After the Failure of Build Back Better, What Lies Ahead for Solar Incentives?

Following months of negotiation, the Biden Administration’s Build Back Better plan failed in late 2021. What does this mean for solar incentives in 2022? The most important thing for homeowners to know is that generous incentives continue to be available, even if congress has yet to expand existing programs. Here’s what homeowners need to know about solar incentives in 2022. 

Federal Incentives: The Solar Tax Credit

The federal solar Investment Tax Credit (ITC) has been a pillar of solar’s unstoppable growth for 15 years. Following a last-minute extension in 2020, the ITC remains a 26% tax credit for all solar installations through 2022. If tax liability is less than the claimed amount, the credit can be carried forward to future tax years. That means a residential solar installation that costs $20,000 will qualify for a $5,200 tax credit that can be carried forward until the full credit is claimed. For commercial installations, the tax credit is scheduled to step down to 22% in 2023, and down to 0% in 2024. The American solar industry has grown by 10,000% since the inception of the ITC in 2006, but its success has some policymakers arguing that it’s time to phase it out. Still, other lawmakers are pushing for the extension of the solar ITC. We’ll keep you updated with the latest.

Did You Know?

If battery storage is included, additional federal tax incentives may apply.

A Mosaic of State and Local Incentives

Sales tax exemptions, state tax credits and cash rebates are available in some states and localities. State incentives are typically more volatile as qualifying criteria and expiration dates are subject to change at the whims of local and state lawmakers. According to EcoWatch, New York offers the best solar incentives with a combination of tax credits, tax exemptions and rebates. Massachusetts, New Jersey and Colorado are also offsetting costs associated with going solar. California’s state-level incentives have expired after intense demand exhausted allocated funding.

Net metering and feed-in tariffs are important pieces of the solar economic puzzle for some. When a solar system produces more electricity than is needed by the building at any given time, the owner is compensated for supplying energy to the grid in the form of bill credits. At the end of each utility billing period, the customer is billed for the net energy use (power drawn from the grid minus power supplied to the grid). A patchwork of rules and regulations pertaining to net metering and feed-in tariffs exist among the states and utilities in the US.

Changes to Net Metering in 2022

It’s been a though year for homeowners looking to go solar.Build Back Better failed in the Senate, now multiple states are proposing legislation or policy changes that would restrict incentives for homeowners. Here are the changes to net metering that were enacted or proposed across the United States.

  • California: The California state utility commission proposed reducing net metering subsidy rates for rooftop solar and adding a monthly charge for new solar owners. California’s NEM rules have not been changed since January 2016, but the proposed changes reduce savings for California’s 1.6 million solar-powered households. A new fee was proposed that would add $40 to $50 to each monthly bill, significantly cutting down on solar savings. The California utility commission is expected to vote on the proposed changes in April or May of 2022. 
  • Florida: House Bill 741 would cut net metering incentives for rooftop solar owners, and allow utilities to charge fees that would raise the cost of switching to renewable energy. The proposed bill will be up for a vote in 2022.
  • North Carolina: A proposal by Duke Energy in North Carolina may complicate solar incentives. The proposed changes to net metering continue the one-to-one retail credit for solar energy, but with an important caveat: The value of the net metering credit would be higher during times of peak grid demand — between 6 and 9 a.m. in the winter and 6 and 9 p.m. in the summer — and lower during off-peak hours. Solar panel owners would face a minimum “basic facilities charge” of $22 to $28 each month.
We’ll be sure to update you with the latest changes to solar incentives in 2022. If you’re ready to talk about how you can save money by going solar, contact Avvio Solar today.

Photo Credit: @kindelmedia

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