So you‘re considering going solar in Ohio? With decent sun exposure, attractive economics and a few incentives, the Buckeye State offers solar savings potential. This guide provides everything you need to capitalize.
We‘ll analyze the costs, available subsidies and bill savings step-by-step so you can make the most informed decision. Whether you want to eliminate electricity bills or make some extra income, solar delivers over the long run.
Understanding Ohio‘s Solar Landscape
To start, let‘s look at how far solar has come in Ohio. This background gives helpful context on where things stand today.
Solar industry growth in Ohio over time
| Year | Solar Capacity (MW) | % Households Powered | Solar Jobs |
|---|---|---|---|
| 2012 | 9 | 0.1% | 2,800 |
| 2017 | 150 | 1.0% | 4,800 |
| 2021 | 1,050 | 5.7% | 7,000 |
- Solar capacity has grown over 100x this past decade to 1+ gigawatts
- Today enough to power 5.7% of households
- Jobs have 2.5X‘d on booming installation activity
This momentum results from improved economics and supportive policies. Utilities now source over 2.5% of Ohio‘s power from solar energy.
And the industry has had a demonstrable economic effect. The solar sector employs over 7,000 Ohioans today, adding tax revenue and local spending.
With continued technology advances, solar energy will likely keep expanding its footprint here. The Tailored Energy Solutions company projects Ohio solar capacity can realistically reach 8 gigawatts by 2030.
That‘s enough to power 17% of households across the state with clean energy. And you can be part of the shift…
Breaking Down System Costs
Let‘s look at what goes into a solar array to understand the true costs…
The average residential solar system price in Ohio lands at around $2.50 per Watt.
Cost Over Time in Ohio
| Year | Avg Cost per Watt |
|---|---|
| 2012 | $5.00 |
| 2017 | $3.50 |
| 2022 | $2.50 |
For a typical 6 kilowatt (6,000 Watt) system, that comes out to $15,000 in upfront investment. Declining 25% from a decade ago.
Here‘s a breakdown of current costs:
Solar System Cost Components
| Component | % of Total Cost | Cost |
|---|---|---|
| Panels | 50% | $7,500 |
| Inverter | 10% | $1,500 |
| Racking | 5% | $750 |
| Installation Labor | 15% | $2,250 |
| Permitting + Interconnect | 10% | $1,500 |
| Sales Tax | 5% | $750 |
| Total | 100% | $15,000 |
We can make some observations here:
- Panels account for half the overall outlay
- Inverters, racking and labor split most of the remainder
- Permitting, administration fees round out system costs
Now let‘s explore how to lower these amounts through Ohio‘s solar incentives.
1. Claim the Federal Solar Tax Credit
The key subsidy bringing down net costs is the 26% federal Investment Tax Credit. This policy offers credits for installing:
- Solar panels
- Inverters
- Any equipment related to generation
So for our $15,000 system, you could earn $3,900 back immediately through this year‘s tax filings.
And if your tax liability falls shy of $3,900, no worries. You can roll over unclaimed portions year after year until the credit is utilized.
There‘s no limit, so take advantage of the full savings over time. This drops our initial out-of-pocket down to $11,100.
Now check out options through your utility…
2. Leverage Net Metering in Ohio
Net metering allows sending excess solar energy to the grid in exchange for credits. When your system produces more than your house is using, meters spin backwards.
This offsets your future electricity draws from the utility when solar production is lower. Such as evenings and winter months.
Now at year-end, if you still have leftover credits, Ohio utilities cut a check to buy back extra generation at an avoided cost rate around $0.03 to $0.05 per kWh.
Net Metering Compensation by Ohio Utility
| Utility | Net Excess Generation Rate |
|---|---|
| AEP Ohio | $0.036 per kWh |
| AES Ohio | $0.031 per kWh |
| Dayton Power + Light | $0.045 per kWh |
While less than the retail electricity rate (around $0.12 per kWh), it‘s still additional value.
A 6 kW system in Dayton may produce 8,500 kWh excess energy per year. At a $0.045 buyback rate, that‘s $383 extra annual income through net metering.
Not huge savings, but it improves the investment over decades. We‘ll account for this in the payback calculation.
Up next – how SRECs work and how much income they provide…
3. Monetize Solar Renewable Energy Certificates
In addition to energy production, your solar system earns renewable energy certificates with each MWh generated.
Think of these as redeemable environmental credits. Ohio utilities use RECs to meet state renewable energy standards.
As a solar owner, you can register and sell credits quarterly or annually to utilities through the PUCO. Income depends on market pricing.
Ohio SREC Pricing
| Year | Average SREC Price |
|---|---|
| 2017 | $4 |
| 2021 | $5 |
| 2022 | $7 |
With SREC rates around $5 in 2022, our 6 kW system would earn about 40 credits annually. At 8 MWh production = 8 SRECs.
40 SRECs * $5 = $200 extra income per year. Not huge, but a nice bonus.
Now check if your hometown offers solar incentives…
4. Seek Out Local Solar Subsidies
Many Ohio municipalities and counties provide solar incentives beyond the state and federal level.
For example, Cleveland has a 15 year property tax abatement for homes adding solar. This avoids increased taxes from home value appreciation post-install.
And Toledo offers a similar 10 year property tax exemption for systems under 25 kW.
For homeowners in these areas, that equates to 15 years of tax savings worth ~$900 in our case (using a 1.76% effective tax rate). Not bad!
Contact your county auditor or solar installer to learn about local solar programs in your Ohio jurisdiction. They can advise on exemptions, special electricity rates, permitting fee waivers and more.
Every little bit helps improve cost effectiveness!
5. Eliminate the Sales Tax
Now one final way to chip away at solar system costs in Ohio:
You don‘t pay any sales tax on solar equipment or installation services.
Skipping the typical 5.75% (or higher for some regions) sales tax puts nearly $900 back in your pocket for a $15,000 system.
Between federal, state and local incentives, our reference solar array cost drops from $15,000 down to…
- Federal tax credit: -$3,900
- Net metering value: -$383 per year
- SREC earnings: -$200 per year
- Local tax exemption: -$900
- No sales tax: -$900
Out-of-Pocket System Cost = $8,700
As a 46% reduction off original sticker price just from subsidies! And decades of continued utility savings to look forward to.
Now let‘s examine when leasing may or may not make sense as an alternative…
To Lease or Buy – What‘s Best in Ohio?
Beyond buying solar panels outright, leasing represents another option with no money down.
Solar leases involve paying a fixed monthly rate over 20 years contractually. Typical terms call for:
- $0 downpayment or equipment costs
- Solar use fee around $0.10 – $0.13 per kWh
- Rates escalate 2-4% annually over contract term
- Option to buy out the system later
While simple and low cost, leases have drawbacks…
Lease Downsides
- Forfeit 30% federal tax credit + other incentives
- Solar company owns assets and earns SRECs
- Effective rate may exceed utility‘s retail rate
This makes buying preferable in most Ohio circumstances if claiming incentives.
However, leases CAN make sense if:
- You lack enough tax liability to use credits
- Moving within 10 years
- Want low-risk solar with no upfront cost
Crunch the numbers both ways for your situation.
Buying is best play if utilizing available credits. But leasing wins if those don‘t fit.
When Does Solar Ultimately Make Sense in Ohio?
Given your electricity rates and usage, solar may already prove cost effective here in the Buckeye State. Declining system prices help the value proposition yearly.
If paying $100+ per month to the utility, solar likely earns savings over time. Though the payback duration can vary.
Breakeven Timeframe
| System Size | Years to Payback |
|---|---|
| 2 kW | 14 years |
| 6 kW | 11 years |
| 10 kW | 9 years |
Accounting for all incentives and future utility savings, a typical 6 kW installation reaches payback in 11 years in Ohio.
After break-even, it‘s essentially free electricity for another 10+ years while panels keep humming. Not to mention the environmental benefits.
Tally up what you might save using our solar calculator. And reach out to local installers for precise quotes.
The financial return may beat sticking with the conventional utility!
Key Takeaways for Ohio Homeowners
- With 1+ gigawatts developed, solar has proven a viable instate energy source
- Between federal tax credits, property exemptions and net metering, 50% subsidies available
- Buying beats leasing thanks to 30% federal tax credit opportunity
- Payback horizons typically fall between 9 and 14 years
- Today‘s system pricing around $15,000 for 6 kW makes adoption most affordable
Does solar make sense for your Ohio home? Reach out and start gathering quotes from top local installation companies.
Often the best financial path forward. And you‘ll be helping Ohio reach its 2030 emissions reductions goals!
Share any other questions in the comments below!
