2022 Pennsylvania Solar Incentives Guide (Tax Credits, Rebates & More)

In this EcoWatch guide on solar incentives in Pennsylvania, you’ll learn:

  • How homeowners can benefit from SRECs in Pennsylvania
  • Which Pennsylvania taxes solar panels are exempt from
  • Whether Pennsylvania offers a state tax credit for solar
  • Which local solar incentives to look out for

This guide has helped thousands of Pennsylvania homeowners save time and money when going solar by aggregating all of the latest incentives available in the area. Let’s get started!

Ecowatch Author Karsten Neumeister

By Karsten Neumeister, Solar Expert

Updated 9/18/2022

Why You Can Trust EcoWatch

Our solar experts have sifted through hundreds of local governments’ and utility companies’ websites to find accurate information about current solar incentives in each state. We’ve also unbiasedly ranked and reviewed hundreds of solar installers to empower you to make the right choice for your home.

How Much Can You Save With Solar Incentives in Pennsylvania?

Jump to Section:

  1. Understanding Solar in the Keystone State
  2. What Solar Incentives Are Currently Offered in Pennsylvania?
  3. Solar Renewable Energy Credits (SRECs)
  4. Net Metering in Pennsylvania
  5. Pennsylvania Solar Sales & Property Tax Exemption
  6. Local Incentives
  7. Does Pennsylvania Have a State Solar Tax Credit?
  8. What Should Pennsylvanians Know About the Federal Solar Tax Credit?
  9. FAQs: Pennsylvania Solar Incentives

In this article, we’ll discuss the solar rebates and incentives available to Pennsylvania homeowners. When you’re ready to speak with a qualified professional, follow the links below. Each of these local installers can help you identify and apply for incentives available in Pennsylvania.

Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

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Understanding Solar in the Keystone State

Solar conversions in Pennsylvania have never been more affordable than they are right now. However, with the average cost per watt of $2.55 and the typical system size in PA of 8.5 kilowatts, homeowners can still expect to pay an average of $21,675 to complete their solar projects. This total can be a large pill to swallow for PA residents, and as much as homeowners want to reduce their carbon footprints, that benefit is often not enough to justify spending over $20,000.

Thankfully, there are a number of incentives offered by the state and federal governments that make solar more affordable upfront and also more enticing. Below, we’ll discuss the solar incentives and tax credits available in Pennsylvania and how each can have an impact on the total you spend to convert to clean energy.

Watch Below: Pioneering Pennsylvania Farmer Ditched Corn Rows for Solar Panels

 

What Solar Incentives Are Currently Offered in Pennsylvania?

First, we want to provide a quick overview of the solar incentives available in Pennsylvania, and the table below will do just that. We’ll also include more details about each PA solar incentive further below.

Pennsylvania Solar Incentive Description
Federal Solar Tax Credit (ITC) The federal solar tax credit is a solar incentive provided by the federal government that is available to all PA residents. It’s a credit for 30% of your total system cost that gets applied to your federal tax liability the year you turn on your system.1 The credit increased to 30% from 26% with the passing of the Inflation Reduction Act in 2022. In PA, with the average system cost of $21,675, the typical credit amount is $6,502.
Solar Renewable Energy Certificates (SRECs) Pennsylvania has an SREC program that lets homeowners earn energy credits for the power their panels put out (1 credit for every 1,000 kilowatt-hours produced). Those credits can then be sold on the SREC market, with a current value of between $35 and $40.2 We’ll include more information about this process below.
Net Metering Net metering is a benefit of overproducing energy with your panels. Most homes with solar power systems inevitably have to pull energy from the grid, but the cost of that electricity can be offset by the excess energy the panels have produced via PA’s net metering program.3 We’ll include additional information about net metering in Pennsylvania below.
Local City & Utility Rebates In addition to all of the above solar incentives, certain municipalities and utility companies provide rebates for installing solar or for energy efficiency upgrades. We’ll get into specifics below.

Pennsylvania’s Renewable Portfolio Standard (RPS) goals came to an end in 2021, but the state has set up pro-solar programs that are still in place and will benefit any homeowner converting to solar. We’ll discuss some of the other statewide solar incentives that help keep this clean energy solution a sound investment despite the lack of a state solar tax credit.

Solar Renewable Energy Credits (SRECs)

solar incentives in pennsylvaniaSRECs are one of the most appealing benefits to going solar and can help homeowners offset or eliminate their energy bills. You’ll earn one SREC for every 1,000 kWh (1 megawatt-hour/mWh) produced by your panels.

The typical 8.5-kW system required to offset electric bills in PA is expected to produce over 10 SRECs per year.4 SRECs can then be sold on PA’s SREC market to utilities looking to report higher renewable energy production. The current value of SRECs in PA is between $35 and $40, meaning the typical home solar system in the state should yield between $350 and $410 per year.

With an appropriately sized solar system, most PA residents shouldn’t have large utility bills — and many homeowners pay nothing at all for electricity — so the SREC payments could be profit used to pay off the system more quickly.

Net Metering in Pennsylvania

Net metering is another great benefit of going solar in Pennsylvania and, when combined with SRECs, makes it very possible to eliminate your electric bills altogether.

Net metering is a billing policy offered by many utility companies and mandated in a number of states. Through interconnection, your home can receive power from the grid when your panels don’t produce enough to cover what you’re using — like on cloudy days or at night. On the other hand, when you produce more than you’re using, your system will send the excess energy to the grid. Net metering allows you to offset what you pay for energy coming in with energy going out.

Pennsylvania has an excellent net metering policy that is enormously beneficial to homeowners. It states that all investor-owned utilities (IOUs) must offer net metering and, most importantly, that the energy you send to the grid be compensated at the full retail value. As such, every kilowatt-hour you overproduce and route to the grid will exactly offset one kilowatt-hour you pull from the grid. This policy applies to any system up to 50 kilowatts and, since most homeowners in PA have an 8.5-kW system, applies to most solar customers in the state.

Keep in mind that not all electric utility companies have to provide access to a net metering program, and there are some additional restrictions. You should check with your electricity provider for more details.

solar incentives in pennsylvania

Pennsylvania Solar Sales & Property Tax Exemption

Sales tax on a system that costs above $20,000 can quickly add up, which is why many states provide a sales tax exemption on solar equipment. Unfortunately, Pennsylvania does not have a sales tax exemption on solar equipment or installation.

Many states also provide a property tax exemption to prevent solar power systems from causing your property taxes to increase. Unfortunately, Pennsylvania also doesn’t have a property tax exemption for solar energy systems. When you carry out a home improvement in the state, that increases your home value, and your assessed value and your property taxes will also go up. Since solar panels bump up your property value, installing solar in PA will affect your property taxes.

Local Incentives

In addition to the incentives discussed above that are statewide, there are some more local incentives and rebate plans afforded by certain municipalities and utility providers in PA. Two of the most significant local rebates come from the City of Philadelphia. Philly offers $0.20 per watt installed, which comes out to an average of $1,700 back for the typical 8.5-kW system installed in Pennsylvania.4

Installing solar also requires permits to be filed with your governing municipality, and Philadelphia offers a rebate for all permit costs associated with installing your solar panels. This can come out to several hundreds of dollars in reimbursements.

Local utility companies can also offer rebate programs for energy-efficiency upgrades. The rebates for things like solar water heaters, LED lighting, high-efficiency appliances and other upgrades are less than the $1,700 rebate for solar systems in Philly, but they still help you save while making your home more energy-efficient. You can check the DSIRE database for more information on local rebates.4

Does Pennsylvania Have a State Solar Tax Credit?

Many states have a state solar tax credit in addition to the federal tax credit, and combining both credits typically makes solar far more affordable for homeowners, enticing them to convert to this alternative energy source. Unfortunately, PA does not have a state tax credit. Still, the other financial incentives are often enough to push residents to adopt solar.

See also: Find out how much solar power your roof can produce with our solar calculator

What Should Pennsylvanians Know About the Federal Solar Tax Credit?

Finally, all Pennsylvania residents who finance solar panels or buy them outright have access to the federal solar investment tax credit (ITC). This incentive is provided by the federal government and gets applied to your federal income taxes owed for the year your system is installed. The credit is for 30% of your total solar system cost, which, in Pennsylvania, averages out to a massive $6,502.

The 30% federal tax credit was extended through 2032 with the passing of the Inflation Reduction Act in 2022. The credit will drop to 26% in 2033 and 22% in 2034. It will be phased out in 2035 unless Congress renews it again.

Read More About Going Solar

FAQs: Pennsylvania Solar Incentives

We get questions from Pennsylvania homeowners routinely about the process of going solar and the incentives they can take advantage of when installing panels. Below are some of the questions we see most frequently. If you have specific questions that aren’t answered here, reach out to our team of solar experts at solar@ecowatch.com.

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Karsten Neumeister

Solar Expert

Karsten is a researcher, editor, writer and energy specialist focused on environmental, social and cultural development. Before joining EcoWatch, Karsten worked in the solar energy sector, studying energy policy, climate tech and environmental education. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.