What Are New York State's Solar Incentives?
New York is one of the most progressive states in the country when it comes to creating and abiding by standards to encourage the adoption of renewable energy, in particular solar energy. What are the incentives offered, how can you find them, and what type of impact does it have if you purchase a solar energy system?
Solar Power Rocks ranks New York as the number one state for best overall grade of A+ in their annual rankings. They determine their rankings through a matrix of government policy, financial incentives, and payback rate.
The 30% Federal Investment tax credit is solar energy's national lynchpin incentive. New York also offers a 25% state tax credit, the Megawatt Block Incentive Structure, and low-interest financing. In all, it is an aggressive policy that financially encourages the adoption of solar by both homeowners and commercial businesses.
The average electricity cost of New York is approximately 45% higher than the national average at around $0.177 per kWh. This is in comparison to Ohio's rate of $0.13 per kWh. The national average is $0.128 per kWh. The cost of installation may be a little higher in New York but the bulk of the cost is going to come from the solar panels and other components. Therefore, to save a higher percentage on your solar energy system, it is recommended that you go with a larger system.
What does the state's Renewable Portfolio Standard look like? New York's RPS is one of the most progressive in the country. The New York State Energy Research and Development Authority (NYSERDA) administers the RPS program for the Public Service Commission. NYSERDA enters into contracts to provide incentives to renewable energy producers. Governor Andrew Cuomo passed legislation extending the state's RPS through 2030. The pan is called Reforming the Energy Vision (REV) and calls for a requirement of 50% of New York State's electricity to be sourced from renewable energy sources by 2030. In total, there was 575% growth of solar from 2012 through 2015 in New York State.
NY State Residential Tax Credit
The major incentive for NY State homeowners is the NY State Residential Tax Credit. The State Residential Tax Credit gives a 25% tax discount for solar installations that is capped at $5,000. Solar power systems but must be new, grid-connected, and net metered. For a typical 7 kW array price of $24,500 ($3.50 per watt), homeowners would see a reduction of their bill of $5,000.
There are two major portions to NYSERDA's solar incentives: Megawatt Block Incentive Structure and low-interest loans. For the Megawatt Block Incentive Structure, the Upstate Region Residential Installation incentive is 40 cents a watt. $0.40 a watt off an incentive can be a tremendous amount of cost savings. If the average installation is priced at around $3.50 per watt for a 7 kW system, that would mean a total price of $24,500. If this was reduced by $0.40 a watt to $3.10, it would be a revised total of $21,700, and the customer would be looking at a cost savings of $2,800.
One of the great incentives that NY State offers is the NY-Sun Affordable Solar Incentive which doubles this $0.40 incentive to $0.80 off a watt installation. So that same 7 kW system would now be priced at $2.70 a watt, or $18,900, or $5,600 off. All of this is before the 30% Federal Tax Credit are applied. In order to be eligible for this additional incentive, residents must own their own home and have a household income that is at or below 80% of the State Median Income or the Area Median Income, whichever is greater. This program was designed for low- and middle-income families who may not be able to afford to go solar without additional help. It is tremendous savings.
The one thing that should be considered is that the NYSERDA incentives are taking a step-down approach as time goes by. As soon as incentive block statuses are met, the next block is a slightly lower financial incentive. As of this writing in August of 2016, the incentive is $0.40 per watt operating under "block 7." "Block 8" will step down the incentive to $0.30 a watt off installation price. "Block 9" will see a step-down to $0.20 a watt.
The NYSERDA loan program offers three different options. Two of the options are for residential homeowners (and small businesses) and the third is for small commercial projects. The interest rate for residential solar installations is between 3.49% - 3.99%, while for small businesses it can be as low as 2.5%.
A 7 kW system generally is priced at $3.50 a watt for a total price of $24,500. The NYSERDA incentive of $0.40 a watt will reduce this price from $24,500 to $21,700. The State Residential Tax Credit would lower this amount from $21,700 to $16,700. And the Federal 30% Investment Tax Credit would further reduce this amount from $16,700 to $11,700. So overall, you would see a total reduction of your solar energy system of 52.2%. The credits and incentives add up.
After you have purchased a system for this reduced price, you will be saving off your electricity bills at a higher rate than the vast majority of states since New York is pushing $0.18 per kWh. This is tremendous cost savings. Most homeowners see a payback period of as little as five years.