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Solar Energy Financial Incentives

New federal tax breaks included in the Energy Policy Act of 2005 are available for products placed in service during 2006 and 2007. All products must meet energy efficiency criteria as determined by the IRS. Criteria will be governed by entities such as Energy Star Rating Service and Solar Rating Certification Corporation. A brief overview of tax credits are listed here.

Photovoltaic or Solar Panels

30% of the cost. Cap of $2,000 for systems installed in 2008, no cap in 2009.  Must provide electricity for the business/residence and must meet applicable fire and electrical codes. 

Solar Hot Water Heaters

30% of the cost up to $2,000.  Must be certified by the Solar Rating Certification Corporation or comparable entity endorsed by the state government in which the  system is located.  At least half of the energy used to heat water for the residence must be solar. The credit cannot be used if the solar hot water system is used to heat pools or hot tubs.

Other Energy Efficient Improvements

An additional tax credit up to $500 for energy efficient windows, insulation, doors, and heating and cooling systems can be taken. This $500 cap can be reached as follows:

  1. Exterior Windows: 10% up to $200
  2. Insulation, exterior doors, pigmented metal roofs: 10% up to $500
  3. Central Air Conditioning: up to $300 of the cost of equipment and installation
  4. Heating Systems: up to $150 of the cost of equipment and installation

All of these products must meet certain energy guidelines to be eligible. Please refer to the IRS or a tax professional for clarification of rules regarding these tax credits. Sustainable Future is not a tax expert and will not be responsible for any erroneous energy tax credits claimed.

Tax Credits for Home Builders

A tax credit of $2,000 per home is available for home builders who build a new energy efficient home that achieves a 50% reduction in energy consumption relative to the International Energy Conservations Code (IECC) standard.  At least 1/5 of the energy reduction must come from the building envelope improvements.  There is also a $1,000 tax credit to manufactured home producers that achieve a 30% reduction in energy savings over the 2004 IECC.  This tax credit applies only to reduction in heating and cooling load.

TVA Generation Partners Program

This program encourages businesses and homeowners to produce green power and sell it back to TVA at a premium.   A $1000 grant is given to the owner of the solar system upon completion of the system. Then TVA pays the owner of the solar system $0.12 above the retail rate for the green power produced. This contract helps immensely towards a reasonable payback on the system. Visit dsire or the Generation Partners website for more details.

For further information, refer to the following web links.

 

Clients of Sustainable Future:

After your Solar System has been installed visit:  https://treas1603.nrel.gov/ to fill out the necessary forms required to receive your federal payment.