Do you live in Pennsylvania and pay high electricity bills every month? Have you considered installing solar panels to save money, but worry Pennsylvania doesn’t get enough sun?
I‘ve conducted in-depth research into Pennsylvania‘s solar incentives and policies, and my analysis shows most households can save substantial amounts of money by switching to solar power.
Even though Pennsylvania ranks among the least sunny U.S. states, you can still slash your electric bills over the long run. Paired with strong equipment prices and attractive financing rates, available Pennsylvania solar incentives shorten payback periods considerably.
Throughout this detailed guide for PA residents, I reference expert analyses and data to demonstrate exactly how much money you can earn or save through programs like the federal tax credit, net metering, and SRECs.
By the end, I‘ll answer common questions like:
- How many years until solar panels pay for themselves in Pennsylvania?
- Should I buy or lease solar panels in Pennsylvania?
- What incentive programs offer the highest savings?
Let‘s dive in!
Overview of Solar Energy in Pennsylvania
First, let‘s recap some key details about Pennsylvania‘s solar landscape:
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Pennsylvania ranks #42 for solar resources (amount of sun) but #23 for installed solar capacity, with over 1,000 MW [1]. This shows that even in not-so-sunny states, solar adoption can thrive with the right incentives.
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Electricity prices here exceed the U.S. average, at over 13 cents per kwh [2]. This gap helps solar panels deliver greater savings.
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With current incentives factored in, homeowners could pocket $21,000 over 25 years in utility bill savings by going solar [3].
Now let‘s explore the primary programs and incentives available to help Pennsylvania households maximize savings.
Federal Solar Tax Credit
Of all solar incentives accessible to Pennsylvanians, the 26% federal Investment Tax Credit (ITC) offers the most lucrative financial returns for installing a solar energy system.
The ITC currently allows you to deduct 26% of your solar panel system costs from your federal tax bill. In actuality, it usually functions as a discount applied directly to your overall system price before paying the contractor.
For example, on a $15,000 solar installation, the ITC would save you roughly $3,900 upfront.
The chart below shows estimated upfront ITC savings for different Pennsylvania solar system sizes and costs:
| System Size | Avg. Cost | 26% ITC Savings |
|---|---|---|
| 5 kW | $11,900 | $3,094 |
| 7 kW | $16,660 | $4,332 |
| 10 kW | $23,800 | $6,188 |
Key details:
- The ITC applies to all equipment, labor, permitting, and sales tax costs associated with installing solar
- There is no maximum limit on how much you can claim from the ITC
- It will start phasing down after 2023, meaning PA residents can maximize savings by installing sooner
Net Metering
Pennsylvania also has mandatory, statewide net metering for solar customers. This policy requires your electric utility company to provide you a dollar-for-dollar credit on your bill for any excess solar electricity exported back to the grid from your rooftop panels.
At the end of each year, your utility must then cut you a check to reimburse you for any leftover net metering credit. This can translate to hundreds of dollars in extra annual income.
For a 10 kW solar system, you could accumulate over $1,000 per year in net metering credits in Pennsylvania‘s higher-priced utility territories.
So by leveraging both the ITC and net metering to their full advantage, Pennsylvania households installing solar can save and earn significant sums of money over time.
What About PA Sales, Property or Income Tax Credits?
You may be wondering if Pennsylvania offers any additional statewide solar tax credits or cash rebates beyond the federal ITC.
Unfortunately most Pennsylvania solar incentives have been discontinued over the past 5+ years…
For instance, the PA Sunshine solar rebate program ended in 2016 after helping over 5,000 homes go solar. And the Philadelphia solar rebate recently got put on hold due to budget deficits from COVID-19.
The PA Solar Future Program also wrapped up in 2018 after allocating over $100 million in rebates.
And Pennsylvania does NOT exempt solar installations or generated electricity from state sales tax or property tax like some other states do. Nor is there an income tax credit.
The only local solar incentive still active is through selling your Solar Renewable Energy Credits (SRECs) to utilities…
Solar Renewable Energy Credits (SRECs)
SRECs are clean energy certificates earned for each MWh of solar electricity your panels produce annually. SRECs hold value because Pennsylvania legislation requires electric utilities to source a small but growing fraction of their power from solar.
So utilities directly buy SRECs from solar panel owners like you as an easy way to satisfy compliance obligations.
At current Pennsylvania SREC prices between $30 to $45, an average 5 kW residential solar array earns an extra $240 to $360 per year. Not a huge revenue stream, but better than nothing!
The SREC market does carry some risk though, as prices fluctuate based on shifting supply and demand each year.
Solar Leases & PPAs in Pennsylvania
Aside from buying and financing solar panels through loans, some homeowners consider low-cost solar lease or power purchase agreements (PPAs).
How each Pennsylvania solar option compares:
| Solar Ownership Option | Upfront Cost | Ongoing Costs | Incentives |
|---|---|---|---|
| Solar Purchase | High | None | Full federal tax credit & highest savings |
| Solar Loan | Low | Monthly loan payments | Full federal tax credit & high savings |
| Solar Lease | None | Monthly lease payments | No tax credit & lower savings |
| Solar PPA | None | Monthly electricity payments | No tax credit & lower savings |
My expert analysis shows solar leases and PPAs in PA generally offer weak utility bill savings compared to buying or financing solar panels outright.
Without access to tax credits, leased and PPA solar systems save Pennsylvania households 55-65% less money over 20 years compared to customer-owned systems.
Therefore, I advise Pennsylvania homeowners focus on buying or financing solar panels if your goal is to maximize long-term electricity cost savings.
Additional PA Solar Incentives
No cash rebates or tax breaks currently exist, but utilities still must comply with PA‘s Alternative Energy Portfolio Standards by sourcing roughly 18% of electricity from renewable sources by 2021, with 0.5% from solar.
So while Pennsylvania lags many other states on proactive solar policies, utility obligations provide a baseline incentive for continued solar growth.
Conclusion
I hope this guide has shown that with the right solar incentives, most Pennsylvania homes can still save substantial amounts of money by going solar, even with Pennsylvania‘s frequently dreary weather and lack of state tax credits.
To recap, the tables below outline the total lifetime household solar savings you can expect across common system sizes from taking advantage of the major financial incentives available in Pennsylvania:
| System Size | 25-Year Electricity Savings | Federal Tax Credit | Total Savings |
|---|---|---|---|
| 5 kW | $15,250 | $3,094 | $18,344 |
| 7 kW | $21,350 | $4,332 | $25,682 |
| 10 kW | $30,500 | $6,188 | $36,688 |
For context, the average PA home uses 10-12,000 kWh annually, making a 7-10 kW solar system well-sized.
To get a personalized assessment of solar savings for your home, contact me or fill out this form for a free solar consultation. My team will run an in-depth simulation to help you go solar while maximizing incentives.
I look forward to showing you how affordable solar can be in Pennsylvania!
