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For the second week of our Solar Myth Busters series, we're covering a myth that is surely the number one reason people miss out on solar's lucrative incentive programs—the elusive solar price drop!
Prices for solar keep getting cheaper, so I should wait and pay less down the road.
While it’s true that solar panel prices are getting cheaper, several other factors have a much larger and immediate impact on the cost of going solar. State and federal tax incentives can offset more than 30% of a solar purchase. The 30% federal solar investment tax credit (ITC) and the $1,000 state of Arizona tax credit are the most beneficial incentives to take advantage of when you go solar, but they do not last forever. This year is the last chance to claim the 30% federal solar investment tax credit (ITC) before it starts decreasing in 2020, so if you're waiting to save five or ten percent on panel pricing, you could be letting a 30% tax incentive pass you by.
The current 30% rate is in place through the end of 2019, so this is the last year to reap the maximum return from this lucrative incentive program. In 2020, the ITC will be reduced to 26% and then drop again to 22% in 2021. From 2022 onward, the residential ITC no longer exists, but the commercial ITC will remain at 10%.
While next year's 26% rate still sounds pretty good on paper, it has a sizable impact on the payback period, extending it by several years in some estimates. When it drops to 22% in 2021, the payback period will extend again. So, if you're inclined to turn Arizona's most abundant natural resource into immediate energy savings, we strongly recommend grabbing the 30% rate while it's still here.
We're barely into 2019, so it's natural to think you still have plenty of time to make the switch and possibly wait for prices to decrease over the year. However, going solar involves many steps and coordination with outside entities for permitting and commissioning. Plus, installers like Sun Valley Solar Solutions already see tighter installation schedules than normal as people rush to make the 30% deadline.
If you're thinking about waiting for solar prices to drop even more, you'll be missing out on lucrative tax benefits that will have a more immediate impact on the ROI of your solar investment. With the 30% ITC ending, 2019 is surely the most important year for solar in more than a decade.
Other parts in our Myth Busters series:
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