How To Make Money With Solar In PA
When people hear ‘solar panels’ they often think of a small solar installation that is offsetting their energy usage or off-grid panels powering some remote location. There’s nothing wrong with that classic understanding of solar but the truth is that solar installations, especially in Pennsylvania, have the potential to be much more than that. In this article, we will explain how to make money with solar in PA.
PA solar systems can be an investment and provide the potential to profit off of solar depending on the size of the installation and the orientation of the building’s roof. As a solar installation company with 20 years of experience, we will do the math for you to show you how you can actually make money with solar in PA.
There are a number of important factors to consider and some conditions that need to be accounted for. But in short, based on the growing green energy movement and the vibrant PA solar industry you can actually make money with a solar installation investment in the state of Pennsylvania.
Solar Installations In PA Can Make You Money
Your residential or commercial solar installation on your home or business can make you money in PA. There are a number of ways that a PA solar installation can be profitable. The 3 main ways that your solar installation can make you money are from the Federal Tax Credit, Solar Renewable Energy Credits, and Net Metering. We’ll break each of these down and do some fun math so you can see how going solar can be a revenue stream in addition to energy independence.
If you run a thriving business in Pennsylvania you can add a solar installation to offset the cost of power to run your company. If you were to do this you could not only save money every month or eliminate your energy costs altogether you could also generate solar renewable energy credits for every 1,000-kilowatt hours your commercial solar installation generated. That would net you income on top of cutting down or eliminating your energy bills.
Solar renewable energy credits are valued at around $45 in PA (currently – 2022) so if your commercial system was large enough to generate even two SRECs per month you would net an extra $1,000 a year just for having the solar system.
Let’s read on to further understand how Pennsylvania solar power can earn you money and turn it into an investment in addition to saving you money on monthly power bills.
Tax Credits Help You Make Money In PA With Solar
Pennsylvania does not offer state-specific tax credits for solar installations but there is a very exciting Federal Solar Tax Credit of 30% available through 2032. This means that solar systems in PA that are installed between 2023 and 2032 will get a 30% federal tax credit. This credit encompasses all the costs associated with installation. The only important caveat to the solar tax credit is that if you have no income then you are not paying taxes so you would not qualify.
Financially what this means is that based on the cost of your solar installation you get 30% off of your federal income taxes. There is no limit on the amount you can get 30% back on either. The solar installation could cost $15,000 or $150,000 and you would receive the full 30% tax credit for either amount! Make sure that you check with your accountant to confirm that you will qualify for the Federal Solar Tax Credit.
USDA REAP Grant For Commercial Solar In 2023 Is Another Financial Benefit Option
In 2023 rural small businesses could be eligible for a REAP Grant. REAP (Rural Energy for America Program) is increasing its normal commercial solar grant amounts by up to three times what is usually available per installation. An influx of funding dollars is allowing REAP to offer more grant money. This will continue over the next 10 years. Currently, a qualifying small business can get 25% but that percentage is expected to go up (possibly as high as 50%). The USDA will be releasing information early in 2023 detailing the new percentage amounts available.
For small business owners looking to add a commercial solar installation this further multiplies the financial benefits of going solar! Contact Belmont Solar with your questions about REAP Grants for 2023 and check out this page for more information about what Pennsylvania small businesses would potentially qualify for these exciting grants!
Net Metering Is Another Way To Profit From PA Solar
Net metering seems to be one of the more confusing topics when it comes to solar power and solar profitability. Pennsylvania solar is no exception. Net metering is an offering that not every state still makes available. Fortunately for you (if you find your home or business within Pennsylvania) it is still a benefit of going solar that you can enjoy and take advantage of! Check out our 2-minute Youtube video explaining net metering if you would like to know more.
What happens when you begin generating your own solar power is there will be times when your solar installation will produce more power than you need. What happens to that extra power if you don’t have solar batteries? It gets sent back out to the grid and is used immediately by your neighbors.
Simultaneously your utility company is tracking how much power you are sending back to the grid. Imagine that it is like an electricity bank account they keep track of for you. When you use power from the grid overnight before they charge you for the usage they subtract from your net metering “account”. At the end of the year (the PECO year ends in May) any recorded power you sent to the grid for others and did not use yourself is credited back to you. PECO hides the net metering rates online so we do not know the exact profit you will make. As long as you eat up everything you saved from your KWH bank account, it’s dollar for dollar. In May of each year, PECO settles the bill. This means if you still have kilowatt-hours in your bank account then they will credit your account. It’s just another great way that you can actually profit from solar!
Pennsylvania’s SREC Program Is Solar Revenue
Pennslyvania’s Solar Renewable Energy Credit program is another way that you can make money with solar in PA. Your grid-tied solar installation generates one SREC every time your system creates one-megawatt hour of power (equivalent to 1,000 kilowatt hours). Every SREC that your solar installation produces can be sold on the Pennsylvania SREC market for an amount of money. The PA SREC market is not the most robust market in the country but it is existent and worth taking advantage of.
Pennsylvania is required to source a certain amount of power from solar renewable energy credits every year that are generated by active solar panel systems. Because of this, the demand for Pennsylvania-generated SRECs is not going away. As a solar installation owner, you can take advantage of this by generating solar renewable energy credits with your system throughout the year and enjoy the financial kickback from every SREC.
The way that SRECs are counted is by measuring the total amount of power your grid-tied solar installation generates through the calendar year. This includes the power that you generate and use (this is important to realize) and the power that is generated in excess of your needs and sent back out to the grid.
To do some basic math if you install a 5-kilowatt solar installation you will generate 5-6 SRECs in one calendar year. Based on the current value of one SREC according to SRECTrade, you would generate approximately $225.00 in SREC revenue. If you install a 15-kilowatt system you would generate approximately $675.00 in SREC revenue in one year. An important note to make here in regards to Belmont Solar and our Pennsylvania solar installs is that approximately 80% of our installations are 10-kilowatt systems. So, a 15 KW system like the one we are using as an example would be an oversized system for a lot of our customers. It’s not out of the question but conditions do need to be right.
Now let’s multiply those numbers by the lifespan of your solar installation which will be at least 30 years. For the 5 kW solar installation (which is quite small for PA) you would earn approximately $6,750 over a 30-year period if SREC values don’t change at all. For the 15 kW system, it would be more like $20,250! $20,000 dollars is no joke at all. When you start to think long-term you begin to see how beneficial solar can be outside of just eliminating your energy bills!
A 15-kilowatt solar system only requires 833 square feet of south-facing roof space which is roughly half the average roof square footage of the American home. This means that if you can handle the upfront cost of an oversized solar system you can make a significant amount of money on top of eliminating your electricity bills.
The current value of one Pennsylvania-generated SREC is $45.50 according to SRECTrade. This price will fluctuate based on market trends and supply and demand.
Oversize Your PA Solar Installation To Maximize Your Profit
Another way to make money with a solar installation is to go with an oversized solar system. Let’s say that your monthly electricity bills were consistently $200.00. Instead of installing a system rated to only compensate for your $200 monthly electricity bill, you could go with an over-sized system rated to compensate for a $300 monthly energy bill and the numbers change significantly. Check out our prepackaged solar systems if you would like an easy oversize installation.
What do we mean by the numbers changing significantly? Well with a system sized to just compensate for your $200 monthly electricity bill, you will save approximately $84,000 over a 30-year span of time. With the oversized system that is set up to compensate for a $300 monthly electricity bill over the same 30 years, you will save approximately $126,000. That is a rough difference of $42,000. What would you do with an additional $42,000 or $1,400 each year for the next 30 years?
The total savings we are talking about here takes into account projected Net Metering savings, the money you will not spend on electricity over the next 30 years, the 30% federal solar tax credit the year you install your system, and the PA SREC revenue your oversized solar system will generate. It’s a number of important factors all coming together to create a serious financial benefit for you and your family.
Space is the biggest limiting factor when it comes to oversizing a solar installation followed closely by roof orientation and then cost. You have to make sure that you have enough roof space. The average home in the US offers 1,700 square feet of space. That is 500 square feet more than what you need for the above oversized solar installation.
The other key factor related to your roof is its orientation in regard to the sun’s daily path in the sky. Provided that your roof is situated in such a way that the surfaces where the solar panels would be installed will get plenty of sunlight you will be just fine and be able to take advantage of an oversized PA solar installation.
How Much Money You Can Make With PA Solar?
Let’s think about the different ways you can make money with solar in PA. Let’s assume that your solar panels will last you for 30, the reality is that they could last and perform for 40 years or even longer! For the sake of the argument, we’ll talk in terms of 30 years just to be safe and reliable.
The first thing we do is take your average monthly electricity bill, multiply it by 12 to figure out how much your energy usage is costing you per year, and then multiply that by 30. So, if your energy bill is $150.00 per month your yearly cost is about $1,800. Now let’s multiply that $1,800 by the number of years your solar panels will be generating power for you and that gives you $54,000. That’s how much you won’t be paying a power company over the next 30 years! That’s a pretty big saving.
As we all know energy prices are on the rise and will never go down so you will continue to benefit more and more as those costs increase over the years. Since we are talking about a 30-year timeframe let’s consider the inflation of the cost of electricity over the last 30 years. By what percentage do you think the average cost of electricity has increased since 1992? Well, according to the US Bureau of Labor Statistics, the average price of electricity has increased 103.30% from 1992 to 2022!
Now let’s think about that same solar installation and time frame and talk about the revenue you will get from the solar renewable energy credits your system generates. Let’s just assume that conservatively your system will produce one SREC per month or 12 over the course of each year. At the current value of $45 in PA that doesn’t seem like very much but over the 30 periods of time we’re talking about that will come out to over $16,000 without SRECs going up in value. And PA SREC values do change over time. That $16,000 number would be even larger as SRECs go up in value.
Thinking Big Picture Shows How You Can Make Money With PA Solar
Looking at the bigger picture of how installing solar panels will benefit you over the entire lifespan of your system really clarifies how you can expect to make money with solar. Instead of just thinking about monthly or yearly savings begin thinking about the savings and benefits stacking up over 30 or more years. That’s when the numbers begin to get exciting.
Going 30 years without paying for electricity will conservatively put $50,000 back into your budget. Then add 30 years of selling solar renewable energy credits to the PA SREC market. Let’s say your solar installation only generates one SREC per month and 12 in a year. That’s $550.00 which doesn’t seem like all that much but over the 30-year lifespan of the installation that’s more than $16,000 in true revenue.
Net metering is a more difficult calculation to make because your energy usage fluctuates based on how much power you’re using at night and so on. Putting a dollar evaluation to that won’t be accurate until you have used your system for a year and see what your power company credits you back. This is a subjective number and will be different for every solar owner.
Are You Ready To Make Money With Solar In PA?
If you’ve made it this far and are interested in how you could begin making money with solar panels in PA don’t hesitate to contact us today. Our trained solar professionals can answer your questions, evaluate your building roof whether that is your home or business and help you calculate how much you could be making by installing the right-sized solar system.
Some people are looking for small solar systems to offset some of their monthly electricity bills and that is just fine. Whatever suits your needs is what you should do. We custom design all manner of grid-tied and off-grid solar installations. You do not need to oversize your system in order to benefit from solar power. But there is the potential to create something that not only saves you thousands of dollars but also nets you thousands of dollars over the lifetime of the system.
We’re here to help you maximize your solar possibilities and dream up a system that could financially serve you for many many years. Contact us today or try out our solar panel cost calculator to get an idea of the numbers and savings and compare a normal-sized system and an oversized system based on your monthly electricity costs. We can’t wait to hear from you!
