Pennsylvania solar 101: must read before you buy solar panels

The main solar incentive that works across all United States is the Solar Investment Tax Credit (ITC) program. By applying to this program, all Americans can deduct 26% of the total cost of their installation from the income tax. The PV system cost doesn’t amount to only how much you’ve spent on your solar panels, but includes the shipping and installation as well. To claim the ITC, complete all the necessary forms and submit them when filing your taxes. It makes sense to hurry up: in 2023 the Tax credit decreases to 22% and after that it’s 10% for commercial systems only.

In Pennsylvania you can get additional financing for your solar project with different programs. They are designed primarily to help businesses switch to renewable energy.

One of the examples is the Sustainable Energy Fund. Solar loans are issued for businesses, nonprofits and municipalities. The size of a loan may vary from $5,000 to $1,000,000: the length of a loan and interest rates depend on the project and its scale. You can calculate the loan and interest on the SEF website.

Since 2019 Philadelphia is willing to pay rebates for those who installed solar panels. Residential solar owners get $0.10 per watt and commercial systems are eligible for a $0.20 per watt rebate. Overall, incentive payments average $1,000 per home, the maximum size of incentive is capped at $100,000. Currently, the program is closed due to COVID-19 budget cuts, but you can still apply and the officials will put you on the waiting list.

Net Metering is the main way in which a solar system pays for itself in the US. The idea is always the same: you sell your excess solar energy into the commercial grid, gain credits and use them to cover your next electric bill.

Electricity that you send to the grid is credited to your next bill at the full retail kWh rate, which includes generation, transmission, and distribution charges. All the remaining NEG are compensated at the utility's "price-to-compare" at the end of the year. The customer gets to keep the RECs that his system produces. Contact your utility for exact rates and net metering conditions. 

For generating clean electricity any person can get Solar Renewable Energy Certificates (SRECs). Unlike with Net Metering, you don’t need to sell any electricity to get credits – the certificates are simply given to you. One SREC is granted for 1 MW of power. A 5kW system can generate over 7 MW over the year, so in theory it’s possible to get 5-7 SRECs in 12 months if you would send all your energy into the grid. 

In Pennsylvania SRECs or alternative energy credits (AECs) can be traded using the PJM-EIS Generation Attributes Tracking System (GATS) platform. The price of a SREC in Pennsylvania floats around $20—$60. It may increase in the future so it makes sense to store credits for later. The lifetime of an AEC is 3 years. To participate, register your system at PJM EIS platform.

Generally, it is legal to install solar panels on your house in Pennsylvania after you get a permit from your local authorities. Requirements for installation may vary from city to city. For example, in Philadelphia you need to get an electrical and building permit, and for some systems it is combined in one.

Be aware that city or county officials can impose additional fees on you for inspections and documents – in Philadelphia the fee for a permit is $25 per $1,000 labor and also equipment in some cases. Usually your installer knows all the details about permits in your area and handles most of the process.