Solar Power in the United States
Contents
- 1 Solar Power in the United States
- 2 Tax Incentives for Going Solar
- 3 Qualification Requirements
- 4 How to claim your Tax Credit
- 5 How does solar power work?
- 6 The Pros and Cons of Switching to Solar Energy
- 7 Solar Power Farms provide an alternative to Private Installation
- 8 Solar Power Consumption in the United States
- 9 Clean Energy
- 10 Electricity Rates
With technology constantly improving, solar power today is more efficient, accessible, and affordable than ever before. Since 2008, installations in the United States have risen more than 3,500% generating enough energy to power the equivalent of 12 million American homes. With the increase in supply comes the drop-in prices. Due to a variety of variables including government programs, the costs of solar panels have dropped nearly 50% since 2014.
A residential or commercial customer may have different options when it comes to choosing solar power. Solar panels can be easily installed on rooftops of most houses and businesses with minimal disruption to your home’s natural appearance. If you don’t like the idea of equipment being installed on your property, you can still take advantage of solar power with solar power farms. We will take a closer look at solar power farms later in this article.
Although the costs of going solar have improved significantly over the years, it still has a way to go before it can compete with the more conventional methods of generating power such as petroleum, natural gas, and coal. The start-up costs for residential solar projects are significant, with 74% going towards “non-hardware costs” such as permitting, financing, and customer acquisition. The affordability for residential and commercial customers choosing to go solar is due to a large part the government plays to incentivize these programs.
Tax Incentives for Going Solar
There are tax incentives the federal government provides for customers that choose to go solar. In addition to federal tax credits, your state may also provide additional tax breaks. Although the tax incentives are set to decrease over the years, you can still take advantage of them today. The tax breaks allow you to deduct a percentage of the installation costs on your federal tax return. Below is a breakdown of the current tax-deductible rate, along with past and expected future rates.
- 30% for systems placed in service by 12/31/2019
- 26% for systems placed in service after 12/31/2019 and before 01/01/2021
- 22% for systems placed in service after 12/31/2020 and before 01/01/2022
Qualification Requirements
To qualify for tax credits from installing solar panels, the system must provide electricity to the residence and meet specific fire and electrical code requirements. Rental properties served by the system also qualify as the property does not need to be the taxpayer’s principal residence.
How to claim your Tax Credit
To claim your tax credit simply file Tax Form 5695 along with your federal tax return. If you pay a professional service to deal with your tax return, you will need to let them know you installed solar panels on your residence or any other property that you own.
How does solar power work?
Thanks to the unlimited amount of energy produced by the sun, solar panels can convert the sunlight directly into electricity by photovoltaic cells. Solar panels are composed of many small units of photovoltaic cells. Photovoltaic cells absorb photons of light and release electrons. A photovoltaic system, such as solar panels, works by capturing these electrons resulting in an electric current that can be used as electricity.
In 1839, French physicist Edmund Becquerel was the first to discover the photoelectric effect when he noticed certain materials would produce small amounts of electric current when exposed to sunlight. The first photovoltaic module was built in 1954 by Bell Laboratories. However, the costs associated with the project was too expensive to gain widespread use. The diagram below illustrates the basic operation of a photovoltaic cell.
The Pros and Cons of Switching to Solar Energy
| Source | Pros | Cons |
|---|---|---|
Solar Power |
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Solar Power Farms provide an alternative to Private Installation
Solar power farms are large areas of land that are used for setting up photovoltaic panels to power neighborhoods and communities. Solar power farms serve the same function as power plants and are also referred to as solar parks or solar stations. Instead of providing power to an individual home or business, like traditional solar panels, solar power farms provide energy to the electric grid which is controlled by large utility companies.
If you’re looking to lower your carbon footprint but don’t want to install solar panels on your home or business, solar power farms might be an option for you. To make these power plants more affordable, an increasing number of states are requiring energy suppliers to have a set percentage of electricity generated or sold to come from clean renewable energy sources. These new regulations are providing incentives for companies to invest in solar power farms.
Eversource is a utility company that operates in the state of Massachusetts. The state has a goal to have 15% of renewable energy sources installed by the end of 2020. Eversource has allocated over $140 million of green bond proceeds that will go into the development of 19 photovoltaic generation sites across the state. The amount of electricity from solar power that Eversource is expected to generate will be enough to power 11,000 homes.
Solar Power Consumption in the United States
Although the costs of generating electricity through photovoltaic cells are going down, the primary sources for generating power in the United States still belongs to petroleum, natural gas, and coal. However, as states impose more regulations, we may begin to see a change in preference. The pie graph below will show the total percentage of net consumption by a power source in the United States. As of 2019, solar power consumption falls at nine percent.
