Wow, congrats, New York! You are number one in solar! With excellent support from state and local government, and super rebates and tax incentives, New York is leading the way in solar panel usage. As the below Swanson graph shows, as the cost of solar has dropped dramatically, it is now incredibly affordable and cost-effective to install and use solar panels in New York.
Let’s take a look at the different solar options available to New York state residents (some cities have additional incentives and programs that we will look at separately).
The chart below gives you an idea of the costs and returns for each solar panel system option available to New York 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 New York installation price of $17,750 (after rebates) for a 5kW system, you will see an immediate return of $5325 (Federal rebate), $4438 (state rebate), and an estimated first-year savings of around $1112 in energy costs. This puts your first year investment at only $6875!
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 7 years, and show you a net profit of over $35,300! 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 panels 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 and 25% state 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 $17,750 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 $17,750 installation price, a purchase on credit makes perfect financial sense. Year one, you should have about $1112 in energy costs, and have loan payments totaling about $1684. This means around $48 per month out of pocket your first year, but remember, you got $9762 in tax credits. That tax credit means you are $9190 ahead the first year!
By year 15, when the loan is paid off, you will be realizing about $1850 per year in savings, and by year 25 your total net returns are around $35,300, even after paying off the system!
If you would like a custom quote based on your energy use, click here for a quote.
Solar 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 (7th in the nation) New York energy costs and the normal energy cost inflation, your savings multiply year after year!
In New York, you will start out with a relatively small savings of $28 per month, which multiplies over time, but you save this money with no money out of your pocket.
With leasing solar panels, 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 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, New York, at 7th in the nation, is pretty strong, with a mandate of almost 30% of electricity generated by renewables by year 2015. That’s pretty aggressive and great!
Solar performance payments, or rewards for production of solar power, are nonexistent statewide in New York, though some local utilities offer limited time payments. Solar performance payments are bonuses paid to homeowners producing solar energy.
This, amazingly, is the only real negative in the New York RPS guidelines!
New York has the nation’s 4th highest solar carve-out for residential solar power, at almost 2.5%. Good job, New York!
New York 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.
Net metering is statewide. Net metering means that any power you produce but don’t use can be sold back to the utility company for the same price they sell it to you.
New York has a 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 extremely simple and cost-effective in New York.
The solar panel rebate programs are generous and plentiful in New York, but they vary depending on your city and county, as well as your income and family size. Regardless, they are some of the most generous in the nation.
New York has the 5th best solar tax credits, at 25%! Good job, New York!
Solar is exempt from property taxes in New York, meaning you will not pay taxes on the increased value of your home due to installing solar.