There are several incentives for Virginians interested in going solar. Here is a rundown of federal tax credits, Solar Renewable Energy Credits (SRECs) and other incentives for solar producers
With solar on your roof, some days you use more energy than you generate. Other days, you generate more energy than you use. Luckily, you’ll always get credit for the electricity that your solar panels produce, even if you’re not using the electricity at that moment. This process is called net metering and your solar system will reduce your electric bill each month in proportion to the amount of electricity your panels produce. More information is available here.
Federal Tax Credit
The Federal Government offers a tax credit for 30% of the total cost of the system, with no maximum credit amount. We are not tax experts, so we cannot give you tax advice, but in general at the end of your installation the installer will give you a receipt for the total cost of your system. You can then give this receipt to your accountant and receive a tax credit of 30% off the total cost of the system. Please consult with a tax expert or your accountant. More information about federal incentives for solar is available here.
Solar Renewable Energy Credits (SRECs)
An SREC is a Solar Renewable Energy Credit and it represents the “green” value of your electricity. SRECs are separate from the physical electricity that your solar panels produce. Think of them like a “voucher” that proves that the electricity from your solar panels is renewable. You get one SREC for every 1,000 kWh of electricity produced by a solar system. A typical 3 KW solar array will produce roughly 3 SRECs annually.
These SREC “vouchers” are valuable because utilities in many states are required to purchase a certain number of SRECs each year in order to meet sustainability requirements. While there are no requirements for Virginia’s utilities, Pennsylvania purchase SRECs from system owners in Virginia (and other states in the mid-Atlantic to meet their sustainability goals.
The value of SREC’s fluctuates based on supply and demand and emerging state policies. Income from SREC’s sales provides an income stream apart from the value of solar energy produced which helps to reduce system payback times for owners of solar systems.