Installing a solar energy system not only contributes to a sustainable future but also offers significant financial benefits. One of the key solar incentives available to homeowners and businesses is the federal solar rebate, also known as the Investment Tax Credit (ITC).
To maximize your solar savings, it’s essential to understand how to calculate and estimate your potential savings with the federal rebate. In this blog, we will guide you through the process, helping you determine the financial advantages of going solar.
- Gather System Information: Begin by collecting essential information about your solar energy system. This includes the total installation cost, system size (in kilowatts or kilowatt-hours), and the percentage of the federal rebate applicable for the year of installation. The current federal solar rebate percentage is 30% till 2032. In 2033, it will be brought down to 26%, in 2024 it will be 22% and 0% in 2035.
- Calculate the Federal Rebate Amount: To calculate the federal rebate, multiply the total installation cost by the applicable rebate percentage. For example, if your solar system installation cost is $30,000 and the federal rebate percentage is 30%, your rebate amount would be $30,000 multiplied by 0.30, which equals $9,000. This is the amount you can claim as a tax credit when filing your federal tax return.
- Estimate Energy Production and Savings: Estimating your solar energy production and subsequent savings requires considering factors such as your location, system size, sun exposure, and local weather conditions. Online solar calculators or software tools can assist in generating accurate estimates based on these parameters. These estimates will provide insights into your potential energy production in kilowatt-hours (kWh) and the corresponding savings on your electricity bills. Most of the solar installation companies provide you with a estimated data from their software.
- Consider Time Horizon: To maximize your savings estimation, it’s important to consider the time horizon over which you plan to assess your solar savings. Typically, the lifespan of a solar energy system is around 25 to 30 years. By multiplying your annual estimated savings by the number of years in the time horizon, you can project the total savings over the system’s lifetime. An experienced solar expert can guide you with accurate calculation post analysis of your electricity bill, your solar system size, orientation of roof and other such factors.
- Account for Other Factors: In addition to the federal rebate and energy bill savings, consider other financial factors that may impact your overall savings. These include any additional state or local incentives, net metering policies, potential increases in electricity rates over time, and the system’s maintenance and operational costs. Incorporating these factors will provide a more comprehensive and accurate estimate of your solar savings.
- Consult with Solar Professionals: To obtain the most accurate and personalized estimate of your solar savings, it’s advisable to consult with reputable solar professionals. They can assess your specific circumstances, conduct a detailed site analysis, and provide an accurate projection of your energy production and potential savings. You can contact Solar Power Nation for expert advice on your requirement.
Calculating and estimating your solar savings with the federal rebate involves considering various factors, such as system cost, rebate percentage, energy production estimates, and other financial considerations.
By following the steps outlined in this blog and consulting with solar professionals, you can obtain a realistic projection of your potential savings. Taking advantage of the federal rebate and understanding your solar savings empowers you to make informed decisions, maximize your return on investment, and enjoy the long-term financial benefits of solar energy.