Government Incentives for Going Green 2021 Edition
As we near the end of the year and the holidays loom, many people, especially homeowners, are likely already starting to think about their finances for 2021. 2020 has been especially tumultuous, so many homeowners are likely looking to find avenues for investment and saving that are safe, certain, and socially responsible. What these fiscally minded homeowners should know is that in 2021, there are many government incentives for going green that are ripe for the taking, as in, they are going away soon. What better way to save money than by helping the environment and taking advantage of money on the table at the same time? Let’s take a look at these government incentives for going green in 2021, how they can save you money, how they help the environment, why homeowners should act soon to take advantage of these incentives to save the most money possible. Tax Credits for Electric Vehicles Electric vehicles are a great idea all around. They reduce the global demand for fossil fuels all while saving drivers tons of money on gas. You can also charge your EV at home if you have solar, so if you have the solar + EV combo, you don’t even have to pay for gas at all by charging your EV with solar! It’s truly a winning combo no matter how you look at it. The greatest thing is that with electric vehicles, all EV’s and plugin hybrid cars bought new in or after 2010 are eligible for federal tax credits up to $7,500. That’s potentially a lot of money on the table there for you to help you buy an EV. The thing is, the amount of credit you can receive for your purchase varies by model, and is based on the capacity of the battery used to power the vehicle. It also changes based on the quantity of vehicles sold. The amount of credit the purchaser receives for each model of vehicle phases out after 200,000 of each model is sold, with three phases representing a 50% phase out each time. So with more popular models of EV’s, less credits are available because so many models have been sold that the credits have already been used up and phased out. Teslas for example, are so popular that any purchased after 12/31/19 are no longer eligible for any credits. The same situation applies to both Chevy Bolts and Cadillac EV’s. There are however, a ton of EV’s that still qualify for the full credit - in many cases a healthy $7,500 credit. All Audi, BMW, Chrysler, Ford, Hyundai EV’s and plug in hybrids have a full tax credit available - ranging from $4,919 to $7,500 credits. For example, the 2021 Honda Clarity, which starts at $33,40 MSRP still has a $7,500 tax credit available. With that tax credit, your cost comes down to $25,900 after the tax credit - a healthy chunk that makes the price hard to ignore. So you can see that with EV’s and hybrids, there are some very appealing tax credits that can save you a ton of money. Let’s take a look at what other tax credits you can take advantage of in 2021 to get the most out of your money.The 22% Solar Tax Credit Over the past 13 years, the solar industry has exploded thanks in large part to the Solar Investment Tax Credit. The Solar ITC, originally established in 2007, was created to provide financial incentive for homeowners to install solar panels on their roofs, in a wider effort to jumpstart the solar industry to decrease our national dependence on fossil fuels for energy. The ITC originally provided a 30% Tax Credit for homeowners who installed solar, and has been extended by Congress a few times, but has been phasing out starting in 2020, and will go away completely after 2021. In 2021 the Solar Tax Credit is phasing down to it’s final amount - 22% before disappearing completely in 2022. Now, we don’t know exactly what will happen in the next year - perhaps the Tax Credit will be extended in some way - but from what we know right now, next year is the last year to get financial help from the federal government to pay for your solar install. So if you’re trying to get the best deal on solar possible - you should install as soon as you can. To put the savings into perspective, the average cost to install a solar system is around $20,000. So if you install in 2021, that means that $4,400 of your installation will be paid for by the federal government in the form of a tax credit. That’s a lot of money in savings you get just for installing solar, and that’s only the beginning as far as savings go as your solar begins producing and offsetting your solar The cool thing about the Tax Credit is that if your tax appetite isn’t as big as your credit, you can roll it over to following years. So you could potentially offset years of what you owe by going solar, all the while saving money on your power bills. It’s a win-win situation no matter how you look at it. What you should know is that to make sure that you get in on the credit, you should install solar as soon as possible. Since many homeowners are aware that the tax credit is expiring next year, there will be a rush at the beginning of the year to get installed, as if you aren’t installed in the year 2021, you won’t get the credit. As solar company backlogs get filled up, you may not be able to get in early enough in the queue to get installed in time to get the credit. That’s why it’s very important to get installed as early as possible.Incentives for Installing Battery Storage In 2020, solar batteries have become immensely popular in Southern California for a few different reasons. Reasons to Install Battery Storage First, they allow homeowners to make the most of their solar installation. If you have a battery you get to hold on to more of the power you create with your solar, instead of selling the extra back to the power company for credit. That not only saves you money, but makes your home a de facto power plant, which ultimately reduces your need to rely on the power company for electricity while also stabilizing the power grid. First, as rolling blackouts have become the new norm during times of high fire danger in Southern California, homeowners have been installing solar + battery storage to backup their home power, so that during these blackouts they can keep the lights on. This has become particularly important during the current COVID lockdowns. Second, homeowners are utilizing solar + battery storage to offset Time of Use rates in utilities that have them. Under Time of Use rates, power is more expensive in the afternoon / early evening than it is the rest of the day, as more people are at home using electricity. By installing a battery with your solar system, you can store the extra power you create during the day with your solar panels in your battery, and program the system such that when the on-peak rates hit, you can use the power in your battery instead of pulling from the grid. That means you can use power all you want in those on-peak times worry free, as you are using the power your battery created during the day. The third reason, which goes along with the Time of Use reason, is that having battery storage can make charging an EV cheaper. Say you drive your EV all day and charge it when you get home from work. If you are charging your EV during those on-peak times, it can get pretty expensive, but if you pull from your battery, you will not be spending any extra money. SGIP Incentives The Self Generation Incentive Program is an incentive program designed to promote the installation of distributed electric generation technology on homes and businesses in California. It was established in 2001 in response to the energy crisis at the time to reduce strain on the grid. SGIP has been very successful - it has funded thousands of battery storage and electric generation projects that have deployed hundreds of megawatts in capacity across the state. SGIP is funded by utility ratepayers in California, and is available to customers of most California utilities. The funds are distributed by the utility that the homeowner resides in, unless they live in SDG&E territory, in which case the funds are distributed by the Center for Sustainable Energy (CSE). Incentives for SGIP eligible systems are based on the capacity of the installed system. To calculate the potential incentive amount, you multiply the capacity of the potential system by the incentive rate for the category of technology that system falls under. The current rate of incentive for small residential storage is currently at $.20/kWh. Saving big by Combining All Three So you can see that there is a potential for a ton of savings, just on incentives for these three green technologies: solar, EV’s and battery storage. Just as an example, if you went solar, bought an EV and installed battery storage all next year, you could save over $12,500 just in credits. That’s not even considering all the savings you will reap in the first month of owning these technologies and the massive savings you will reap as the years go by. So if you’re looking for safe investments and ways to save in the year 2021 that also benefit the environment - solar, EV’s, and battery storage are all clear options that are guaranteed to save you money. There’s essentially a large amount of money sitting there on the table - paying you to go green. You’ll save big all while reducing your carbon footprint, and really, who can argue with that?
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