Delaware has quickly become one of the best states in the country to make the switch to solar! As the below Swanson graph shows, as the cost of solar panels has dropped dramatically, it is now incredibly affordable and cost-effective to install and use solar in Delaware.
Tied for 12th in its 2016 Solar Report Card as seen at the bottom of this page, Delaware has some very innovative and lucrative incentives for homeowners to switch to solar. Programs like this will keep our nation’s first state a leader in clean energy and protecting the environment.
Let’s take a look at the different solar options available to Delaware residents.
The chart below gives you an idea of the costs and returns for each solar panel option available to Delaware residents – purchase, purchase with credit, and solar leasing.
A cash purchase always delivers the most immediate, largest savings. With no loan payments, you realize 100% of the energy savings immediately, along with the Federal 30% tax credit.
Considering an average Delaware installation price of $16,650 for a 5kW system, you will see an immediate return of $4995 (Federal rebate) and an estimated first-year savings of around $819 in energy costs. Additionally, you can sell your first year SRECs for an estimated $2250. This puts your first year investment at only $8586!
Taking into account expected energy price inflation, your yearly savings should be an estimated $1300 within 15 years. This should completely pay for the system within 11 years, and show you a net profit of over $22,400! Remember, you still own the added value of the system to your property, and you are supporting local jobs and the environment too!
For most people, paying for solar with a home equity loan makes the most sense. Because you are using a home equity loan, you not only get the 30% Federal credit, but you can deduct the interest on the loan as well. You get all of the benefits and incentives without any cash out of pocket.
Let’s assume a home equity loan of 5% for a $16,650 system. While there will be a few years in the beginning where the loan payments are greater than the savings in energy costs, energy inflation will quickly outpace your loan payment.
With an average $16,650 installation price, a purchase on credit makes perfect financial sense. Year one, you should have about $819 in energy costs, and have loan payments totaling about $1580. This means around $63 per month out of pocket your first year, but remember, you got $4995 in Federal tax credits, as well as $2250 in SRECs. That tax credit means you are $6484 ahead the first year!
By year 15, when the loan is paid off, you will be realizing about $1300 per year in savings, and by year 25 your total net returns are around $15,400, even after paying off the system!
If you would like a custom quote based on your energy use, click here for a quote.
Solar panel leasing is a great way to go solar if you are short of cash or if you don’t have the ability to take a loan. As you can see above, the immediate returns are not as impressive, but due to the relatively high (12th in the nation) Delaware energy costs and the normal energy cost inflation, your savings multiply year after year!
In Delaware, you will start out with a relatively small savings of $13 per month, which multiplies over time, but you save this money with no money out of your pocket.
With solar leasing, you generally have two distinct options.
With standard leasing, you basically pay a rental payment for a solar roof system. The system is installed and maintained by the solar company on your roof. Depending on the amount of sun you get, the lease payment plus the new, lower electric bill should be less than what you are currently paying.
With a Power Purchase Agreement (PPA), you agree to allow a company to install home solar panels on your roof. You then purchase the energy your panels produce at a substantial discount to your current residential electric rates. As with a lease, the company maintains the system and assumes all risk. You just collect the savings.
Keep in mind that with a lease, you do not get the residual value of the system to your property, as you do not own it. You also do not receive any of the tax credits or other benefits of home solar ownership, other than lower energy costs.
A state’s Renewable Portfolio Standard (RPS) is a plan, based on legislation or regulation, that outlines goals and targets for production of renewable energy in the state. The RPS is the tool that encourages power companies to supply renewable energy rather than using fossil fuels.
Though there are some states with stronger RPS guidelines, Delaware, at 12th in the nation, is pretty strong, with a mandate of almost 25% of electricity generated by renewables by year 2025/6. That’s pretty great news for solar panel usage!
Solar rebates have diminished greatly in the past few years, as the local utilities have come closer to reaching their goals of renewable energy generation. Updating the Delaware RPS to strengthen the goals should mean new rebates for the state.
There are a few rebate programs remaining, but even those programs have waiting lists of a few years.
There are no state solar tax credits to encourage participation in Delaware. State tax credits are a win for both the state and the consumer. For the state, there is no out-of-pocket cost, and for the consumer, there is an incentive to participate.
Delaware has no property tax exemption for the value of home solar systems. You are taxed for the increased property value of adding solar to your home. Not exempting solar discourages participation.
Delaware has the nation’s 3rd highest solar carve-out for solar power, at almost 1%. This will rise at .25% each year through 2025, so good job, Delaware!
Delaware has some of the highest energy prices in the nation. Why is this good news? The actual cost of a solar system is a function of energy prices. The higher the energy cost, the less expensive the yearly cost of installing solar.
There is a strong Net Metering law in Delaware, allowing solar users to sell all unused power generated from solar panels back to the utility at full retail rates. Every month you have surplus power, you receive a credit on your next month’s bill, and this carries forward every month.
Delaware has a fairly strong Interconnectivity law, governing what utilities can charge or demand in return for you hooking up to the grid, and how simple it is to do so. It is fairly simple and cost-effective in Delaware.
Delaware offers competitive “performance payments” for solar, known as “SRECs”. Basically, these are solar credits that you can sell back to the utilities for cash. Because the rules vary by utility, you should consult your local utility to verify the guidelines.
There are no state sales taxes on solar panels in Delaware, making it much more affordable to pay for initially, and more cost-effective in the long run.