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A solar power initiative to get behind.

September 9, 2020 GMT
A solar power initiative to get behind.
A solar power initiative to get behind.

New York, NY ( TS Newswire ) -- 09 Sep 2020

Why do solar panels cost so much in the USA? A 30% tariff on the import of solar products does not help, but it does not explain why they are 300% more expensive than in Australia. The USA is lagging behind many countries when it comes to domestic power generation . A large reason for that is the main tool other countries are using is large rebates on the cost of solar installation.

Australians are installing solar panels at a rate of knots with 1 in 5 homes having solar. The reason its all going gangbusters down under is partially the rebate homeowners are getting off the cost of the system. This gives them an ROI or payback period is about half of the USA, with an average of 3 years compared to 6 in the USA.

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Here is a quick look at the difference in the price of solar systems of comparable sizes.

System sizeAustralians Pay (USD)Americans PayDifference
1.5 kWh$2,085$3,362+ 61.2%
2 kWh$2,302$4,469+ 94.1%
3 kWh$2,620$6,727+ 156.8%
4 kWh$3,018$8,969+ 197.1%
5 kWh$3,321$11,211+ 237.5%
6 kWh$3,919$11,453+ 192.2%

The above prices are for solar systems in California and converted to US dollars. Price after rebates has been discounted. This is the final installation price.

So what gives?

It looks like the key here is the cost of the battery. The price per kWh does not include the cost of the battery installation which makes up a more and more significant chunk of the installation cost the bigger the system gets.

Australians have a bit of a trick up their sleeve in the form of feed-in tariffs, so there is no real need for a better.

Heres an explanation

One needs a battery because the solar system produces most of its power during the day, but most power is used at night with the TV, washing machine, etc. More than 70% of power consumption takes place at night when panels are not producing electricity.

How Feed-in tariffs work

Instead of storing power in an expensive lithium-ion battery, the Australian government has mandated that the power companies pay customers credits for power their system produces and feeds back into the grid.

When a solar system produces extra power it is not using during the day, it is fed directly into the grid and tracked using a standard inverter.

When a user draws power from the grid at night, they do it for free as they are essentially taking the power they gave the power company earlier in the day.

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This works out to be basically net natural for the users power consumption.

Is it really green?

Ideally one wants to be totally off the grid. The power consumers draw at night is most likely coming from a coal power plant, so this is not a long-term solution, but something that works well while they wait for Elon Musk to invent a better and cheaper battery

How does solar rebate work in Australia?

Solar rebates work by the government issuing Small Scale Technology Certificates (STC) to customers for every 1 KWh of solar they install. Large polluters are forced to bid for these certificates on the open market and the money is given directly to the customer.

A popular 5kWh solar system would get 72 STCs at a rate of about $39 each. So the customer would get a cashback of $2,808 or a 30% discount off the cost of their system.

Its a speedy strategy to reduce the installation upfront cost by an average of $3,200.

In the US, such cost reductions come in the form of solar incentives that enable ordinary Americans to build photovoltaic (PV) panels on their property affordably. A tax credit (or savings tax credit) allows customers to use up to 30 percent of their solar installation expenses and pay off their yearly IRS bills. Of, e.g., if it costs $10,000 for a users PV program, they will reduce their tax liabilities by a massive $3,000 million.

How to claim the solar rebate in the US

Lots of people have heard about the new renewable tax credit, also known as the Investment Tax Credit (ITC) when they think Renewable. Through offering a dollar-for-dollar tax deduction equivalent to 26 percent of the total expense of a solar energy device, the Federal ITC allows it to be more accessible to households and companies. What does the typical solar shopper mean by 26 percent? The average national gross cost to install a solar panel network in 2020 is $17,760, according to marketplace data from EnergySage. At that amount, the solar tax credit will decrease the federal tax liability by $4,618 and that is just one of many rebates and discounts that can slash homeowners solar costs.

Difference between rebate and feed-in tariff

A rebate is money given back or a discount off the price of the solar system. A feed-in tariff is the money a power company will pay the consumer for every kW of power generated and feed into the grid, which they sell on at a profit.

The inverter is set up in such a way that it feeds enough power to the consumers house as it is being used and sends excess to the grid.

The feed-in tariff rate is quite generous in Australia and means a battery is not really needed to make the most of a solar panel system.

Will the rebate on solar end?

The free solar tax credit, commonly known as the technology tax credit (ITC), enables homeowners to exclude from their federal taxes 26 percent of the cost of building a solar energy device. Originally established by the Energy Policy Act of 2005, the federal ITC was set to expire in late 2007. Some delays moved the expiry date back to the end of 2016, but analysts claimed a further five-year extension would carry the solar industry to full maturity. The tax credit is still available to homeowners in any manner until 2021, thanks to the spending bill approved by Congress in late December 2015.

Here are the details:

2016 - 2019: the tax credit stands at 30% of the systems expense. This ensures that a homeowner can still get a significant discount off their solar panel setup.

2020: Current residential and commercial solar owners will exclude from their taxes 26 percent of the systems costs.

2021: Future residential and commercial solar owners will exclude from their taxes 22% of the cost of the system.

2022 onwards: Owners of new commercial solar energy systems will exclude from their taxes 10 percent of the cost of the system. Residential solar energy systems do not earn a federal incentive.

Australia compared

Down Under, they will be enjoying the solar rebates for another 10 years as it will be phased out by 2030.

Each year the amount of STCs per kWh are reduced, but it is believed that as the industry grows the price of solar will slowly reduce the cost making solar about the same price as when the initiative started.

What will the rebate be in 2020 for US residents?

By the end of 2020, the federal ITC is reduced to 22 percent, but now it is 26 percent. Current residential and commercial solar owners will exclude from their taxes 26 percent of the systems expense. The ITC was initially established by the 2005 Energy Policy Act and was set to expire in late 2007. Thanks to the ITCs popularity, and its success in supporting the transition of the United States to a renewable energy economy, Congress has extended its expiry date several times. Now the solar energy tax credit is available in some form to homeowners by 2021.

When to get solar installed

Installing between September and November guarantees very high production levels, and in the warmer months, one should be ready to make maximum use of the new system. The years ANYTIME is the best for solar installation. However, thinking about it already, spring is a great time for solar installation. The warmer weather is just around the corner, and more and more people are starting to consider installing solar to see those sunbeams on their electricity bills shine results!

Summer is the best month for electricity, but the best time to mount the new solar panel is in the spring month.

Are there government grants for solar?

Solar energy subsidies allow more homes to open through renewable energy. Federal block grants support several solar energy projects that provide incentives or rebates to consumers to turn parts from domestic energy supplies into the wind. Grants and rebates include solar panels, solar water heaters, and even heaters for the rooftop pools.

The US Department of Housing and Urban Development utilizes renewable sources, which can include solar panels, to provide home improvement grants. Grants are required in areas with low income. The funds are distributed to local organizations as block grants from a pool of $250,000,000.

Can one get solar free?

Sometimes the word free solar panels is used to sell solar lease or solar purchase agreements (PPAs). A business will install solar panels on a consumers roof under both forms of contracts for no money upfront but will bill for the energy they generate. Most of the offers will save the user money, but not all of them, so one should compare all options thoroughly. Also, buying solar panels or using a zero-down solar loan to finance them should be considered. So what do advertisers and salespersons of an organization mean when they say free solar panels? They usually refer to solar leases and power buy agreements (PPAs). Under these provisions for solar finance, a solar company would install a solar system on a consumers roof at no upfront cost to them. It sounds great to the consumer might claim their home is powered by clean energy, and they can even refer to the solar panels on their roof to show it. But the fact is they dont own the device, and the solar energy generated by the panels isnt safe. Under solar lease agreements, the solar company retains ownership, and the user compensates for the energy it generates. The corporation has built a small power plant on the roof and sells the energy to the homeowner.