Vital things about solar in the USA

Updated 2020

Among vital things about solar in the USA, while the price of solar in the USA has fallen it still seems almost absurdly high. As of July 2020 the average cost is US$17,460 for a 6 kilowatt system. It is still US$12,920 after the 26% Federal ITC discount (not factoring in any additional state rebates or incentives).

Just why solar is so costly in the USA seems unclear. It’s cost is well over twice that of the far smaller market in Australia. That same size (6 kilowatt) system in Australia is under A$6000 (US$4,300) including installation.

Throughout 2020, the USA’s solar tax credit is equal to 26% of the cost to install a solar system, with no maximum credit amount. This reduces to 22% in 2021 and expires completely for residential installations in 2022. After 2021, however, businesses can receive a 10% tax credit. The solar tax credit can only be claimed if there is a tax liability in the year of installation. Furthermore claimants cannot take a credit that is larger than the amount of taxes owed. They can, however, claim the credit over more than one year, and carry any leftover amount forward to the next year.

The USA’s Internal Revenue Service requires the system to be ‘placed into service’ by the end of the year to qualify for that year’s tax credit. It does not, however, define ‘placed into service’, but presumably means fully installed and working.

On the plus side, the majority of Americans live in states that have a renewable portfolio standard. This is a mandatory state government requirement that a certain percentage of the state’s electricity must come from renewable sources. Some states have aggressive goals. Hawaii has a target of 100% renewable energy by 2045Maine’s target is for 100% by 2050. California, the USA’s largest state, is aiming for 60% as soon as 2030.

Further information

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