Solar Tax Benefit – How US Government Can Encourage Solar Usage

There are many (mostly environment-related) reasons why you should consider “going green” as far as energy is concerned. Well, guess what? The United States government hopes to tip the scale in favor of green energy, adding a new incentive for prospective customers.

Two words: “tax benefits”.

So far, one of the most widely used types of green power is solar power, which relies on solar panels, consisting of Photovoltaic solar cells. Once the switch is made from classical grid and battery power and once the solar panels are in place, the energy costs of any average household are expected to drop considerably.

So why don’t most American homes rely on solar energy already? To begin with, the installation costs are quite prohibitive. Solar power requires the installation of so-called solar kits. The kits themselves are quite expensive, and the installation costs are also non-negligible.

A good way of estimating the cost/revenue rate for solar kit installation is to look at how many dollars are required to generate a single watt of power. In 2005, this dollar/watt rate was, at best, $3 – $4 per watt. As an estimation, you should reckon on costs of about $900 (with installation charges) for a system generating about 75 watts.

The average household would require as much as 5 kilowatts, however, meaning an average cost of $30,000 – $40,000, including installation costs. For those who wish to make a good long-term investment, however, and switch over to a hybrid of classical and solar power, the government has lately introduced appealing incentives that make installation more attractive.

These benefits are not automatically translated to switches to full-time solar power, although some states provide incentives for fully off-grid systems, too. The state of Massachusetts, for example, offers tax reductions ranging up to 20 years of tax exemption for home owners relying on solar and wind power.

Home owners who use renewable energy devices may receive up to $1000 tax credit. In Arizona, rebate systems allow home owners to get a rebate of $4 per watt, up to $7,000, whereas going completely off-grid will get you $2 rebate per watt and $700 rebate for solar water heating.

Solar cell manufacturers are also supporting this effort by increasing their output. It is expected that the prices for solar panels in the United States will drop by as much as $0.20 per watt in 2011, making the total price drop by 12.5% below current prices.

The conclusion?

What with the attractive government benefits and the drop in installation costs, 2011 may just be the year you will want to switch over from classical to hybrid power. That’s what the government hopes you’ll do, anyway.