Connecticut Solar Incentives in 2024: You Won’t Believe How Much You Can Save

Key Takeaways:

• 30% federal solar tax credit available through 2032
• Connecticut offers property tax and sales tax exemptions for solar
• Low-interest solar loans available through CT Green Bank
• Net metering allows selling excess solar power back to the grid

Are you a homeowner in Connecticut thinking about going solar? You’re in luck! The state has some great incentives to make switching to clean energy cheaper than ever.

Connecticut has high electricity prices and lots of sun. This makes it a perfect place to use solar power. By putting solar panels on your home, you can greatly reduce or even get rid of your electric bills. Plus, you’ll be helping the environment.

But that’s not all. Connecticut has many solar incentives, like tax credits, exemptions, and special financing options. These can save you thousands of dollars on the upfront cost of your solar installation. In this guide, we’ll show you all the ways you can save when you go solar in Connecticut.

Federal Solar Investment Tax Credit

One of the biggest incentives for Connecticut solar buyers is the federal solar investment tax credit (ITC). This tax credit lets you subtract 30% of the cost of your solar panel system from your federal taxes. Here’s an example:

Let’s say your solar installation costs $20,000. With the 30% tax credit, you can claim $6,000 as a credit on your federal tax return. That’s a lot of money back in your pocket!

The good news is that this 30% credit is available to Connecticut residents through 2032. This is thanks to the Inflation Reduction Act passed in August 2022. The credit will go down to 26% in 2033 and 22% in 2034 before ending in 2035. So now is a great time to switch to solar.

To get the solar ITC, you must own your solar energy system. You can buy it with cash or a solar loan. If you lease your system or sign a power purchase agreement (PPA), you won’t get this tax credit.

Connecticut State Solar Incentives

In addition to the federal tax credit, Connecticut offers several state-level incentives to encourage homeowners to adopt solar:

Property Tax Exemption for Renewable Energy Systems

When you install solar panels on your home, your property value typically goes up.

Normally, this would mean a corresponding increase in your property taxes. However, Connecticut’s property tax exemption ensures that you won’t pay any additional taxes due to the value your solar system adds to your home.

This exemption can save you hundreds or even thousands of dollars over the 25+ year lifespan of your solar panels. It’s just one more way Connecticut is making solar a smart financial investment for homeowners.

Sales and Use Tax Exemption for Solar and Geothermal Systems

If you’ve ever made a big purchase in Connecticut, you know that the state’s 6.35% sales tax can add up quickly. But when you buy a solar energy system, you’ll be completely exempt from paying this tax.

For an average-sized residential solar installation, the sales tax exemption can shave off nearly $1,700 in upfront costs. Combined with the federal tax credit, these savings make a compelling case for going solar sooner rather than later.

Connecticut Green Bank Residential Solar Investment Program (RSIP)

The Connecticut Green Bank is a state-sponsored organization dedicated to promoting clean energy adoption. Through its Residential Solar Investment Program (RSIP), the Green Bank offers two types of incentives for homeowners going solar:

1. Performance-Based Incentive (PBI): With the PBI, you’ll receive a fixed payment per kilowatt-hour (kWh) of solar energy produced over the course of 20 years. As of 2024, the PBI rate is $0.035/kWh for the first 10 kW of installed capacity and $0.025/kWh for the next 10 kW. So, if your 8 kW system generates 10,000 kWh per year, you’d receive an annual PBI payment of $350 for 20 years—that’s $7,000 in total!
2. Upfront Rebate: If you prefer an immediate discount on your solar installation, you can opt for the RSIP’s upfront rebate instead of the PBI. The current rebate rate is $0.40 per watt of installed capacity, up to 10 kW. For an 8 kW system, that translates to a $3,200 rebate applied directly to your installation costs.

To qualify for either RSIP incentive, your solar system must be installed by a Connecticut Green Bank-approved contractor. These contractors have met the Green Bank’s rigorous quality standards, so you can feel confident in their work.

Connecticut Green Bank Solar for All Program

In addition to the RSIP, the Connecticut Green Bank offers a special Solar for All program designed to make solar accessible to low- and moderate-income (LMI) households.

If your household income is at or below 100% of the area median income (AMI), you may be eligible for:

• A no-money-down, no-credit-check 20-year solar lease with fixed monthly payments
• A discounted lease rate of 5.5 cents per kWh (compared to the standard 7.5 cents per kWh)
• Free energy efficiency upgrades to help you save even more on your electric bills

By removing financial barriers and providing additional support, the Solar for All program ensures that all Connecticut residents can benefit from clean, affordable solar energy.

Local Utility and City Incentives

Net Metering

Eversource and United Illuminating are the two biggest electric companies in Connecticut. They both have net metering programs for solar customers.

With net metering, any extra solar energy your system makes is sent back to the grid. You get a credit on your electric bill for that energy.

These credits add up during sunny summer months when your solar panels are making more electricity than your home uses. In the winter, when your solar production goes down, you can use those saved credits to lower your energy costs.

Thanks to Connecticut’s net metering policies, you can basically use the grid as a big battery storage system. This helps you get the most value out of your solar investment.

Battery Storage Incentives

If you want to take your energy independence even further, you might want to install a solar battery storage system along with your panels. Battery storage lets you save your extra solar energy at home, instead of sending it back to the grid. This way, you can use it during power outages or at night when your panels aren’t making energy.

Through the Connecticut Green Bank’s Energy Storage Solutions program, you can get upfront and performance-based incentives for installing a qualified battery storage system. To get these incentives, you have to let your utility company take energy from your battery during times of high demand. This helps reduce stress on the grid.

The upfront incentive is based on the size of your battery in kilowatt-hours (kWh). The performance incentive is paid each year for five years based on how well your battery performs on average. Together, these incentives can pay for a big part of your battery installation costs.

Is Net Metering Available in Connecticut?

No, traditional net metering is no longer available in Connecticut as of January 2022.

The state replaced its previous net metering program with the Residential Renewable Energy Solutions Program, which offers two new options for solar customers:

1. The Netting Tariff: This allows customers to earn monetary bill credits for excess solar energy sent to the grid. The credits are equal to the retail electricity rate and can roll over indefinitely to offset future bills. This is the best option for most homeowners.
2. The Buy All Tariff: Under this option, solar owners sell all the energy their system produces to the utility at a fixed per-kWh rate over 20 years. This provides certainty for solar developers and works well for those offering power purchase agreements (PPAs).

While not called “net metering”, the Netting Tariff functions similarly and provides even better benefits in some ways, such as the indefinite rollover of credits at the full retail rate. So in essence, Connecticut still has a net metering-like program, just under a different name and structure as part of the new Residential Renewable Energy Solutions Program.

Financing Options

Paying for solar panels can seem daunting, but Connecticut offers several attractive financing options to make going solar more affordable.

Smart-E Loans through Connecticut Green Bank

The Connecticut Green Bank’s Smart-E Loan program provides low-interest financing for a variety of home energy improvements, including solar installations.

With loan terms ranging from 5 to 20 years and interest rates as low as 4.49%, Smart-E Loans can significantly reduce the upfront cost of going solar.

To qualify for a Smart-E Loan, your property must be:

• An owner-occupied residential dwelling in Connecticut
• A 1-4 unit building
• Individually metered if it’s a condo or townhouse

The maximum loan amount is $40,000 for terms up to 12 years and $25,000 for 15 and 20-year terms. Best of all, you can use up to 25% of the loan for non-energy related improvements, such as a new roof prior to installing solar.

Comparing Savings: Loans vs Paying Cash

Let’s look at an example to see how financing with a Smart-E Loan compares to paying cash for a solar installation.

Assume you purchase a 6 kW solar system at a cost of $16,080 after applying the 30% federal tax credit. If you take a 10-year Smart-E Loan at 5.99% interest, your monthly payments would be $178. Over the 10-year loan term, you’d pay a total of $21,360.

In contrast, if you paid $16,080 in cash upfront, you’d save $5,280 in interest payments over those 10 years. However, you’d be out that lump sum of cash that could be invested elsewhere.

Ultimately, the decision to finance or pay cash depends on your unique financial situation and goals. Financing can make solar accessible with no money down, while paying cash maximizes long-term savings. Consult with a financial advisor to determine the best path for you.

 

Real Examples

To see how Connecticut’s solar incentives play out in the real world, let’s look at a case study of a typical homeowner.

Sarah and John have a 2,000-square-foot home in Hartford. They currently pay $200 per month for electricity. After doing some research, they decide to install a 6 kW solar system on their south-facing roof.

The gross cost of the system is $23,000, but after applying the 30% federal tax credit, the net cost comes down to $16,100. Sarah and John opt to finance the system with a 10-year Smart-E Loan at 5.99% interest.

Their loan payments are $178 per month – $22 less than their previous electric bill. In essence, they are able to start saving from day one. Over the 10-year loan term, accounting for interest, they will have paid a total of $21,360 for their solar panels.

However, assuming a modest 2% annual increase in electricity rates, Sarah and John’s solar panels will save them over $30,000 in electricity costs over 20 years. Even after paying off the loan, they come out $8,640 ahead – all while reducing their carbon footprint.

Here’s what a local solar installer had to say about how incentives help his Connecticut customers:

“Between the federal tax credit, Smart-E financing, and net metering, Connecticut offers some of the best solar incentives in the country. For most of my customers, it’s a no-brainer – they can go solar for no money down and start saving right away. I’ve seen solar loans completely transform the market and make solar a realistic option for so many more homeowners.”

Recap

If you’re considering solar, now is the time to act. The 30% federal tax credit is set to decrease after 2032, so the sooner you install, the more you’ll save. Get quotes from reputable local installers to see exactly how much you could save by going solar.

By investing in solar, you’re not only reducing your own energy costs and carbon footprint but also contributing to a cleaner, more sustainable future for Connecticut and beyond. With strong state incentives and falling solar prices, there’s never been a better time to make the switch to clean, renewable energy.