, as well as the “multiple players” involved. He says there’s potentially room for the Virginia Department of Energy or electric utility companies to fill the gap.

“Now you’re starting to see a small critical mass where more people are able to transition to solar,” Hoyne said. “In terms of why there’s a limited amount of information, it’s just a new market that’s new in terms of broader appeal.”

The US Department of Energy offers solar power generation calculator This estimates the amount of energy that can be generated in a geographic area, although enclosure orientation and tree cover also affect how much direct sunlight reaches a PV array.

Other helpful resources, both for businesses and nonprofits, include: Local Energy Alliance program, SolarizeNOVAGoogle’s Project sunroof, Solar United Neighborsthe Database on state support for renewables and efficiency and a to lead by the Solar Energy Industries Association.

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