Incentives and Economics
There are two main incentives for solar arrays in the state of Wisconsin:
Federal Residential Renewable Energy Credit
- 26% of the system cost as a personal tax credit (22% for systems placed in service after 12/31/2022)
- The home served by the system does not have to be the taxpayer's principal residence
- If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.
Wisconsin Focus on Energy
- $500 of the system cost for a residential system or slightly more for a business if the system qualifies. (These numbers change based on remaining funds; ask for updated information)
- The site assessors can discuss whether you can expect to meet system qualifications
Years past, solar was an expensive way to have electricity for only those who were rather nutty about conservation. Now however, solar systems are not only environmentally healthy but also economically a great investment, due to lowered prices of system components.
Example
Lynn and Greg used an average of 7000 kWhrs over the past year. They pay $0.126 per kWhr. The following will show their options assuming they use exactly the same electricity and using a normal 3% rate increase for the utility. (There are a lot of variables)
The system they are thinking about installing is a 6 kW system that costs $14,256 before incentives. After incentives, they will be paying $10,180.
| Year | Pay Outright | No system installed: cost of electricity each year |
|---|---|---|
| Year 1 | $10,180 | $920.70 |
| Year 2 | $0 | $971.34 |
| Year 3 | $0 | $1,024.76 |
| Year 4 | $0 | $1,081.12 |
| Year 5 | $0 | $1,140.59 |
| Year 6 | $0 | $1,203.32 |
| Year 7 | $0 | $1,269.50 |
| Year 8 | $0 | $1,339.32 |
| Year 9 | $0 | $1,412.99 |
| Year 10 | $0 | $1,490.70 |
| Total kWh cost after 10 years | $10,180 | $11,854.34 |
After about 8-9 years this system would reach payback and be producing free energy. The system will continue to function for many more years and every year the savings from not paying higher electric bills will continue. There may be occasional maintenance costs as the system ages. (These calculations do not take into account flat fees that most utilities have.)
What if they don't pay outright?
Lynn and Greg can talk with their bank about a loan. The initial incentives received for installing the system can be put forward as the down payment of the loan. Each month they would have loan payments, but they wouldn't have as high of an electric bill. Once the loan is repaid, they now have much lower energy costs.
Investing in solar is a longer-term investment. People are sometimes dismayed by a 7-10 year payback -but- the system will work for 40+ years; making it a great investment for your property.