Seizing Solar Incentives: 3 Reasons You Can’t Wait Until 2020 To Go Solar

​Solar incentives are a big deal, and if you've been paying attention to the solar market, you know that 2019 is a big year. The solar market is growing at a triple-digit pace, but there is still a great deal of volatility is present due to factors such as incentive structures & regulatory uncertainty. These factors are present in nearly every market, but rarely do so many changes line up with one specific date; December 31st, 2019.

The reality is simple; if you want to go solar 2019 will offer you the lowest solar cost possible. Once the clock strikes midnight in December, some projects will go up 20% overnight. A combination of expiring tax credits, changing regulations and reduced grant funding means that 2019 is a big deal in solar. 

What specific solar incentives do you need to keep an eye on?

​Want to skip to the big reveal? Click here.

​#1 ) The Dissappearing Federal INvestment Tax Credit

​The Federal Investment Tax Credit (ITC) is the most important incentive of the bunch. The ITC offers 30% of your project costs back in the form of a tax rebate the year after you install a system.

Starting in 2020, the ITC rate steps down to 26%. A further reduction to 22% will take place in 2021. After 2021, the residential credit is set to expire, while the industrial credit will remain at 10%. If you wait until 2020 to go solar, you could leave thousands on the table.

#2 ) NYSERDA ​Block step down

This per-watt incentive has been available to residential and commercial customers since 2015 and can make a massive dent in your up-front costs.

The NYSERDA incentive is administered by the NY-SUN program, a government-funded initiative aimed at speeding up the adoption of solar in NYS. NYSERDA is granted funding through the NYS government and passes along these savings to customers through the use of specific incentive blocks. Each NYSERDA block offers a different per watt incentive, and when that block runs out, the incentive will lower for the subsequent block. Each region in NYS has its own bank of grants that apply to homes and businesses in that region.

Its safe to assume that the residential blocks in Upstate NY are ​set to step down by then end of the year. Given the incoming step-down of the Federal ITC credit, its likely that ​every NYSERDA block will have been used up and stepped down in some way, shape or form by the end of the year.

#3 ) THE EXPANSION OF VDER

​The ITC and NYSERDA are important, but It would be short-sighted not to address a third, and arguably more critical program that will impact the New York solar market; VDER.

VDER stands for the Value of Distributed Energy Resources. It functions as a set of standards that dictates the rate a utility will compensate a customer for power production being fed into the grid. Currently, VDER only impacts off-site or remote net-metered customers, but starting in 2020 VDER will impact all solar customers, regardless of their panel location. Why does this matter? The answer is in sizing. 

Currently, an on-site residential customer who has solar panels on their property consumes the energy produced by the panels during the day, any excess they generate is credited to thier meter at a one-to-one ratio. Essentially, you get market rate for every kWh you export back to the grid.

Traditionally, VDER rates tend to be LESS than retail, meaning that you would need to generate more energy than you consumed to offset that same market rate. This small reduction in rate can have a significant effect on system sizing, and ultimately the cost of a solar system.

If your VDER rate was 15% lower than your retail rate, your system needs to be 15% larger to offset the same amount of energy cost. This ultimately means your system would likely be 15% more expensive next year than it is today.

Systems built and interconnected in 2019 will not be subject to this new energy crediting system, and thus their systems will produce slightly more financial value per watt than their 2020 counterparts. 

​But...what does this mean for me? (The big reveal)

That's a lot to digest. So let's break it down in more simple terms. A current residential customer who is buying a system to offset around $100/month of electrical costs would see the following financial impact.

In 2019, the customer would enjoy one to one crediting without VDER. As a result, their system would likely need to be around 10kW to offset that utility cost..

To keep things simple, let's assume that 10kW system costs $3.00/watt, or $30,000.

For a $30,000 system, that customer could get $10,000 in Federal Tax credits with the current 30% ITC.

That same customer would also get $5000 in NYS tax credits.

Additionally, that customer would enjoy a  $.35/watt NYSERDA incentive that decreased the overall system cost by an additional $3,500.

Our fictitious customer would have access to $18,500 in incentives this year, a 60% reduction in top-line costs, bringing the final cost of their system to $11,500.

If that same customer kicked the can down the road and decided to wait until 2020, their circumstances might change drastically.

First of all, their system will now likely be subject to a VDER rate of 10-15% less than what they pay. Say the current rate is $.10/kWh, their new VDER rate would be $.085/kWh.

Because the utility is compensating them less for their overproduction, the system now needs to be 15% larger to offset that same $100/month bill. That 10kW system they could have bought in 2019 ​now needs to be up-sized to 11.5kW. ​

Assuming the cost per watt stayed the same their new top-line cost is now $34,500, a $4,500 increase. ​

The Federal Investment Tax Credit steps down to 26% in 2020, so they would get a total of $8,970 in tax credits.

The NYS tax credit stays the same, so they would still have access to the $5,000 credit to reduce their costs.

In this scenario, it's all but certain that the NYSERDA block has dropped to $.20/watt. This grant would provide $2,300 off the cost of their system.

All in all, the final cost of their solar system in 2020 would be $18,230, an increase of more than $6,500, just for waiting until 2020.

The numbers don't lie. If you're looking to go solar in NYS, 2019 is your year. 

Curious about the cost of a solar system? Reach out to our team below, and we'll happily conduct a free estimate of your needs.