Going solar for your hot water needs provides benefits to today’s homeowner while reducing energy use and costs. You can save up to 80% on your water heating bill. And this can be done while preventing up to 4000 tons of carbon monoxide from entering the atmosphere. Using the incentives offered by PG&E together with the federal tax credits provides significant savings.
The 30% federal tax credit has been extended to December, 2019, for home and business owners who qualify. It is my intent here to answer any questions you might have about the incentives and the tax credit and how they work. I’m also providing a couple helpful links for more information.
Federal Tax Credit
When the 30% tax credit expires after 1919 the credit will be 26% and in 2021 will be 22%. After that it will be 10% for commercial projects, but will no longer be available to residential homeowners.
This program is not a deduction, but a tax credit. The credit works by applying it against the amount you owe on your tax bill. If your tax bill is less than the credit you can continue to subtract the credit from the following year’s taxes. This tax credit applies only to your primary residence and can not be used for systems for heating pools. If you use a residence as a primary resident for part of the year and rent it out the rest of the year, you can deduct a partial credit from the period of time it is your primary residence. When you consult your tax preparer make sure to let them know you have a solar thermal system.
PG&E Incentive Program
PG&E offers an incentive rebate on solar thermal systems through the CSI (California Solar Initiative). You can earn up to $4,366 rebate on a residential solar system and up to $800,000 for a commercial property. The amount each system earns depends on the design, system type, shading and location. One of the benefits of this program is, unlike the federal tax credit, you can earn a rebate on systems for rental properties and to heat pools. Low income natural gas customers can qualify for higher incentives under the Low Income Program. As this incentive program hits certain benchmarks benefits will decline so it’s best to apply for your incentive as soon as possible. Your California Solar Initiative contractor will complete and submit all paperwork. After the final inspection, upon the approval of your application your check will be sent in about a week.
With both of these programs the out of pocket costs for a solar thermal system is very affordable. One of our customer’s installed a $9,000 system with out of pocket costs of about $2,650 after the tax credit and rebate. With the long term savings in energy and costs this means the system will pay for itself in about 5 years maybe less. Most systems last for about 25 years with minimal, if any, servicing. If you have any questions or would like an estimate please contact us or a reputable contractor near you.