Net metering is an agreement with the customer and the electric utility, where the utility agrees to buy the extra power the solar system produces for the same price that the customer pays the utility for electricity. Any excess electricity generated is banked to the customer's account for future consumption.
Net billing and net metering are almost the same, but in a net billing agreement, the utility only provides credits equal to the wholesale cost of electricity, which is usually only a fraction of what the customer would pay for the same electricity. This provides a slower payback for a solar system. For example, if a customer pays a rate of $0.12 per kilowatt hour (kWh), they would only get credit of $0.03 per kWh or $0.04 per kWh for the extra electricity their solar system produces. In a net metering agreement, if a customer pays $0.12 per kWh, they get credited $0.12 per kWh for the extra power they produce.
Solar Energy Systems partners with local and national banks to provide financing for eligible customers. We have $0 down and other options to help cover the up-front costs of a solar system.
The federal government provides a 26% Federal Tax Credit on all solar systems. This essentially acts as a 26% discount that you receive with your tax refund. Almost all customer's are eligible for this, with the exception of some non-profits. Act soon! The 26% Federal Tax Credit is ending this year!
Solar Renewable Energy Certificates (SRECs) can be sold in the SREC market. An SREC represents the production of 1 MWh of solar energy. They are an extra value placed on solar energy because of its environmentally friendly or "green" attributes. Utilities and companies in states that require a percentage of their electric load to come from renewable energy buy these certificates to help reach their required percentage. Solar Energy Systems installs a separate SREC meter, which has the option to be monitored and entered online automatically.
Some businesses are eligible for grants from the United Stated Department of Agriculture. These grants can cover as much as 20% of the cost of a solar system, improving the payback of the system significantly.
Solar energy systems are a depreciating asset and can be written off on taxes like any other depreciating asset. This can lower the cost of your system by as much as 25%.
The payback period for every solar system is going to vary, because each system is engineered with slight differences to fit the customer's needs and some may receive financial incentives. On average, the payback for residential customers in Indiana is 8 to 10 years, and 6 to 8 years for commercial customers. If a business receives a grant, the payback can be as low as 4 years. Below is an example system to illustrate how to calculate financial incentives into the final cost of a system.
Up Front Cost: $35,000
Federal Tax Credit: $9,100
Utility Savings: $1,600
Actual System Cost : $24,040
Additional Savings for Businesses
Grants (not guaranteed): $7,350
Adjusted Actual System Cost: $9,851
Note: to calculate the adjusted actual system cost, the grant amount needs to be subtracted from the up front system cost in order to determine the new federal tax credit. You cannot receive a tax credit on the grant contribution. In this case, the new up front cost is $27,650 and the new federal tax credit is $7,189.