Incentives
Solar subsidies in in California
Operators of solar power plants in California receive a 30% tax credit when purchasing, and can choose between the EPBB and PBI incentive programs.
Solar programs in other states
A detailed overview of all subsidy programs can be found in DSIRE – the Database of State Incentives for Renewables & Efficiency: www.dsireusa.org.
Sample Calculation for California
The tax credits and rebates for the residential sector consist of the following:
- 30 % tax credit (starting in 2009 without a cap; cap was US$ 2,000 before)
- 2.2 US$/W rebate by California Solar Initiative for customers of the electricity providers Pacific Gas & Electric. LA Department of Water and Power, and Southern California Edison customers
- or 0.22 US$/kWh PBI (Performance Based Incentives)
Example for the economics of a residential PV
| Incentive “EPBB” (Expected Performance Based Buydown) per Wall, an up-front payment |
|
| Cost of PV installed |
2 kW @ 7,500 US$/kW = US$ 15,000 |
| California Solar Initiative Incentive (10/2008) | 2.2 US$/W * 2,000 W = US$ 4,400 |
| Tax credit | US$ 10,600*30 % = US$ 3,180 |
| After rebates and tax credits the customer pays | US$ 7,500 |
| Savings for base electricity rates | 1,600 kWh/kW * 2 kW * 0.15 US$/kWh = 480 US$/year |
| Payback time | 15.6 years |
| Savings when PV is used for peak electricity rates | 1,600 kWh/kW * 2kW * 0.30 US$/kWh = 960 US$/year |
| Payback time | 7.8 years |
| PBI (performance based initiative) | |
| Cost of PV installe | 2kW @ 7,500 US$/kW = US$ 15,000 |
| Tax credit | net cost = US$ 15,000 * 30 % = US$ 4,500 |
| Cost to homeowner | US$ 10,500 |
| PBI (US$/kWh produced) | 1,600 kWh/kW * 2 kW * 0.34 US$/kW = 1,088 US$ / year |
| Payback time | 9.6 years |
Higher initial investment cost (US$ 15,000, without California Solar Initiative Incentive) to homeowner results in a higher tax credit of US$ 4,500 (vs. US$ 3,150 as given in the example for EPPB) and to higher feed-in-tariffs (PBI)