2023 Solar Incentives Guide for Philadelphia, PA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Philadelphia.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
Solar installers are experts in maximizing your solar tax credits and rebates.
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By EcoWatch Local Advisors
Data Analysis: James Savino
Ranking Methodology: Karsten Neumeister
Updated March 14, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in Philadelphia?
High Performance Buildings Incentive Program
Commercial loans/loan guarantees: $2 million
Grants: Lesser of 10% of project costs or $500,000
City of Philadelphia - Solar Rebate Program
Commercial: $0.10 per watt of solar installed
Wind and Geothermal Incentives Program
Manufacturer grants: $5,000 per job created within 3 years
Loans for geothermal systems: $3 per square foot of space served up to $5 million; also limited to 50% of eligible costs for residential systems.
Loans for wind energy production projects: $5 million
Grants for wind energy production projects: $1 million
Grants for feasibility studies: 50% of cost up to $175,000
Loan guarantee grants: Up to 75% of deficient funds up to $5 million
Solar Alternative Energy Credits
High Performance Building Incentives Program
City of Philadelphia - Streamlined Solar Permitting and Fee Reduction
Federal Residential Renewable Energy Tax Credit
The term "solar incentives" refers broadly to financial incentives designed to encourage the use of renewable energy by making the installation and use of solar panels more affordable. Incentives could include things like discounts, cash back or credit towards your monthly utility bill. Some incentives are handled federally, while others are offered by the state of Pennsylvania or your specific utility company, county or municipality. Some solar incentives you might qualify for are:
- Solar Renewable Energy Certificate (SREC): SRECs are credits that can be sold to your utility company (or other buyers) for cash that is generally considered part of your taxable income. In most cases, there is a small threshold of energy production to meet before your solar system qualifies for SRECs or similar performance-based incentives. SRECs and similar incentives are typically handled at the state level.
- Rebates: Solar rebates may be provided by your state or county, or by your local utility company. These rebates work as partial refunds that are applied after your purchase of a solar system and before tax credits are calculated.
- Tax Exemptions: Tax exemptions can come in one of two forms. First, there is sales tax exemption, which is applied when you purchase solar panels. The second is property tax exemption. This allows you to exclude the value added by your solar system when paying property tax on your house.
- Net Metering: Net metering is an incentive you can get after your solar panels are up and running. If you have a net metering agreement with your Philadelphia utility company, the company will subtract the value of the excess energy your solar system produces from your utility bill each month. In some places, this credit is dollar-for-dollar, while in others you might receive a refund equivalent to a percentage of the value.
- Tax Credits: Tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the government. (A tax credit is different from a tax deduction.)
Federal Solar Incentives
Federal incentives are the type of incentives that you are most likely to have heard of. The solar incentive that you're most likely to have heard of is the Federal Solar Investment Tax Credit (ITC), which gives you a credit on your taxes equal to a specified percentage of your solar system's cost.
The ITC is applied to the total cost of solar panel installation, including the panels themselves as well as equipment, labor and accessories. This credit can be claimed for panels installed after January 1, 2006 on a primary or secondary residence located in the United States that you own. The tax credit ranges from 26-30% of total costs depending on when your project was completed. There is no maximum claim amount.
Wondering how the ITC applies to your specific situation? Reach out to your local Philadelphia solar panel installation expert to get more information.
In August 2022, the Inflation Reduction Act expanded and extended the ITC, now dubbed the Clean Energy Credit. The Clean Energy Credit is valid until 2035. Your solar installation project undertaken between 2022 and 2032 may qualify for a 30% tax credit. This amount will decrease slightly on a yearly basis until the end of the current program. Beginning in 2023, it will also be easier to obtain credits for energy storage systems under the new laws.
Click here to learn more about the new Inflation Reduction Act. To best understand how the new Clean Energy Credit might apply to you, talk to your local Philadelphia solar installers.
State & Local Solar Incentives
Not all solar incentives are federal; rebates, tax credits and more might also be offered at the local or state level. Certain incentives are ongoing, while others are offered for only a limited time. Your local incentives might come from your county or municipality, or from the Pennsylvania government.
Next Steps for Installing Solar in Philadelphia
You can qualify for solar incentives from the federal government and the Pennsylvania government, as well as from your local utility company. Growing availability of solar initiatives over the last 15 years has helped increase nationwide solar energy use enormously. We recommend talking to your local Philadelphia solar installation expert to learn more about these incentives and to be sure that you're getting the most money possible for your solar system.
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EcoWatch's Philadelphia, PA Solar Incentives FAQs
How do I learn if I qualify for specific solar incentives?
In most cases, solar incentives apply to:
- a new solar system
- installed on property you own
- within the U.S.
- within the date range specified by a particular incentive.
Specific incentives, including those given out by the Pennsylvania government or by your county/municipality, sometimes have additional qualifications. Get in touch with your local Philadelphia solar installer to learn more about what incentives your project may qualify for.
If my house already has solar panels, can I still claim incentives?
You should plan to talk to the company that installed your solar panels — or get in touch with a local Philadelphia solar installer — to learn about which incentives you might qualify for. If your system was installed after January 1, 2022, you likely qualify for the newly increased 30% tax credit under the Inflation Reduction Act. Solar systems installed between 2006 and 2021 may qualify for a tax credit of 26-30%.
How much will solar panels save me annually on my electric bill in Philadelphia?
After adding solar panels to your house in Philadelphia, you can expect to save approximately $814.92 per year, or approximately $15,483.53 over the next 20 years.
How long until the federal solar tax credit ends?
The Clean Energy Credit (formerly called the federal solar tax credit, or ITC), is scheduled to end on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.
Can I receive incentives both towards the up-front cost of solar panels, and later as reimbursement?
Yes, you can claim both tax credits and rebates towards the cost of your solar panels. Depending on which incentives you are receiving, they may apply in a different order. Make sure that you talk to your solar installer or a local tax professional to verify that you are claiming incentives correctly and getting the most money possible.
Our goal is to reach as many people as we can with sensible solutions like solar energy. Our team of full-time local researchers collects solar price and installation data for every city in America then compiles it to create these digestible city guides. If you want to read our solar expert's opinion on the top solar companies featured here, follow this link.
Solar incentive research was conducted by Melissa Smith and Karsten Neumeister. Local data analysis was conducted by James Savino. See something we missed or could do better? Email the editor.