State Financial Incentives for Renewable Energy Usage
There are a wide variety of financial incentives available to homeowners to aid in the conversion to a more self-sufficient lifestyle. Below are the top four states in terms of the amount of financial incentives offered to homeowners. The rest of the states’ incentives can be found on when clicking on the picture below.
Click on the above picture to see all the States' Financial Incentives
Below describes each of the different homeowner financial incentives that are featured in the above chart.
Tax Incentives
- Corporate Tax Incentives: These include corporate tax credits, deductions, and exemptions. This can apply to residential sectors as well as commercial in a few special cases, such as in South Carolina where they have a Solar Energy Tax Credit that allows taxpayers to claim a credit of 25% of the cost of installing a solar-energy in any building owned by the taxpayer.
- Personal Tax Incentives: These include personal income tax credits and deductions, and are used as a tool to offset the cost of purchasing and installing energy efficient equipment in your home. This type of incentive usually has a maximum monetary amount of the deduction or credit.
- Property Tax Incentives: Include exemptions, exclusions, and credits. A vast majority of these types of incentives ensure that the added value obtained by implementing a renewable energy system is not included in the valuation of the property for taxation purposes.
- Sales Tax Incentives: This type of incentive provides an exemption from the state sales tax for buying energy-efficient appliances, a renewable energy system, and other items related to reducing use and increasing efficiency in the home. Some states have established a “sales tax holiday”, where a sales tax exemption for renewable energy items is available for a few days out of the year, giving consumers a push to purchase these items in a set time frame.
Loans
Loans provide financing needed to buy energy efficient or renewable energy systems and equipment. Loan terms are usually 10 years or less, and they are usually offered with very low-interest rates to cover a wide variety of energy efficient projects.
Rebates
Rebate Programs provide money after the fact to support and promote the installation of energy efficient projects. Rebate Programs are usually administered by utilities (municipal utilities and electric cooperatives, but can also be administered by the state.
Grants
Grant Programs: This type of incentive is offered by states to supports the development and use of energy efficient projects and renewable energy technologies. These incentives vary greatly from program to program. Some offer financial support for a wide range of areas related to alternative energy, while others or more specific and may offer funding for projects utilizing a specific type of technology. While grants are primarily available to commercial, industrial, utility, education, and government sectors, there are some available for the residential sector, which is illustrated in the table.
Other Incentives
- Green Building Incentives: These incentives are used to promote the creations of green building, which are building that are designed to minimize harmful impact on the environment. These incentives commonly come in the form of a reduction or waiver in building permit fees. The Leadership in Energy and Environmental Design (LEED) is a well-known program to certify energy efficient building.
- Leasing/Lease Purchase Programs: This incentive allows customers to lease an alternative energy generation device (i.e. photovoltaic system) from their local utility. This is done primarily for customers in remote areas, where the cost of extending traditional forms of electric distribution lines would be too expensive to be feasible. Some programs have the option for the customer to then purchase the system after a specified amount of time.
- Production Incentives: This incentive provides payments based on the amount of kilowatt-hours a renewable energy system generates. These are also known as performance based incentives.
- Utility Rate Discounts: This incentive can be offered by utility companies to encourage household energy efficiency. They are provided for households that meet a certain energy efficient rating (the Energy Star Program is well known for this), and in meeting those requirements the owner is awarded a discount on each month’s electricity bill.