SolarSME Delaware
Empowering Delaware with Solar Energy by a Trustworthy Solar Brand
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Delaware may not be the largest or sunniest state, but it’s quickly becoming a solar powerhouse. . Solar panel installation is booming because of simple yet effective set of policies that ensure you’re rewarded for producing clean energy. It’s proof that sometimes, simplicity is truly beautiful.
Here’s the exciting part: Solar incentives in Delaware can slash thousands of dollars off the cost of solar panels. On average, a photovoltaic (PV) system in the First State totals around $24,510 before incentives, just above the national average. Plus, the absence of sales tax means that’s your all-in price for going solar.
Delaware’s affordable solar equipment costs, approximately $2.58 per watt, are lower than the national average, making it accessible to more people. To meet the above-average electricity demand, the typical system size required is 9.5 kilowatts (kW).
Delaware has set a Renewable Portfolio Standard (RPS) goal, aiming for 40% of electricity to come from renewables by 2035. While the state may not offer as many solar incentives as some others, it’s clear that the future of solar energy in Delaware is shining brighter every day.
To meet the above-average electricity demand, the typical system size required is 9.5 kilowatts (kW). Delaware has set a Renewable Portfolio Standard (RPS) goal, aiming for 40% of electricity to come from renewables by 2035. While the state may not offer as many solar incentives as some others, it’s clear that the future of solar energy in Delaware is shining brighter every day.
Here’s everything you need to know about the federal solar tax credit and how it benefits you:
Origins of the Credit: Back in 2005, the federal government introduced the solar tax credit, offering a generous 30% credit on income taxes for all solar equipment installations. This credit is applied to your tax liability for the year when your solar system becomes operational.
Changes for the Better: Initially, the credit was set to gradually decrease to 26% in 2022, 22% in 2023, and then phase out entirely in 2024.
A Pleasant Surprise: In August 2022, the federal government passed the Inflation Reduction Act (IRA), bringing the credit back up to 30%—retroactively applying to installations completed in 2022. Even better, they extended the credit for an entire decade! Here’s the updated schedule:
- 30% credit for systems installed through 2032
- 26% credit for systems installed in 2033
- 22% credit for systems installed in 2034
- No credit for systems installed in 2035 and beyond
To give you an idea of the potential savings, the average Delaware resident requires a 9.5 kW solar system to offset their energy bills. At the local rate of approximately $2.58 per watt, this system would cost around $24,510. With the federal solar investment tax credit, you can enjoy an average credit of $7,353 applied directly to your income tax bill. Don’t miss out on this opportunity to invest in clean energy while reducing your tax burden. Act now to reap the benefits of the federal solar tax credit in Delaware!
Claiming the federal Investment Tax Credit (ITC) in Delaware is a straightforward process, involving a single form to be submitted with your annual income tax return. Here are the steps to claim this credit:
- Step 1: Visit the official IRS website and obtain form 5695.
- Step 2: Complete the form by providing details about the installation location (your home address), solar system cost, system size, and the contact information of the solar installer in Delaware who provided the solar installation service to you. Typically, filling out this form should only take a few minutes.
- Step 3: Include the filled-out form along with your other tax-related documents when you submit your tax return. If you have an accountant handling your taxes, ensure they receive the completed form.
Alternatively, if you use tax software like TurboTax, you’ll likely receive on-screen prompts related to solar equipment or energy-efficient home improvements. In this case, you can skip the above steps and follow the software’s prompts to claim the ITC.
SRECs, or Solar Renewable Energy Credits, are incentives earned based on the electricity generated by your solar power system, regardless of how you use that energy. Delaware residents participate in the SREC program offered by the Delaware Sustainable Electric Utility (SEU or DESEU), primarily administered by Delmarva Power, the state’s largest utility company. This arrangement was established by state legislation, shifting the responsibility of SREC purchases to distribution companies instead of electricity providers.
For every megawatt-hour (MWh) your solar system generates, you earn one SREC, typically valued at around $11.1 per credit. With the average solar system size, most residents accumulate about one credit each month, amounting to an annual credit value of approximately $132. Over the 20-year duration of your SREC program, this totals to $2,640 in credit value.
Regrettably, the SREC program operates within a highly competitive framework, and there’s no assurance of acceptance. Nevertheless, you can take the following steps to register and be considered for eligibility:
- Step 1: Visit Delaware’s online SREC portal and establish an account.
- Step 2: Progress through the on-screen instructions and complete the program application. Ensure you have system details and installer information on hand for this step.
- Step 3: Await confirmation of your program enrollment. Once accepted, your system’s production will be monitored, and the credits you generate will be automatically sold to your energy distribution company, typically Delmarva Power.
Net energy metering (NEM) is a widely appreciated solar incentive throughout the nation. This policy ensures that solar customers receive credit for the excess power their systems generate, even if it’s not immediately consumed. The process involves monitoring your energy production and usage, with surplus electricity being sent to the grid. These credits can be utilized in the future if you require more electricity than your system generates in a given month. Essentially, excess power generated during sunny months can offset higher usage and lower production during the winter.
In Delaware, the NEM policy guarantees full retail value credit for surplus power, optimizing long-term energy savings, shortening the solar payback period, and enhancing the overall value of your solar panels. However, it’s essential to acknowledge that NEM policies are evolving across the U.S., driven by the increasing popularity of solar and the achievement of Renewable Portfolio Standards (RPS) goals. In some regions, the strain on the electric grid caused by NEM may lead utility companies to reconsider or restrict NEM eligibility due to potential grid outages.
For most solar customers, enrolling in net energy metering is typically a seamless process. While some paperwork is involved, best solar installers in your region often handle the enrollment for you. To ensure you maximize this benefit, follow these steps:
- Contact your electric utility to confirm the installation of the appropriate bidirectional meter, usually provided at no cost.
- Verify with your chosen solar panel installation company that they will automatically enroll you in the state’s net energy metering program, which is the case with most reliable providers in Delaware.
- Proceed with the solar installation.
- Monitor your electric bills in the initial months after transitioning to ensure that your renewable energy credits are accumulating correctly.
This scenario is quite likely in Delaware, given the Solar Energy Industries Association’s (SEIA) projection of a substantial increase in solar conversions over the next five years. However, it’s worth noting that in some other states, credit rates have decreased, and in certain cases, the perk has been eliminated altogether. While this isn’t the current situation in your area, it’s possible that the same trend could emerge in Delaware in the future.
While the state may not offer the most generous incentives for solar conversion, there are additional perks provided by local governments and utility companies in Delaware to make going solar more appealing. Here’s a summary of these local incentives along with a brief description of each:
- Delmarva Power Green Energy Program: Delmarva Power customers can benefit from a rebate for solar conversion, offering cash-back incentives of up to $0.70 per watt, with a maximum rebate of $6,000. On average, for a 9.5 kW system in your area, the rebate typically amounts to the full $6,000. It’s important to note that rebate amounts may decrease over time.
- Delaware Electric Cooperative (DEC) Green Energy Program: DEC customers can participate in a rebate program that offers $0.50 per watt for the first 5 kW and $0.20 per watt thereafter, with a program cap of $2,000. Given the average system size and cost in your area, most customers can expect to receive the full $2,000 rebate.
- Delaware Municipal Electric Corporation (DEMEC) Green Energy Grants: DEMEC customers can access rebates for home solar, wind, and geothermal systems. This rebate offers up to $1.00 per watt for the initial 5 kW (up to $5,000) and $0.50 per watt for each additional kW installed. On average, customers can expect a rebate of around $7,250 for a typical 9.5 kW system.
Federal Solar Credit: Above all, we highly recommend the federal credit as the most advantageous solar benefit in your region. It’s a quick application process, open to all customers, and potentially worth over $7,300—an exceptional return on your solar investment.
Net Metering: Another valuable perk, net energy metering, credits you at full retail value, optimizing long-term savings, lowering electricity expenses, and increasing your system and home’s value post-conversion. Enrolling in Delaware’s net metering is typically hassle-free, with most reputable solar installers handling paperwork.
Local Solar Rebates: Don’t miss out on available cash-back incentives, accessible to most homeowners. These straightforward programs offer refunds ranging from $2,000 to $7,250, significantly reducing your overall conversion costs. DEMEC provides the most attractive rebate, followed by Delmarva and DEC.
Leverage these incentives to turbocharge your solar journey!
SRECs represent credits earned through solar energy generation. These credits are purchased by energy companies to offset fossil fuel use, creating a potential income source for solar system owners.
Delaware’s SREC program has limited availability, making it less lucrative compared to other states. Nevertheless, approved participants can typically earn about one SREC per month, valued at around $11 each as of January 2023. Over 20
years, selling these credits could yield approximately $2,640 in total earnings.
SRECs (Solar Renewable Energy Credits) were generally considered taxable income in Delaware. When homeowners or solar system owners earn income from selling SRECs, it is typically subject to federal income tax. However, state taxation policies may vary, and Delaware’s tax laws can change over time. Therefore, it’s crucial to consult a tax professional or check the most recent tax guidelines from the Delaware Department of Revenue for the most up-to-date information on the taxation of SRECs in the state. Tax laws and regulations can evolve, so staying informed is essential for accurate tax reporting.
From 2022 to 2032, homeowners who install solar panels can benefit from a 30% federal tax credit known as the Residential Clean Energy Credit. This credit has no maximum limit on the cost of solar panels.
In Delaware, utilities have the authority to discontinue net metering when the energy generated by home solar systems surpasses a specific limit. Solar companies cautioned that ending net metering would hinder new installations and disrupt their industry.
In 2012, SREC Delaware was designed to buy Solar Renewable Energy Certificates (SRECs) from individuals, farms, businesses, and those who install solar systems. Delmarva Power purchases SRECs to help fulfill state-mandated renewable energy targets.
The DEMEC green energy program rebate offers $1,000 per kilowatt (kW), with a maximum of $3,500. For the full incentive, a 3.5kW system is sufficient. The Delaware Electric Cooperative's green energy rebate provides $500 per kW, up to a maximum of $2,500. To maximize the credit, you'd require a 5kW system.
