Economics Of Solar
There are three primary factors that contribute to the economics of installing solar panels; avoided purchase power costs, incentives and Solar Renewable Energy Credit Sales (SREC’s).
Avoided Purchase Power Costs
One of the mechanics of recovering the investment of doing a solar installation is reducing the energy purchased from the electric utility. Utility customers obviously won’t pay for any energy that they don’t use. In most cases, the utility will have a net metering tariff on file with their respective public service commission, that dictates how any excess solar energy, which is fed into the utility grid, is dealt with. These are all utility specific.
Incentives
While some states and a few utilities may have specific incentives, all utility customers can take advantage of the federal incentives. The Inflation Reduction Act (IRA), passed during the Biden administration, outlines all of the incentives available to individuals and companies that install solar panels. Some of these incentives pertain to all sectors, while others are limited to commercial and industrial installations. There are also some which are specific to certain geographic areas. All of these need to be investigated in doing an economic analysis. Recent legislation enacted by the Trump Administration, established deadlines to take advantage of the Federal Incentives. All federal tax incentives for residential installations expired on December 31st, 2025, while commercial installations must be started by July 4th, 2026.