Government Policies and Incentives Boosting Solar Energy Growth

Going solar is not only about individual households saving money on utility and bills and helping the environment. It is a worldwide initiative. Governments understand the impact of climate change and are working from the ground up to encourage transformations.

The most powerful way for governments to encourage households and businesses to go solar is through initiatives and policies. They offer rebates and credits to make solar more affordable. They put policies in place to prevent fossil fuel and greenhouse gas emissions.

Why Does the Government Care About Solar?

It Saves Money on Natural Disasters

Climate change has increased the prevalence of natural disasters. Warmer temperatures mean more intense storms. It also increases the risk of flooding due to melting glaciers.

As of June 2024, the United States has experienced 11 weather and climate disasters including nine winter storms and two winter storms resulting in 84 deaths. Statistics show the average natural disasters that occur each year has increased significantly rising from 8.5 from 1980-2018 to 20.4 from 2019 -2023.

Beyond property damage and loss of lives, natural disasters have cost the government over $1 billion in 2024 alone. This money may be more well-spent addressing other issues. It would also reduce the reliance on taxpayer dollars.

It’s a Crowd-Pleaser

It may not always seem like it, but politicians work for the people.  Like any civil servant, they want to keep their jobs and make their customers happy.

Environmental issues are at the forefront of political matters. A Pew Research study revealed that 69% of Americans support the United States’ efforts to become carbon neutral by 2050.

Governments know they cannot ignore environmental issues. People will get sick from increased pollution if they don't address them. The atmosphere will suffer, and more natural disasters will occur. Americans will not be pleased.

It Reduces Reliance on the Grid

Most of the United States relies on the electrical grid for the energy they need to power their homes and businesses. The grid is becoming overtaxed due to more electronic devices, data centers, and even electric vehicles. As a result, blackouts are likely to occur.

Solar panels reduce reliance on the grid and the risk of blackouts. Many governments work with utility companies to provide incentives to households that go solar to ensure the grid remains functional.

What Government Policies are Boosting Solar Growth?

PURPA (Public Utilities Regulatory Act (PURPA)

People have been concerned about the environment for years and solar incentives are nothing new. The solar incentive PURPA dates to 1978. It was designed to improve energy efficiency and promote equitable energy rates. It has played a valuable role in today’s energy expansion efforts.

The legislation mandates that utility companies purchase power from small renewable energy producers when the cost of electricity is less than what the company would pay to deliver its power. These small energy producers are known as qualifying facilities (QF). A facility can qualify as a QF if it meets one of two standards:

• It must be 80MW or less in capacity and generate some form of renewable energy

• It must simultaneously produce electric and thermal energy. The thermal energy must have a productive use such as the ability to provide heat or power.

PURPA requires utility companies to provide electricity at an ‘avoided cost’ i.e., the cost the utility would pay to acquire electricity through a third party. It has had an impact in areas with few state-level solar energy incentives.

The Inflation Reduction Act

More recently, the Biden administration has secured $1 billion from the Inflation Reduction Act to improve permitting processes and speed up the review process to facilitate solar adaption. As a result, the time to complete most environmental reviews has drastically decreased. Assessment for projects is also accelerated.

As a result, the administration is completing projects in record time. They are more than 18 months ahead of schedule on their energy-permitting goal. The Department of Interior (DOI) has permitted more than 25 gigawatts of clean energy projects well before their 2025 goal.

Biden’s New Solar Initiatives

The Biden Administration also launched new solar incentives to lower electricity bills and create more clean energy jobs. In 2022, the president partnered with the Department of Energy (DOE) and the Department of Health & Human Services (HHS) to connect families with the Low-Income Home Energy Assistance Program (LIHEAP) and other low-income assistance programs.

LIHEAP assists low-income families so they can pay for their energy bills. It also provides energy crisis assistance, weatherization, and energy-related home repairs. Families have had issues accessing these programs in the past, but the new Community Solar Subscription Platform will help them get the assistance they require.

The DOE also announced it would dedicate $10 million from Biden’s Bipartisan Infrastructure Law to create solar jobs in underserved communities.

Solar Energy Technology Office (SETO)

SETO is a subsection of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy. It funds research that aids with the growth of the solar industry. Its efforts have led to improvements in solar panel efficiency, decreased grid reliability, and the creation of a new business model.

The organization has launched several programs to support solar growth. One sub-program lowers the soft cost of solar such as installation, permitting, zoning, and planning. It reduces costs through technical assistance, data analysis, business innovation, and training.

Another SETO program, SolSmart, provides official designation to local governments that reduce the soft costs of solar through solar energy developments. It provides free technical assistance to help governments achieve this designation. It has helped the solar industry move faster in achieving its goals.

Renewable Portfolio Standards (RPS)

RPS is implemented at a state level. The policy requires utility companies to produce a certain amount of power from a renewable source over a pre-determined time frame. Time frames and percentages vary from state to state.

In some instances, utilities can meet RPS standards by using any renewable target of their choice. In other cases, they must choose from specific sources, also known as cut-outs or set-asides. They must source their power from rooftop solar or larger renewable generation projects like wind farms or utility-scale solar, helping to grow the market.

As of 2024, RPS was adopted by 31 states and the District of Columbia. It typically applies to investor-owned utility companies.

Renewable Energy Certificates (RECs)

RECs are tied to RPS. They provide ways for consumers to earn additional income from their solar installation.

Utility companies in states with RPS must produce a certain amount of their energy from renewable sources. They can access household rooftop solar or purchase solar from solar farms. A REC proves that they own one MWh of renewable energy.

There are various types of RECs, but SRECs (Solar Renewable Energy Certificates) apply to solar.

The price of SRECS fluctuates based on supply and demand. If a state targets high levels of renewable energy production, the cost will be higher. An Alternative Compliance Payment (ACP) typically sets the prices that cap the market.

If utility companies in states that mandate RECs do not comply, they could get fined.

What Government Incentives are Boosting Solar Growth?

The Solar Tax Credit

The solar tax credit is among the most well-known solar tax incentives. Households that install solar may receive a credit on their taxes for 30% of the cost of solar. It will reduce the money they owe on their return.

For example, if a household installs a solar system that costs $20,000, they are eligible for a $6000 credit. If they owe $10,000 in taxes, the amount will be reduced to $4000.

 If the return is less than $6000, the excess amount will roll over to next year’s taxes. The consumer will not receive a cash payment.

The credit is available only for the year the system was installed. You cannot receive more than one credit per installed unit. It covers the cost of the panel and installation. It may also cover batteries.

The solar credit will not last forever. It will reduce to 26% in 2033 and 22% in 2034 before phasing out completely in 2035. If you plan to go solar, now may be the best time.

Net Metering

Net metering is a system that allows solar households to sell excess solar energy back to the utility company in return for a credit on their electric bill. It is mandatory in 34 states plus Washington D.C. and Puerto Rico. It is valuable in protecting the electric grid.

The process works in the following way:

1.    When the homeowner gets solar installation, the provider will replace their electric meter with a bi-directional meter which records the energy the solar panels export to the grid.

2.    At the end of the billing period, the utility company totals the energy sent to the grid and the energy the household uses. If the homeowner uses more electricity than they sent, the utility bill will reflect the difference. If they send more than they used, the homeowner will receive a balance applied to their next monthly bill.

Net metering offers another way for households to save money on solar offsetting installation costs.

Virtual Net Metering

Virtual net metering allows consumers to take advantage of net metering, even if they don’t have a solar installation. They can own a share of an off-site solar product and receive credit on their electricity bill for the share of their produced energy.

Local Government Incentives

Solar incentives are not only available on a federal level. Many states offer them as well.

For example, California, a leading American solar state, protects solar consumers against property tax increases. Californians do not need to pay additional taxes for solar installation, even though it boosts their home value.

The state also works with utility companies to provide rebates for solar battery installation. Its DAS-SASH program provides solar incentives for low-income customers in disadvantaged communities.

The National Electric Vehicle Infrastructure (NEVI) Program

Electric vehicles are a crucial step in solar adoption. Using solar power to charge EVs benefits the electric grid, the atmosphere, and consumer’s wallets.

Unfortunately, most states don’t have the infrastructure to support solar vehicles. For example, California, Florida, and Texas are seeing the strongest EV industry growth. However, they fall to the bottom ten in the nation considering the availability of charging stations per EV drivers.

The National Electric Vehicle Infrastructure aims to change that by awarding $5 million to states that create coast-to-coast networks of electric vehicle chargers across major interstate routes. These ‘alternative fuel corridors can greatly reduce emissions.

Many states are getting on board. For example, California’s Governor Newsom has put a “down payment’ of $384 million over the next three years to support the creation of more charging stations. He is aiming to end the sale of new gasoline-powered cars by 2035.

Solar America is Doing Its Part to Make Solar More Accessible

Government policies and incentives are making solar more accessible. Solar America is also doing its part. We help consumers connect with affordable providers all over the country.

Enter your information on our contact form and our database will provide results to solar contractors in your area. Choose the ones best suited to your needs. Our competitive system ensures the lowest prices.

Contact us for the assistance you need in reaching your renewable goals