Kentucky, often referred to as the Bluegrass State currently holds the 43rd position when it comes to installed solar capacity, as reported by the Solar Energy Industries Association. However, there is considerable anticipation for the industry’s growth, particularly in light of the expanded financial incentives offered under the Federal Inflation Reduction Act.
When most people consider solar power, Kentucky isn’t typically the first state that comes to mind. However, the landscape of energy production in Kentucky is undergoing a swift transformation. Solar energy has been on the ascent throughout the United States for quite some time, and several solar companies in Kentucky are now making strides to catch up with this trend. Stay with us for a while as we show you how you can reap the financial benefits of residential solar power Kentucky:
How Residential Solar Power Kentucky is Financially Rewarding?
Federal Solar Tax Credit
The federal solar tax credit is a significant financial perk for solar customers in Kentucky. It works by giving you credit on your income taxes, reducing the amount you owe to the federal government. The credit equals 30% of the total cost of your solar system. This tax credit has been in place since the early 2000s, and it was extended in the year 2022 thanks to the Inflation Reduction Act. Here’s how it breaks down:
The credit stays at 30% for systems installed between 2022 and 2031.
- In 2032, it is likely to drop to 26%.
- In 2033, it will drop further to 22%.
- By 2034, the credit will no longer be available.
In Kentucky, the average solar system size is about 11 kilowatts (kW), slightly larger than the national average due to higher energy consumption. With solar equipment costing around $2.34 per watt in Kentucky, this means an average homeowner can get a tax credit of about $7,722.
Note- It’s important to keep in mind that the federal credit isn’t cash-back; it’s a reduction in your tax bill. If you don’t owe taxes to the federal government, you won’t receive the credit. However, you have the option to take a partial credit and carry over the remaining amount for up to five years.
Expert Tip: Solar specialists suggest Kentucky residents not overlook the Federal Tax Credit. This incentive is helpful in achieving impactful savings in a very subtle and non-complex way. This means the application process is a breeze, requiring you to fill out just one form, and you’ll be on your way to saving fortunes.
Electricity Bill Reduction
The biggest advantage of transitioning to residential solar power Kentucky is the ample savings it brings to your electricity bills. In many instances, residential solar panel systems in the region recoup their initial cost in approximately 13 years. Over the equipment’s lifespan of 12+ years and after, the cumulative energy savings are estimated at $20,247 on average. If your payback period is shorter than 13 years, your savings will be even greater, and vice versa.
Additionally, it’s worth noting that your actual savings might surpass the $20,247 average, especially considering that electricity rates have been steadily increasing and are projected to continue rising in the future. While saving over $20,000 through solar adoption in Kentucky is based on current electricity prices, the potential for greater savings exists if rates continue to climb.
Home Value Enhancement
A significant advantage often overlooked by homeowners considering solar power is the boost in property value that solar panels Kentucky provide. Research conducted by Zillow indicates that converting to solar can increase your home’s value by 4.1%. In Kentucky, where the property is valued at $188,463 on average, this translates to an additional average value of $7,727 upon solar installation.
This figure could be much higher in expensive areas like Louisville or Lexington. It’s important to note that this financial incentive isn’t applicable to leases and power purchase agreements (PPAs) for solar panels. To take advantage of this benefit, you’ll need to purchase your panels outright with cash or through solar financing.
Net Metering in Kentucky
Net metering, commonly known as net energy metering, represents a billing policy strategically provided by utility companies to encourage the adoption of residential solar power Kentucky. By connecting your solar panels to the power grid, net metering allows you to generate surplus electricity and accumulate credits for this excess generated energy. These credits can then be implemented towards future bills if your energy consumption surpasses your production.
In Kentucky, every investor-owned utility (IOU) and electric cooperative must abide by net energy metering regulations, except for the Tennessee Valley Authority (TVA). Unless you’re a TVA customer, the energy credits you accrue are calculated at the complete retail rate, making this the most advantageous situation.
Leasing Solar Panels Kentucky
An alternative approach to obtaining solar panels at no upfront cost in Kentucky is through solar leasing. In this arrangement, a third-party company sets up panels on your property, and you commit to a monthly fee payment for the electricity generated by these panels. Usually, this monthly fee is lower than the cost of conventional electricity. Additionally, the solar leasing company assumes responsibility for the maintenance of the panels. Consequently, you can reap the advantages of solar energy without the initial expense of purchasing the panels.
Conclusion
The ideal moment to invest in solar energy has arrived for those in the great Bluegrass State. Whether you own a residential or commercial property, solar panels Kentucky have the potential to yield significant savings. Furthermore, the availability of numerous public and private financial incentives for prospective buyers translates into considerable cost savings when purchasing your solar system.
Trust us when we say that with skyrocketing costs of utility bills, switching to solar-generated energy is your saving grace. There are numerous solar companies in Kentucky. Thus, it’s time you take the plunge and grab the opportunity of setting up solar panels over your roof. Ohio Valley Solar is here to support you through this transition. We provide best-in-class solar panel installation services in Kentucky. Our services extend to the installation and maintenance of LED lights and generator systems as well! Get in touch with us today to get commercial and residential solar power Kentucky