Solar Panel Cost in Pennsylvania (2023 Local Savings Guide)
By Dan Simms /
In this guide to saving money on your solar power system by taking advantage of incentives in Pennsylvania, you’ll learn:
Yes, the local solar perks in the Keystone State make a significant difference in your effective conversion costs.
The typical cost of a photovoltaic (PV) system in Pennsylvania is around $21,675, which is based on the average cost per watt for equipment — below the national average at $2.55 — and the typical system size required in the area — also below the U.S. average at 8.5 kilowatts (kW).
The total price to go solar in the area is about $3,000 below what most Americans pay, but it’s still unrealistic for most homeowners to shell out over $20,000 for PV panels.
Although the state lacks a current Renewable Portfolio Standard (RPS) goal, there is still a decent number of incentives available to make solar more affordable and accessible. Including local perks, the state has more incentive programs than most others. Combined, these can save you thousands of dollars on your system.
In the table below, we’ll include a list of the available incentives in your area, including a brief description of each. We’ll also provide the average savings each benefit typically offers in the state.
|Solar Incentives in Pennsylvania||Incentive Type||Description||Occurrence||Estimated Dollar Amount You Can Receive|
|Federal Solar Investment Tax Credit (ITC)||Federal||This perk guarantees that 30% of your system installation costs gets credited to your income tax liability||One-time: Applies once when you file your taxes after installation, but remaining credit can be used for up to five years total.||$6,503, on average in PA|
|Solar Renewable Energy Certificates (SRECs)||State||You earn certificates for all solar production (one credit per 1,000 kilowatt-hours generated). You can sell certificates for a profit||Ongoing: SRECs continue to accrue for as long as your panels generate electricity.||$7,600, on average, over the life of your system|
|Net Metering||Local||Offers electric bill credits for all excess energy your system generates and sends to the power grid||Always in Effect: Your net energy metering credits will accrue for as long as your panels continue producing power||Varies based on system size, monthly electric bills and more|
|Local Incentives||Local||Solar rebates and other incentives offered by local utility companies, cities and other municipalities||Varies depending on the perk||Varies based on the incentive, your system size and more|
The federal solar credit is an outstanding solar perk, and it’s made available to all U.S. residents by the federal government. It incentivizes solar adoption by offering a tax credit in the amount of 30% of your system installation costs. That amount is applied to any income taxes you owe.
Given the typical solar system cost of $21,675 in your area, the credit usually totals around $6,503. If you owe more than $6,500 to the Internal Revenue Service (IRS) for the year you install your system, then your tax bill will be reduced by the credit amount.
This perk has been offered since 2005. The credit rate dropped to 26% in 2022, and it was scheduled to drop further to 22% in 2023 and then go away entirely in 2024. However, the Inflation Reduction Act (IRA) bumped the credit rate for these years back up to 30% and pushed the program’s expiration date to 2035.
The new rate schedule is below:
Taking advantage of the federal credit requires minimal effort on your part, which is great news and makes this perk all the more worthwhile. You can follow the steps below to make sure you get access to the credit.
If you use a program like HR Block or TurboTax to file your taxes, the software should prompt you automatically for information on solar conversion. Just be sure to answer that you did complete a solar installation or energy efficiency home improvement, and then answer the relevant questions that follow.
In our opinion, this is the premier solar perk available to residents, and it’s the one we recommend taking over all others if you only have time to apply for one.
Not only is this incentive available to all taxpayers, but it only takes a few minutes to take advantage of, and the potential value you get — an average of around $6,500 — is unmatched by any other solar benefit program in the area.
We should mention that this incentive cannot fully be taken advantage of if you don’t owe money on your income taxes. No tax liability leaves you with an unclaimable credit. You’ll need to owe an average of $1,300 per year for five years following your home solar conversion to be able to take the entire credit.
The local SREC program — also called the Solar Alternative Energy Credit program or the Solar Renewable Energy Credits program — offers credits for all of the solar energy your panels produce. You’ll earn one energy certificate for every 1,000 kilowatt-hours (kWh) — or 1 megawatt (MW) — you generate.
The credits can be sold on the active SREC market in the state, with an average value of about $38 each. The typical system in your area should produce just under 1,000 kWh per month and earn around ten credits per year.
At the average price of $38 each, that’s an annual total of $380. Over the 20 years your system is expected to hold value and generate electricity, that’s a total of $7,600 you’re expected to earn from selling credits.
As such, this perk can effectively pay for about a third of your entire system cost, although you’ll slowly get that money back from selling credits each year. Credits will vary in value over time.
Making sure you get access to the local SREC program is pretty simple and won’t take much time. You can follow the steps below to enroll.
Energy certificate programs are some of our favorite perks throughout the country. They serve to legitimize solar energy as a valid renewable energy source and provide effective savings for Pennsylvania residents at the same time.
Our favorite things about the SREC program in your area are the ease with which you can apply and the long-term effective savings you can see. You’ll spend just a few minutes applying for the program, and you’ll sell your accrued credits for an average of around $7,600 over the lifespan of your system.
We should note that these programs exist in many other states as well and, unfortunately, some states are seeing changes to SREC programs for the worse. Some states — even those with active RPS goals — are opting into a block program, which caps the number of participants. This could happen in your area in the future as well, so don’t count on SREC values remaining consistent with time.
Net energy metering is a policy that credits you for any electricity you overproduce with your system and send to the grid. You earn credits for your electric bills, which you can call on later if your system ever fails to generate the power you need.
Net energy metering (NEM) provides a few key benefits, including pushing your long-term energy savings higher, increasing the value your panels add to your property and reducing the panel payback period.
The state mandates NEM for all investor-owned utilities (IOUs), which means customers of companies like Duquesne Light Company, FirstEnergy (Penn Power) and Pennsylvania Electric Company (PECO) are guaranteed access to this perk.
The PUC doesn’t require that energy credits hold any specific value, so many companies offer a below-retail rate for credits. This is still beneficial, but it’s not as appealing as the full retail rate.
We should mention that while net metering is currently an outstanding perk in your area, it could be abandoned in the future. Just like with SRECs, many states are seeing decreases in NEM rates and programs disappearing entirely. There is no plan in place for this to happen in the Keystone State, but there’s always the chance that it will. If you manage to install your system before any changes, you’ll likely be grandfathered into the new policy.
Making sure you take advantage of net metering is an easy process, and for many residents, it won’t require any effort aside from organizing your solar installation. Below, we’ll discuss the steps you can take to make sure you’re set up for NEM.
Net energy metering is one of our favorite solar perks in the country. It helps customers in your area reach that average lifetime energy savings of $23,634, and that’s after the program helps pay off your system entirely. NEM is especially beneficial because most residents won’t need to spend any time enrolling in the program.
In addition to the perks that are offered on the federal and state levels mentioned above, there are some local perks you might be able to take. We’ll include a list of these options below, along with a description of each.
There were no other local perks for solar, in particular, at the time of writing. However, you can contact your utility company or check DSIRE (Database of State Incentives for Renewables & Efficiency) for information on rebates for other energy efficiency upgrades.
Above, we’ve mentioned all of the perks available for solar conversion in your area. There are some of these financial incentives that are more valuable overall to residents, so we’ll include our top picks for solar incentives in PA below.
The federal credit takes just a few minutes and a single form to apply for, but the return on that investment is massive. The typical credit amount — and potential effective savings — is just over $6,500. Plus, unlike some of the local perks, this incentive is available to all residents.
Net energy metering is another incentive we strongly suggest you don’t miss out on if it’s available to you. This program requires a short application filed with your electricity provider, which is well worth the time it takes to complete. However, most of the reliable solar installers in the state will file the form for you, making the process automatic.
While this perk isn’t available to all residents, it does provide massive value to those who can take it. It can help pay off your system more quickly than the average ten years, and it pushes your long-term savings closer to or above the local average of $23,634.
The potential savings make this one of our favorite perks in the area, despite it not being available to all residents.
Finally, we suggest you take advantage of the SREC program in the state. You’ll spend just a few minutes applying to this perk as well, and yet it can effectively save you over $7,000 over the lifespan of your system. Savings aren’t immediate, but they can help reduce your effective electricity rates each year your panels generate power.
As mentioned above, every solar customer in the state will earn energy certificates for every 1,000 kWh their system generates, regardless of how that power is used. You can sell the certificates you earn on the local market, usually for an average of around $40. They’re purchased by energy companies looking to offset fossil fuel sourcing and reduce their contribution to climate change.
Generally speaking, most residents will earn around ten credits per year.
Yes, SRECs are taxable. You’ll need to report the value of the credits you earn and sell when filing your income taxes after solar conversion.
The only change in state incentives that is definite in the near future is the discontinuation of the solar rebate program in Philadelphia. This is set to end on 12/31/2024.2
Although there are no other plans in place for incentive programs to improve, become less beneficial or disappear, the likelihood is that the state will see some additional incentive downgrades in the coming years. This is pure speculation, but it’s based on the fact that the RPS goal expired in 2021 and has yet to be reinstated.
If negative changes do occur, we’d expect to see net energy metering and SRECs take a hit.
Since there is no mandated credit rate for NEM and it’s only required to be offered by IOUs, the possible negative changes include the policy becoming entirely optional or the program going away entirely.
It’s more likely that we’ll see the SREC program diminish in some way in the near future, as companies are currently not required to buy SRECs to meet an active RPS goal. We could see the program disappear altogether or the per-credit rate go down as demand decreases over the next few years.
Below, we’ll provide answers to the most common questions we see about incentives and rebate programs available for PV systems in your area.
At this time, there is nothing to suggest that we’ll see new or increasing incentives in the next two years. Unfortunately, the state’s RPS goal expired in 2021, and a new one hasn’t been set yet. Since this goal drives the adoption and improvement of incentives, we may not see any new or improved perks until a new goal is set.
The Inflation Reduction Act (IRA) extended the federal credit by ten years to 2034 and set up a new rate reduction schedule that included an increased credit value of 30% for 2022-2032. The credit will drop to 26% in 2033, 22% in 2034 and 0% in 2035.
The IRA also improved tax credits for some electric vehicles (EVs). The new maximum credit amount is $7,500, although the rate depends on the make and model, as well as where it was manufactured.
Unfortunately, yes. The solar rebate available to Philly residents will end on 12/31/2024. Although this is the only perk that’s scheduled to disappear, we do foresee others getting less beneficial or going away entirely.
Specifically, we believe the net energy metering policy and the SREC program are in danger of disappearing in the next two years or at least becoming less appealing. This is largely due to the state’s RPS goal expiring in 2021, which is at least expected to make the value of SRECs go down. It could lead to a decrease in NEM as well, as many states are seeing.
Unfortunately, no, the state doesn’t offer an exemption for sales or property taxes. That means your property taxes will increase after converting to solar due to the bump in home value, and you’ll have to pay the state sales tax on all components of your solar panel system.
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