Many governments and utility companies around the world are now offering various financial incentives to install new energy efficient appliances such as furnaces and water heaters. Some of these programs also offer various types of incentives to install solar electric panels (photovoltaic panels) and solar heating systems.
Two countries that have had great success in increasing their use of renewable energy and fostering a "green" economy are Germany and Japan. Both countries have developed a thriving domestic solar industry, employing tens of thousands of people, by creating a demand for solar products through the use of various incentives.
However, for the average consumer seeking to determine the cost effectiveness of using solar technology, the incentives offered by various levels of government and utilities, can prove to be a daunting task.
Generally speaking, the types of incentives can be grouped into the following categories:
Grants and Rebates
Low Interest Loans
- Numerous grants or rebates may be available in your jurisdiction through various programs that may be sponsored by the federal government, state government, regional government or by the utilities. The goal is to reduce the upfront cost of installing solar systems, thereby reducing the payback period for such systems.
Feed in Tariffs
- Some jurisdictions may provide low or no interest loans for solar installations. This can greatly influence the time it takes to reach a break even point from a financial perspective.
- Some jurisdictions have mandated that utilities pay a premium for electricity generated from renewable resources. Premiums vary by jurisdiction, but can be 5 to 20 times the going rate for utility generated electricity. For example, in Ontario, Canada, the utilities have to pay 42 cents per kilowatt/hour for electricity generated from solar panels. Traditional grid power costs about 6 cents per kilowatt/hour.
- Any electricity generated from a solar panel that is fed back into the grid is credited at the going rate. The difference between energy consumed by the household and energy created by the household is what the householder will pay.
- Some jurisdictions may have provided an accelerated depreciation schedule for the capital cost of solar panels.
Given the complexity of the various incentives and grants available, it is probably prudent to consult a solar installer if you are considering installing a solar system. The solar installer should be knowledgeable in the grants and incentives that are available in your jurisdiction.