Michigan solar 101: must read before you buy solar panels

The Solar Investment Tax Credit (ITC) allows homeowners to claim 26% of the cost of their solar power system installed until 2022 as an income tax deduction. For example, if your solar system costs $20,000, you are eligible for $5,200 (26% of the total gross cost) in tax credit. Solar system cost comprises not only the money spent on solar panels, but also freight shipping costs, professional installer fees, tools bought or rented and so on. To claim the ITC, complete all the necessary forms and submit them when filing your taxes.

Solar laws in Michigan make Net Metering programs available to customers of investor-owned utilities and rural electric cooperatives. The program gives households an opportunity to send any excess electricity back to the grid instead of storing it with batteries.

When you sell your solar power to the utility, you receive credits that can be used to offset your next bills. In Michigan their value is equal to full retail electricity price for the systems with a capacity of 20 kW or less. Avoided cost rate is used for larger systems. The credits may be rolled over indefinitely, the companies neither retire nor purchase them.

Also, the utilities may not apply discriminatory rates to Net Metering customers. In Michigan, companies serving more than 1 million customers are required to supply a compatible meter if requested by a client. Application and interconnection review fees may not exceed $100.

Renewable Energy Credits are certificates granted to any person or entity upon generation of each MWh of clean electricity. Unlike with Net Metering, you don’t need to sell any electricity to get credits. The value of RECs is always changing, which makes them similar to stock market assets. Based on the available data, selling RECs could mean anywhere from $300 to $1,000 annually for a 10 kW solar system.

To participate, you have to apply for approval to the Michigan Public Service Commission. After that, you can create a REC account with the Michigan Renewable Energy Certification System (MIRECS) to begin tracking and selling your credits. Keep in mind that in Michigan RECs have a lifetime of only three years.

The Michigan Saves non-profit organisation offers loans to homeowners in Michigan who want to finance a PV system purchase and installation. The loan amount can vary from $1,000 to $100,000 and the maximum term length is 15 years. When taking a loan less or equal to $4,999, the term will be one year for every $1,000.

The loan is available for both primary and secondary residences and is compatible with PV systems between 1 and 20 kW. Your debt-to-income ratio must be lower than 50% and your credit score above 640. There is no prepayment penalty.

It is legal to install solar panels on your house in Michigan. However, there is no statewide legislation that makes it unlawful to restrict installation of solar PV systems, so it’s best to contact your homeowners organisation (HOA) or study its declaration and rules to find out more. You may have to submit your project for approval before changing the exterior of your house. The board may ask you to hide the system from view, reduce the number of panels or just reject your proposal.

When it comes to natural disasters, Michigan is one of the safest states in the USA. It doesn’t mean that nothing ever happens in the Great Lakes State. Wildfires, storms and sometimes floods break the calm once in a while, interfering with both generating plants and power lines. Your PV modules are designed to handle most hurricanes, meaning you will have a supply of energy in case of a blackout. In 2021, severe storms damaged more than 2,000 power lines, leaving more than 700,000 customers across the state without electricity. Often, the necessary repairs take much more than a few hours, which adds to the list of reasons to go solar.