As a Utah resident, you likely know our state has some of the sunniest skies around. What you may not realize is that solar panels remain a smart, money-saving home upgrade here despite lacking supportive policies.
In this guide, I‘ll show you exactly how much solar could save the average Utah home. I‘ve compiled up-to-date incentives data, cost projections over 20+ years, and we‘ll walk through policy barriers in the state. My goal is to arm you with everything needed to make the smartest solar decision. Key takeaways include:
- 30% federal tax credit can reduce an average 6kW system cost by nearly $5,000
- Additional state tax savings available but expiring completely by 2024
- Electric bill offsets through net metering, albeit with credit limitations
- Payback periods of 10-15 years factoring available incentives
Let‘s dive into the details!
Over 300,000 Utah Homes Could Run on Rooftop Solar Power
Current estimates indicate rooftop solar could provide over 3,000 MW of power across Utah. For context, that‘s enough to supply over 300,000 households based on average electricity consumption!
We‘ve already seen massive growth with nearly 550,000 homes running on the state‘s 2,922 MW of installed solar capacity in 2022 (1). Now imagine doubling that in the next 5 years.
Cost declines and supportive policy incentives make that type of exponential growth achievable. But Utah lags behind leading states so far.
Our abundant sunlight means you need fewer panels to generate ample clean energy. But upfront system costs run high here compared to payback potential through our electricity rates. Significant policy barriers also hinder solar expansion, although expiring tax credits offer savings opportunities for now.
Solar Power Costs vs. Utility Bill Savings in Utah
Weighing rooftop solar purely on short term economics proves tricky in Utah. Let‘s break down the quantitative landscape for solar costs, utility rates, and bill offsets:
- System Cost – $2.66 per Watt on average, so $15,960 for a typical 6 kW home array
- Electricity Rate – $0.1072 per kWh from Rocky Mountain Power
- Annual Bill – Approximately $1,013/year for average household [[Insert citation]]
- Payback Period – Around 16 years with above numbers before incentives
While wholesale solar panel costs continue falling, Utah‘s market characteristics like permitting and labor costs keep our installed pricing high. Meanwhile our electricity rates from the grid lag the national average.
However, projecting out the next 20 years tells a more compelling story:
- Utility rates likely to rise 3-4% annually
- Solar array output very consistent once installed
- Federal and state incentives cut upfront system costs
Table 1 visualizes projected costs and cumulative savings from solar over 20 years with full ITC claimed upfront and rising retail electricity at 4% annually. Payback happens just before year 13 assuming consistent output.
| Year | System Cost | Federal ITC (30%) | State Credits | Annual Bill Offset | Cumulative Solar Savings |
|---|---|---|---|---|---|
| 2023 | $15,960 | $4,788 | $400 | $1,013 | $6,201 |
| 2024 | – | – | $400 | $1,053 | $7,654 |
| 2025 | – | – | – | $1,096 | $9,144 |
| 2026 | – | – | – | $1,140 | $10,688 |
| 2027 | – | – | – | $1,186 | $12,288 |
| 2028 | – | – | – | $1,233 | $13,948 |
| 2029 | – | – | – | $1,283 | $15,671 |
| 2030 | – | – | – | $1,334 | $17,461 |
| 2031 | – | – | – | $1,388 | $19,321 |
| 2032 | – | – | – | $1,444 | $21,253 |
| 2033 | – | – | – | $1,502 | $23,263 |
Table 1. 20-year solar cost and savings projections for 6kW system with available incentives
The key is running the numbers with your actual utility costs and projected electricity inflation over the full lifespan. Extending the window beyond short term payback paints solar economics in a much more favorable light!
Now let‘s explore how leverage what incentives we do have while they last.
Claim the 30% Federal Solar Tax Credit Before It‘s Too Late
The federal Investment Tax Credit (ITC) remains the most impactful solar incentive nationwide. This program offers new solar customers like you a dollar-for-dollar reduction in your income tax liability equal to 30% of your full system costs.
For a typical Utah array priced around $15,960 installed, claiming the full 30% ITC would save nearly $4,800! As you saw in the cost projection above, those immediate tax savings make an enormous dent in the overall outlay.
Now here is the critical part – the existing 30% credit with unlimited runway starts phasing down rapidly in less than 2 years:
- 2023 & 2024 – Remains at 30%
- 2025 thru 2032 – Steps down to 26%
- 2033 & 2034 – Steps down to 22%
- 2035+ – Expires completely absent extension
With those time horizons, today‘s solar shoppers would be wise to complete new systems this year or next to maximize savings. Acting by 2024 hedges against political uncertainty around further extensions beyond 2034.
The phase down also equates to over $2,000 less tax relief for systems installed just 2-3 years from now. The credit expiry concentrates solar payback models into the next decade before economics shift.
In short – now remains the optimal window to go solar if long term system costs drive your decision making.
Utah‘s Solar Tax Credit Disappears After 2023
While federal incentives provide the biggest impact, Utah‘s state income tax credit offered another layer of savings for solar owners.
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Unfortunately that state credit also dwindles annually in availability:
- 2023 – $400 credit per system
- 2024 – Final $400 credit before repeal
Similar to the closing federal credit window, Utah homeowners eyeing solar act most strategically by completing installations in the next 14 months. That ensures capturing both credits at their maximum levels before policy shifts squeeze financial returns over the long run.
Net Metering Offsets Electric Bills But With Limits
Aside from upfront tax relief, net metering provides the main avenue for Utah solar users to recapture costs through offsetting normal utility bills. This billing arrangement requires Rocky Mountain Power to credit customers for excess solar electricity fed from their rooftop systems back to the grid.
Net metering functions as follows for Utah residents:
- Panel output first supplies on-site home loads
- Any excess generation gets exported to the grid
- That excess energy gets tallied as credits on your utility bill
- Credits balance against grid usage from the utility during nighttime or high load periods
However, limitations around annualized credit reconciliation reduce the value of net metering in Utah compared to other programs nationally:
- At the end of each year, any unused credits expire rather than rollover
- This creates impetus to right-size solar systems closely to average household usage
- Oversized capacity risks wasted exports that never get credited
Still, modeled properly, net metering allows solar users to offset 30-40% or more of their annual utility expenses. That cuts compounding rate escalations over decades to provide substantial cost savings.
Pairing these bill reductions with dropping panel prices and incentives makes Utah solar a smart, albeit complex, proposition.
Where Do We Go From Here?
I won‘t sugar coat it – the economics for solar power in Utah sit on a knife‘s edge today between policy upside and regular price declines driving growth rather than in-state support.
Our state legislature holds the future of renewable development through tools like renewable portfolio standards, carbon policies, and both residential and commercial solar incentives. So progress depends largely on their appetite going forward.
But other states prove the trend toward solar seemingly inevitable over long time horizons. Market factors like improving technology, expanding scale and downstream jobs also inevitably pressure lawmakers.
In the meantime – Utahns would be wise to control what they can:
- Crunch the 20+ year cost projections with real electric costs
- Claim available credits before they disappear
- Pressure leaders to back policies like net metering
- Consider community solar options too
I‘m happy to walk through cost models or incentive applications in more detail as you evaluate solar decisions for your home. Utah still provides real money saving opportunities if you position strategically while broader trends improve all around us. Reach out with any other questions!
Frequently Asked Questions
How many years until solar panels pay themselves off in Utah?
- Based on the average costs and rates modeled above, a 6kW solar system would take roughly 12-13 years to payback completely after the 30% federal ITC and available Utah state credits.
Can you save actual money over the long run with solar power?
- Yes, Utah homeowners can realize thousands in net savings over a 20 year lifespan when factoring available incentives, offset utility bills through net metering, and compounding retail rate increases from the utility.
How much do home solar panels realistically cost in Utah?
- As of 2022, average quoted pricing sat around $2.66 per Watt in Utah. A typical 6,000 Watt (6kW) residential solar array would therefore install for about $15,960 before incentives. Total out of pocket drops to around $11,500 after capturing the 30% federal tax credit.
What about going solar makes sense financially vs environmentally for Utahns?
- Solar panels represent rare win-win upgrades – improving home economics through long term energy savings while also slashing carbon emissions. Most Utahns cite both motivations for switching to solar power.
