home



OPB Business Partner
ENERGY TRUST OF OREGON
  1992- 2010 Tax-Credit Certified Solar Technician
The North American Board of Certified Energy Practitioners
SOLAR RATING AND CERTIFICATION CORPORATION

SOLAR HOT WATER
COSTS AND INCENTIVES

From our observations, solar hot water heating systems generally range in cost from $13,000 to $18,000. The systems Solar Energy Solutions, Inc. installs generally range in price from $14,000 to $16,000. The reason for the price difference is due to the complexity of the installations. To find out more on how these systems are sized and work, click here or go to our FAQ page for solar hot water. Our prices are higher than some and lower than others. However, what we feel we do better than all is our hands-on approach to each and every aspect to each and every install. Even before a job is started, we bring to all potential projects personal and courteous customer service. This is something we provide all along. We pick up our phones. If we are going to be late or if there is some deviation from expectations, we are on the phone discussing it. We also like to think of our installations as pieces of art, masterfully installed. We care about the quality of the components used and the eye for detail installations should have.

Site Specifications

There are a couple of site-specific technical specifications concerning your potential solar site which you need to be aware of. One of the first things you want to think about when considering solar is how good of a solar site you have. The incentives that exist are really only meant to incent solar systems placed in the most optimal of locations. In other words, in order to get your hands on these incentives, your house has to have a roof that has access to 75% or more of the yearly sun. This means you really can’t have any shade falling on the roof where you want your solar system installed from 10 am to 4 pm. The roof does have that 25% leeway, but it gets used up pretty fast.

The other specification to be aware of is the life left remaining on your roof. If this is not something you can remember or verify and the roof life is a bit iffy, you should call a home inspector or a roofer to come on out and take a look at things. Make sure they leave you something in writing as proof you have 10 years or more left remaining on your roof.

Finally, don’t feel you can’t go solar just because you don’t have a perfect solar site and are not eligible for all the incentive. Every year Solar Energy Solutions, Inc. installs systems which fall outside of the ideal scenario the incentives are set up to support. The incentives are great, but not essential to an installation.

Economic Reasons to GO Solar

Before we go any further, we should probably address the persistent issue of payback. Simply put, payback isn’t the issue, because a simple arithmetic calculation of up-front costs versus reduced monthly expenses just doesn’t capture the relevant factors. Just like a car, TV, cell phone, or whatever, the real payback is in having something that does something for you, not recouping the costs.

However, unlike any of the aforementioned things, there are strong economic reasons to considering going solar. Solar systems will give you a return on investment that is completely risk free and tax free. On top of this, your solar investment will double or more in value over the course of 10 years due to energy prices endlessly increasing. And, solar systems increase your property value by the cost of the systems, yet because of the incentives, only cost you a fraction of that total. Of course, my favorite incentive is conservation. If conservation is not on your mind even a little bit and simple payback the only thing of relevance to your decision to go solar, solar may not be for you.

Solar Incentives

There are currently two entities which incent the installation of solar hot water heating systems: the Oregon Department of Energy through a state income tax credit, and the federal government with a federal income tax credit.

The Oregon Department of Energy has since 1986 been on the cutting edge of encouraging people to go solar by means of tax credits. Oregon’s tax credit program for solar has always been an example to the rest of the nation. The state income tax credit is based on the performance of a system. Different systems qualify for different tax credit incentives. Also, the state is only looking to incent ideal solar scenarios.  The maximum state tax credit for solar hot water heating is $6,000. You get this tax credit incentive when you file your state income taxes. Remember, this is a tax credit, not a tax deduction. Tax credits are better than tax deductions because they come right off of your state income tax liability. For example, say you have paid the state of Oregon $4,000 in taxes throughout the course of the year. Because of deductions and allowances, say you get $500 back. Well, if you install a solar hot water heating system, you could get back an additional refund of up to $6,000.

People are always complaining about how they never get anything for their tax dollar. Here is a way you can get your tax dollar right back into your pocket and install a solar system to boot. But remember, you do have to pay a state income tax in order to get the tax credit. If your income tax liability is low, the state gives you up to 5 years to absorb the full amount.

I remember when I received a $1,500 tax credit when I installed my solar hot water system in 1992. It was an afternoon in May and I was doing some office work when I heard the mailman come to the door. On this particular day he only had one piece of mail and it was from the Oregon Department of Revenue. With one eye closed and the other half open, I opened the letter wondering what the bad news could be. But then, as I peeked inside, what should my wary eyes see? A check for $1,500 bucks. Yippee! I said as I ran through the offices yelling, “Isn’t government GREAT?!” How often can a person yell that?

The Federal Government: The Federal tax credit is currently available for solar hot water heating. Unlike the state income tax credit, there are no technical or solar site specifications on this incentive. No matter how big or small your system is, how sunny or shady your site is, you qualify for the federal income tax credit. However, it does assume you pay what is called a minimum federal tax. So, it would be wise to talk to your tax person first on this matter. But, assuming you qualify, it is, like the state income tax credit, a dollar for dollar tax credit, going against your federal income tax liability

Economic Summery

To summarize, if Solar Energy Solutions, Inc. installs the solar hot water heating system mentioned above for $15,000.00 it could qualify for a state income tax credit of $5,000.00 and a federal income tax credit of $4,500.00. This means under this scenario, there would be a total of $9,500.00 in incentives. This would bring your total system cost down from $13,000.00 to $5,500.00. WOW! This is a 63% savings using money you are going to pay the governments anyways for a great solar improvement to you property.

$15,000.00 Installed cost
- $5,000.00 State income tax credit
- $4,500.00 Federal income tax credit
$5,500.00 Net cost!

This system would save you around $350.00 a year in energy. $350.00 on $5,500.00 will yield a WHOPPING, risk free and tax free return on your investment of 6%! Better still, this return on investment will endlessly increase because energy prices endlessly increase. This means what saves you $350.00 a year now will save you at least 700.00 a year in 10 years or so and yield a Risk Free, Tax Free ROI of 12%!