How to Save Money on Solar Panels In Pennsylvania

How to Save Money on Solar Panels in Pennsylvania: The Ultimate Guide for Homeowners

At first glance, Pennsylvania doesn‘t seem poised as a national clean energy leader. With our sprawling Appalachian ridges and long, overcast winters, the Keystone State ranks among the bottom ten for annual solar radiation.

Yet paradoxically, those same dreary weather conditions make investing in rooftop solar a financial windfall for many PA residents. How so? Simple – avoiding skyrocketing electricity bills from traditional utilities offsets the diminished solar production potential.

Let‘s compare Pennsylvania‘s solar payback metrics to the country‘s sunniest state, Arizona:

• Average electricity rate – PA: $0.15/kWh, Arizona: $0.12/kWh
• Average solar installation cost – PA: $2.30/Watt, Arizona: $2.50/Watt
• Solar output per rated kW – PA: 1,200 kWh, Arizona: 1,800 kWh

Based on these figures, a 6 kW solar array in Pennsylvania would generate $1,080/year in bill savings while the identical system in Arizona earns its owner $1,296 annually.

Despite receiving 50% more sunlight, the solar panels in Arizona pay for themselves ONLY 2 years faster than the same system in radically-different Pennsylvania!

And that‘s before accounting for all the incentives exclusive to PA residents that I‘ll outline shortly…

The point is, sunshine alone does not make a state ideal for solar panels. When electricity rates run high while equipment prices stay low, the financial case for installing a solar array strengthens regardless of suboptimal conditions.

Now let‘s dive into everything you need to know about saving money on solar in Keystone State!

Section 1: Overview of Solar Potential in Pennsylvania

Pennsylvania sits nearly dead-last in annual solar radiation figures, averaging between 3.5 and 4.5 kWh/Meter squared each day depending on location.

That‘s about half the solar potential of desert states like Arizona, meaning a 6 kW solar array in PA would likely generate just 8,910 kWh in Year 1 instead of 15,000+ kWh.

However, losing 35-40% production doesn‘t directly translate to 35% lower savings…because your utility rates stay fixed! So while PA homeowners do need slightly oversized solar systems, the financial payoffs remain on par nationally once you adjust for sunlight differences.

In fact, the same 6 kW array costing $14,280 in PA (after federal tax credit) would earn $1,336 in Year 1 utility savings. At that rate, the system pays for itself in under 11 years – right in line with the US average.

And countless incentives we‘ll unpack shortly all work to Drive that payback period even lower…

Section 2: How Federal and State Solar Incentives Slash Costs in PA

Solar incentives serve as the ultimate equalizer providing Pennsylvanians every reason to go solar despite unideal weather conditions.

Let‘s breakdown all the rebates, tax credits, performance payments and other savings opportunities unique to PA:

Federal Solar Incentives

1. 26-30% Federal Solar Tax Credit

The 26-30% federal Investment Tax Credit (ITC) remains the most valuable solar incentive, allowing Pennsylvania system owners to deduct nearly one-third the total installation costs directly from taxes owed.

Incentive Value Over Time

This means on a $20,000 solar purchase in 2022, you could pocket $6,000 extra back from Uncle Sam at tax time.

The recent Inflation Reduction Act extension now guarantees solar tax credits at current levels through 2034 before phasing out completely. So PA residents still have ample time to capitalize.

2. Solar Panel Depreciation Bonus

Beyond the ITC, all solar equipment placed in service is entitled to 100% first-year depreciation deductions on federal taxes.

This enhanced bonus depreciation benefit permits writing off the entire system cost (MINUS what you claim via the 30% ITC) in Year 1 rather than depreciating over 5+ years.

So that further drops your tax burden after an array installation.

Pennsylvania State Solar Incentives

3. PA Utility Net Metering

Net metering policies require local electric companies to provide full retail credit for excess solar electricity fed back to the grid. So on sunny days when your system overproduces, your meter literally spins backwards!

This directly offsets your consumption from the grid at night, saving Pennsylvania homeowners 15 to 20 cents per kWh.

Even better – state law mandates cash payouts each year for any leftover credit balances, paid at the full retail electricity rate!

4. PA Solar Renewable Energy Credits (SRECs)

For each 1,000 kWh generated through your solar panels annually, you‘ll receive 1 PA solar renewable energy credit (SREC).

Local utilities then purchase these credits to satisfy state compliance standards. The average 2022 SREC price sits around $50.

A 6 kW system produces ~9 SRECs per year. By selling on the open market at current rates, that‘s $450 extra income annually!

5. Philadelphia Solar Panel Rebate

Philly residents can earn $200 cash back per kW installed, up to $10,000, through the city‘s generous solar rebate initiative.

The program is so popular it maintains an ongoing waitlist, but provides a rare regional rebate for Pennsylvania homes once funded.

Pennsylvania Solar Incentives At-a-Glance

With the mix of robust federal tax deductions AND steady cash flows from PA utility incentives, residents can expect complete solar payback within 7-9 years after installing a properly-sized system.

Section 3: PA Solar Regulations & Long-Term Outlook

You might be wondering what motivates Pennsylvania utility companies to compensate solar customers so generously…

The answer lies in Renewable Portfolio Standards legally enforced at the state level. These RPS laws require electric providers to obtain 18% of retail electricity from green sources by 2021, including 0.5% specifically from solar installations.

To satisfy the solar carve-out portion, local utilities actively purchase SRECs from homeowners while also paying top dollar for excess solar electricity to resell to other customers.

While Pennsylvania‘s current Alternative Energy Portfolio Standard technically expired already, it jumpstarted enough momentum over the past decade to sustain continued solar expansion even absent strict mandates.

As evidence, the PA solar industry ballooned from under 50 megawatts (MW) of capacity in 2010 to over 1,000 MW by year-end 2021. Solar employers now number nearly 6,000, having doubled output over just the last 3 years.

This existing growth trajectory suggests an emerging solar hotspot in Pennsylvania, cultivated by forward-thinking policy incentive mechanisms initiated close to a decade ago.

For Keystone State residents, it translates to a stable, supportive landscape with plenty runway yet for advantageous solar compensationpackages from utilities and governments alike.

Section 4: Should You Lease or Buy Solar Panels in Pennsylvania?

For homeowners lacking the upfront capital to purchase solar equipment outright, leases and power purchase agreements (PPAs) present enticing zero-money-down financing alternatives.

But in most scenarios, owning your Pennsylvania solar array through loans or cash reigns supreme when you crunch the numbers. Let‘s compare:

Solar Panel Ownership vs. Leasing in PA

As you can see, owning your Pennsylvania solar system proves significantly more lucrative based on incentive eligibility and long-term savings. Expect complete payback in as little as 8 years when buying compared to 15+ years leasing.

The two instances where leases make sense:

1. If you lack the tax liability to claim ownership incentives

2. If using solar to lock in lower electricity rates holds more importance than maximizing ROI

For all other solar shoppers able to purchase, buying trumps leasing for fastest financial payback in PA.

Key Takeaways: Top Reasons To Go Solar In Pennsylvania

I know that was an information download about every solar policy and incentive under the Pennsylvania sun. So let‘s recap the key reasons installing rooftop solar panels makes tremendous financial sense here:

1. Robust Federal Tax Credits Slash 30% Off System Costs

Nothing moves the needle more than claiming the 30% federal solar tax credit before it steps down over the next decade. PA homeowners can deduct thousands from gross costs.

2. Favorable Net Metering & SREC Policies Provide Ongoing Revenue

Even after the upfront discounts, net metering and Solar Renewable Energy Credits provide years of additional value through bill savings and incentive payouts.

3. High Electricity Prices From Dirty Fuels Improve Payback Period

Pennsylvania ranks among the top 10 most expensive states for household electricity thanks to Appalachian coal and imported natural gas dominating our energy mix. Going solar mitigates these volatilely-priced non-renewables.

4. Supportive Regulations Drive Growth Projections

Robust solar expansion the past decade confirms Pennsylvania‘s ongoing commitment to renewable energy despite recent Alternative Energy Portfolio Standard mandates technically sunsetting.

In total, PA sunlight limitations get offset by an ideal mix of high utility rates plus strong equipment incentives that, when properly modeled by an installer, produce 8-11 year payback periods on average.

That may still seem long, but it aligns with national benchmarks. And once your system hits the breakeven point after 8-11 years, you‘ll enjoy FREE daytime electricity for another 15+ years while panels remain under warranty!

Reach out now to connect with a reputable local solar installer serving Pennsylvania homeowners. They can assess your specific property conditions, utility billing history and electricity needs to right-size an array for maximum long-term savings.

The financial case for solar panels rests clearly in your favor – now enjoy the benefits of clean, sustainable Pennsylvania sun power for decades to come!

Jake Fisher
Solar Expert