Good news for solar in 2016, but future remains foggy

2016 will see a continuation of strong solar conversion rates.

Two important developments in 2015 will make 2016 another good year to install solar on your house.

First, PG&E and other utilities in California were largely rebuffed by the California Public Utilities Commission (CPUC) in their efforts to make solar less beneficial to homeowners. PG&E et al had suggested to reduce the amount solar homeowners were paid for solar energy they fed back to the power grid, and also requested authorization to levy flat “service” fees on solar homeowners. The CPUC preliminary ruling from early December 2015 makes clear that the so-called NEM (net metering agreement), which regulates the relationship between solar homes and the utilities, will remain largely unchanged going forward.

Second, the Federal Investment Tax Credit (ITC), which enables you to subtract 30% of the cost of your solar system from yourFederal tax bill, was set to expire at the end of 2016. However, the ITC was continued under the omnibus bill just passed by Congress. The upshot: Uncle Sam will continue to pay 30% of the cost when you install solar on your house.

How does the Federal Tax Credit work? Here is an example: you owe $40,000 in Federal taxes for 2016. You installed solar for $45,000—a somewhat largish system— the same year. The ITC enables you to subtract $13,500 from your owed taxes:

$40,000 tax bill–($45,000 x 30%) tax credit= $40,000 – $13,500 = $26,500.

With the above developments, there is every reason to believe that the increase in solar installations will continue apace. Solar remains cheaper, more reliable, and greener than utility power, and is the first choice for powering Northern California homes.