Homeowners can install solar at a cost that state and federal incentives and tax credits make financially attractive, but California just complicated the math.
For potential switchers, tax credits can quickly recover part of the up-front cost of going green. Hurwitz took the federal tax credit for his system when he installed it in 2020, and is preparing to add a battery now that it, too, comes with tax credits. Some contractors offer deals where they absorb the upfront cost – and claim the credit – in exchange for agreements to lease back the system.
There's a significant variation in those numbers by region, and by the size and other factors specific to the house, EnergySage CEO Vikram Aggarwal said. In New Jersey, for example, a 7-kilowatt system costs on average $20,510 before the credit and $15,177 after it. In Houston, it's about $1,000 less. In Chicago, that system is close to $2,000 more than in New Jersey. A more robust 10-kilowatt system costs more than $31,000 before the credit around Chicago, but $26,500 in Tampa, Fla.
Alternatively, consumers can finance the system but still own it themselves – we were quoted interest rates of 2.99 to 8.99 percent. That eliminates consumers' up-front cost, but cuts into the savings as some of the avoided utility costs go to pay off interest, Aggarwal said. Wood Mackenzie said the details of California's decision made it look less onerous than the firm had expected. EnergySage says the payback period for California systems without a battery will be 10 years instead of six after the new rules take effect in April. Savings in the years afterward will be about 60 percent less, the company estimates.
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