Solar Panel Cost – Is It Worth It?

Posted on October 27, 2022October 27, 2022 by Caitlin Garrity

Why do homeowners go solar?

Usually, our customers go solar for one (and sometimes two) of two reasons: to go green and to save money.

One of the first questions we hear from folks just starting their solar journey is: “Will solar really save me money?”

While the answer is yes, understanding how is essential.

This article will help you understand the financial calculations better to determine if solar makes sense for your home and family.

Solar Panel Cost – Is It Worth It?

Solar is unlike any other investment in your home. The home improvements you make – adding a deck, installing a hot tub, getting new gutters. They don’t have a guaranteed return on investment. But solar does.

Below are the key considerations you’ll want to start with when evaluating if solar is a good investment opportunity for you.

Key considerations:

The cost of a solar energy system
The amount you would otherwise pay for electricity over 30 years
The amount that energy costs will escalate over 30 years
How long will the system take to pay for itself

After figuring out these values, you’ll have a better idea of the investment, the return on investment (ROI), and the number of years it will take to see your ROI.

Zero Down Solar Loans

Solar companies in Ohio increasingly provide Zero Down Solar Loans. Just about any solar installer in Ohio who you talk to will have a financing option.

In recent years, zero-down loans have opened doors for homeowners who have wanted to go solar but haven’t had the upfront capital to make the investment.

All installers offer different loans, and it’s important to think critically about the loan you’re being offered.

Often people are interested in getting a loan for a solar system where the monthly loan payment is less than what they’re currently paying for electricity. In Ohio, solar is a long-term investment. It’s not a quick payback or for someone looking to save money on their monthly utility bills.

Also, a low monthly payment doesn’t automatically mean a better deal if you’re paying more for your solar system in the long run. For low-interest loans, sometimes the installer will pay a finance company for better loan rates but bake the finance fees into the cost of your solar system, inflating the price of the solar system itself.

Tax Credits

The main incentive for solar energy installation is the Solar Investment Tax Credit. If you owe federal taxes, this is a great incentive that allows you to take 30% of the cost of the system (including batteries!) against the federal taxes you owe.

If you don’t pay that much in taxes, you can take the tax credit over multiple years.

Factor the solar investment tax credit into your equation if you qualify to take it.

Read more about the Solar Investment Tax Credit here.

Home Value

According to a recent Zillow study, you increase your home’s value by 4% when you go solar.

For a median-value home in the US, this is a value of approximately $9,000, according to Zillow.

Why do homes with solar sell for more? Homes that come with a solar energy system can provide sizeable future energy cost savings for homebuyers. As energy prices go up and energy consumption increases in a home (say, with a growing family), buyers understand the value.

Additionally, homebuyers are increasingly energy conscious – for environmental and financial reasons alike.

How Much Will You Save?

This is a tricky calculation as it takes into account everything we’ve considered above and more…

The rate you’re paying for electricity now is different from the rate you’ll be paying for electricity 20 years down the line. In Ohio, we’ve historically seen an increase in electricity rates of 3% per year, but some years are different. In 2022 Ohio saw an increase of nearly 8%. Year over year, these increases add up, so energy rate escalation is important to consider when evaluating solar for your home.

Doing The Math

All homeowners who go solar will eventually see a benefit from their solar installation. What surprises some people is the amount of time it can take to get there. In Ohio, solar is a long-term investment. It’s not a good fit for someone looking to save money immediately on their monthly utility bills.

If you can wait to see your system pay back, your rewards will be reaped in owning your own power generator at your home and making your own power as the homes around you continue to rent their power from the utility company.

You can either do the math for yourself or work with our solar professionals to better understand the numbers.

Our Solar Consultants have been working for years to help homeowners make sense of these equations.

Unlike some other companies out there in the marketplace, we take a consultative approach. We work with you to understand your goals and your budget and determine the best solar solution to fit your needs. Sometimes installing solar makes sense for homeowners, and sometimes, it does not. We will take the time to tell you if solar doesn’t make sense for you.

Visit our FAQ page for answers to more common questions about solar installation.

If you’re interested in getting a free consultation, fill out the form below to get started down the road toward a long-term investment in your home.

National vs Local Solar Installer: How to Choose

Posted on October 27, 2022August 4, 2023 by Caitlin Garrity

Do I Choose a Local or National Solar Installer?

When you’re shopping for a solar installer, you’re often comparing apples to oranges and trying to understand who has the best products, the best quality, all with the highest level of service.

One of the biggest differences between companies you’ll find when you start shopping is that there are small, local installers, and there are some big, national solar installers. When choosing a solar installer, one of the biggest questions you’ll come up against is: should I go with a national or local solar installer?

In terms of quality and level of service, some overarching themes differentiate local from national solar companies. In this blog, we’ll address those differences to help you make an informed decision.

Kokosing Solar falls into the local solar installer category. We will describe below the advantages that give us the best of both worlds.

Quality

Would you be willing to pay a little more if you knew that your chosen company would give you a better solar system?

Local Installers have better ratings. Why? They care a lot about the work they do. Local installers have dedicated full-time employees who live and work in your community.

Large national installers might have offices in various states, but they don’t always have dedicated solar installation crews in your area. For that reason, a lot of their work is subcontracted. These subcontracted workers have unknown and varying experience and training levels. They have a different relationship with the larger company and are therefore less accountable to the quality of craftsmanship when they install solar on your home.

When you work with a local contractor, they have a vested interest in seeing your solar system succeed. They’re hoping you refer them to friends and family. They want your neighbors to think your system is beautiful and consider going solar themselves. They want to employ your neighbors in well-paid, green energy jobs.

To seal the deal, Kokosing Solar offers a 20-year Workmanship Warranty on our labor.

Local installers often use higher quality brands because of the personal responsibility they feel over their work. This reduces any long-term solar maintenance costs for buyers and increases the life expectancy of solar panels and equipment.

Third Sun Kokosing Solar is a full turnkey solar installer. We take care of sales, design, interconnection, permitting, and installation. And we do it all in-house. Our whole team (including our vital installation team) are full-time workers with benefits, PTO, and training and growth paths in our company.

Meet our team! Our locally based solar team is ready to help you understand the solar pricing we provide and if you have any questions as you compare all your apples and oranges quotes!

Service

While a solar system is very low maintenance with no moving parts, there are occasionally issues that may arise. In this case, your system will need to be serviced by a dedicated solar service technician. While the equipment warranties are long – often 25+ years – knowing that your solar installer will be around to support you should any equipment warranty or other issues arise is vital.

As various unknown solar companies continue to enter Ohio, we increasingly get calls from homeowners who need their systems serviced by installers who no longer exist. We hear about faulty products installed by non-licensed electricians, voiding product warranties. You’ll see these stories, too, as you read some of the one-star reviews left by disgruntled customers of these various companies.

Always check to see if your installer has a dedicated service team and will be there for you after your installation.

You can reach our service team by chatting in on our website or calling us at 740-249-4533.

Conclusion

Third Sun Kokosing solar brings over 20 years of residential solar installation experience to your home. Beyond that, we have the size and resources of Kokosing Industrial, one of the largest contractors in the Midwest.

We’re one of 71 members of the Amicus Solar Cooperative, which allows us to pool our purchasing power and get products for prices that the huge national installers are getting them at. This innovative collaboration between quality solar energy companies from across the nation gives us the combined purchasing power of one of the largest national companies while maintaining the personal customer focus and nimbleness of a small local business.

Our business design allows us to instill the confidence in our customers that we have the resources to offer the best products, highest level of craftsmanship, and the best service. And that we’ll be around for the next 20, 30, 40 years, when and if they need us.

Reach out today to begin your solar journey with Kokosing Solar, your trusted solar partner.

Solar Tax Credit for Business and Organizations

Posted on October 27, 2022October 27, 2022 by Caitlin Garrity

Frequently Asked Questions that we’ve received so far….

Following the August 2022 passing of the Inflation Reduction Act, which included numerous tax benefits for clean energy installation, we have received some excellent questions from our followers.

While the guidance for these rules is still taking shape, there are some questions that we’re able to address. You can find those below.

Please feel free to submit additional questions to us and stay tuned as we plan to host more events as additional rules and guidance becomes available.

If you’re just getting started, check out the recorded version of our most recent webinar that overviews all of the solar energy tax benefits in the IRA and what we know so far.

How do we know if we have a good site for solar?  

We can conduct a quick remote analysis to help. Additional site information is required for project development but an initial look can help take the next step in determining feasibility. Click here if you’re ready to talk with a Solar Consultant.

Should I wait for better solar technology to become available?   

This is a frequent question, and the answer isn’t always black and white. In short, if the technology available today will meet your goals and the funding is available, then there is little benefit to waiting. Solar is modular and can grow as the technology improves.  

Can solar power my EV chargers?  

The short answer is yes, though solar is typically designed to offset all of the loads served by your main electrical panel.   

How does the transferability of the tax credits work? 

Companies (for example, developers) may choose to transfer the ITC or PTC to another taxpayer. Taxpayers who are not tax-exempt entities will be allowed a one-time transfer of these tax credits. Any payments received in exchange for the transfer of credits would be excluded from income, and any amounts paid to obtain a transferred credit could not be deducted from income. Credits that could be transferred would also be given extended carryback and carryforward periods. The carryback period for these credits would be extended from 1 to 3 years, and the carryforward period extended from 20 to 22 years. 

For the 40% domestic content requirements how much does it increase each year and where does it cap, 100%?

The domestic content standard will be set by Treasury under 661 of Federal Regulations. These requirements are 100% steel/iron under 661.5(B) and for manufactured products a 40% requirement through 2024 followed by 45% in 2025, 50% in 2026, and 55% in 2027 and beyond.  Manufactured content is further explained: The products which are components of a qualified facility upon completion will be deemed to have been produced in the United States if the adjusted percentage of the total costs of all such manufactured products of the facility are attributable to manufactured products (including components) which are mined, produced, or manufactured in the United States. This section is expected to have further clarification.

Is there anything in the legislative pipeline in the State of Ohio that may offer financial assistance to <=1MW projects with net metering? 

It’s always possible that something may surface, though our focus here has been on the Federal bill. A more likely outcome for Ohio will be at the local level.  

For the low income benefit, does it matter at all if tenants own or rent? 

10%: the project is located in a low-income community 1 or on Indian land. 2 20%: the project is part of a qualified low-income residential building project 3 or a qualified low-income economic benefit project. 4 If the latter, (20% adder) then yes the tenants would need to be renters to qualify.  The project must be installed on a residential rental building that is part of a housing program under the Violence Against Women Act, Title V of the Housing Act of 1949, a tribally designated housing entity, or other programs determined by HUD; and the “financial benefits” of the electricity produced by the project are “allocated equitably” among the occupants of the building. See IRA § 13103(a), to be codified at 26 U.S.C. § 48(e)(2)(B). 

You mentioned Green Bank funding adder incentive.  Can you elaborate on that? 

SEC. 60103. GREENHOUSE GAS REDUCTION FUND. 2 The Clean Air Act is amended by inserting after section 133 of such Act, as added by section 60102 of this Act, 4 the following: 5 ‘‘SEC. 134. GREENHOUSE GAS REDUCTION FUND.

Do Small, sub-chapter S Corp business qualify for the solar tax credits?

Yes, an S-Corp business can benefit for the available tax credits. 

Any benefits or incentives for rental properties/property owners,  particularly if serving HUD recipients?  

These credits are “Allocated” meaning a company will have to apply to the Treasury to get these particular credits. Treasury can allocate 1.8 GW direct current capacity total of wind and solar credits per year starting for 2023.      The project must be installed on a residential rental building that is part of a housing program (including HUD programs) and the “financial benefits” of the electricity produced by the project are “allocated equitably” among the occupants of the building. See IRA § 13103(a), to be codified at 26 U.S.C. § 48(e)(2)(B). 

How will IRA change financing for nonprofits, schools, local governments?

Solar continues to be a great fit for these governmental entities, and traditional funding options such as third party owned systems or Power Purchase Agreements (PPA) continue. A new option included in the IRA allows for these entities to purchase solar outright and benefit from a “direct pay” provision. The criterion for the payment is still being developed, though a government entity may receive a payment equal to what a tax–paying entity would receive. Still, it is tied to the domestic content requirements. We can help you evaluate the option that works best for you.

Do you have an in-house accounting team that assists solar clients with the tax incentives? 

We are familiar with the code and related documents and can point you and your tax advisors in the right direction to address specific questions. Additionally, our decades of experience in the solar industry have helped us build a network of professionals that work in this space who are better suited to advise on tax specific implications, though we still recommend consulting with your tax professional.

What is my tax credit rate if I installed, or plan to have a project installed this year?   

The new Base ITC for projects installed this year is 30%.

What is an energy community?

Brownfield sites as defined under Sections 101(39)(A), (B), and (D)(ii)(III) of CERCLA; As determined by the Secretary, (1) a metropolitan or non-metropolitan statistical area with unemployment rates, from the previous year, at or above the national average and (2) at least 0.17% of employment or 25% of local tax revenues are related to the extraction, processing, transport, or storage of coal, oil, or natural gas at any time beginning in 2010 Census tracts, plus their adjacent census tracts, where a coal mine closed after 1999 or a coal-fired power plant was retired after 2009. 

Understanding Adders for Commercial Solar in the Inflation Reduction Act

Posted on October 27, 2022September 13, 2023 by Caitlin Garrity

How has the solar industry grown since the Solar Investment Tax Credit (ITC) was first instated?

Dating back to 2006, the ITC or Federal Investment Tax Credit (Section 48 of the tax code) is a tax credit that can be claimed on federal taxes owed for up to 30% of the cost of a solar system.

The ITC was designed for -and delivered – to drive down costs and increase adoption.

Since the ITC was enacted in 2006, the U.S. solar industry has grown by more than 200 times
The cost to install solar has dropped by more than 60% over the last decade
Average annual growth of over 50% over the last decade alone

Until the Inflation Reduction Act (IRA) was signed in August 2022, the existing ITC had the following structure and stepdown:

30% for projects started or completed EOY 2021
26% through EOY 2022
22% through EOY 2023
Sunset at 10% for 2024 and beyond for commercial only

Since its creation, Congress has provided numerous extensions, though only for short 5-year periods. The problem with these short-term extensions? They do not provide the long-term view and stability that organizations need to plan. The IRA addresses this.

Most of our electric generation is from fossil fuels, and that price fluctuates based on global markets. Fuel from solar energy is free once the system is installed, providing long-term stability and lowering electric prices.

Implementing onsite solar can help you take control of your energy costs by fixing a certain percentage of your electric rate for the long haul.

Big Picture Benefits for Solar in the Inflation Reduction Act

Interconnection added to Base

Historically developers incurred many costs on the front end when developing a solar project. The ITC takes care of this by allowing these expenses to be included.

Immediate impact

Projects built in 2022 are eligible for the 30%. This includes projects closed or constructed in 2022, increasing from previous 26%.

Long Term Planning

30% for 2023 through 2033. This allows for long-term planning and certainty. Keep in mind that there are planning requirements that can take a significant amount of time to complete. We encourage you to begin planning now.

Projects Under 1 Megawatt (MW)

Some new additions…

10% Bonus for Domestic Content
10% Bonus for Siting in Energy Community

Adders for Projects Under 1MW AC*

10% for low-income communities
20% for low-income residential housing

*(competitively allocated and have caps)

If your project was eligible for the 30% ITC, you’re now looking at 40% or 50% tax credits with these additions.

Projects Above 1 Megawatt (MW)

6% Base ITC
2% Bonus for Domestic Content
2% for Siting in Energy Community
* 10% for low-income communities (Projects under 5MW AC)
* 20% for low-income residential housing (Projects under 5MW AC)

*(competitively allocated and have caps.)

Adders

Where the rubber meets the road…

+ 24% Base ITC for projects that meet labor requirements (prevailing wage rates, apprenticeship program)

The bill was intended to make sure that there are good-paying green jobs, and these adders intend to incentivize this. While providing good paying jobs to our communities is central to our mission, Kokosing (link to Kokosing energy site) is the right partner as, right out of the gate, we have the eligibility to meet these requirements.

+ 10% Bonus for Domestic Content

Guidance is still forthcoming in this department.

What we are hearing so far is that to qualify for this adder, all steel must be 100% US Steel (usually part of the solar racking), and 40% of all the additional equipment (like modules, inverters…) must include content from US sources.

Solar manufacturing is a complex process. From the solar silicone that gets refined into wafers to the assembly of the solar modules using aluminum and glass. These materials are typically supplied from all over the world. There are a few select module manufacturers who assemble solar panels in the United States. We are still waiting to hear if they will qualify to meet the rules set forth in this adder.

We expect that our equipment suppliers don’t currently meet the requirements for this adder. However, we know that our partners are setting in place a roadmap to begin to meet these goals. Getting our customers to that extra 10% is important to us and to them.

+ 10% Bonus for Siting in Energy Community

To qualify for this adder…

The project could be located on a certified Brownfield (former remediated industrial site, capped landfill…).
Census tracts, plus their adjacent census tracts, where a coal mine closed after 1999 or a coal-fired power plant was retired after 2009.
As determined by the Secretary, (1) a metropolitan or non-metropolitan statistical area with unemployment rates, from the previous year, at or above the national average and (2) at least 0.17% of employment or 25% of local tax revenues are related to the extraction, processing, transport, or storage of coal, oil, or natural gas at any time beginning in 2010.

+ 10%, 20% (or 30%) Low Income Community Adder

Competitive – Apply to Treasury. We are not yet sure if this is a merit based application or a first come first served application and are still waiting on guidance.
1.8 GW allocated per year.
5 MW AC cap per project.
+ 10% Adder if located in a low-income Community or on Native American Indian Land (specific definitions are available).
+ 20% Adder if the project is part of a qualified low-income residential building project or a qualified low-income economic benefit project (specific definitions are available).

We will be happy to work with you to understand what percentage tax credit you would qualify for.

Direct Pay Provision

Historically, the only entities that could benefit from these tax benefits were entities with a tax appetite: for profit institutions and businesses. Non-profits, state and local municipalities, rural electric co-ops, and Indian Tribal governments could not take advantage of the benefits.

The IRA takes care of that. These entities, who don’t traditionally pay taxes, could get this tax credit paid to them directly. Likely the payment would be after the project is built.

Like all other organizations, a non-tax-paying organization is only eligible for the percentage back in the categories where you meet the requirements listed. Additionally, we have seen guidance that tax-exempt bond financing could see a reduction in the percentage available.

Stay Tuned

More details will be available in the months ahead as rules and guidance become available. Check out our FAQ page for additional coverage of the solar tax benefits included in the IRA.

We plan to keep our audience up to date with the latest information as it becomes available.

The best way to stay in touch? Start by signing up for a free solar evaluation. Fill out the form below to get started developing your project today.