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How Hoosiers Can Save Thousands by Going Solar: A Comprehensive Guide

Solar energy is booming in Indiana, and for good reason. With some of the lowest solar prices in the country and a growing array of incentives, there has never been a better time for Hoosier homeowners to make the switch to clean energy. In this in-depth guide, we‘ll break down everything you need to know to maximize your solar savings in Indiana.

Solar Energy in Indiana: A Rapidly Expanding Industry

Indiana may not be the first state you think of when it comes to solar, but the industry is growing at a rapid clip. According to the Solar Energy Industries Association, Indiana ranked 23rd in the country for solar installations in 2021, with enough solar capacity to power over 160,000 homes.

And that‘s just the beginning. Indiana has ambitious plans to add a whopping 8 gigawatts (GW) of solar energy over the next 5 years – that‘s more than double the state‘s current total solar capacity of 1.5 GW. This major investment demonstrates Indiana‘s commitment to expanding clean, affordable solar power across the state.

So why is solar becoming increasingly popular in Indiana? One key factor is the falling cost of solar technology. As the chart below shows, the price of solar has plummeted by over 70% in the past decade, making it one of the most affordable energy options available today.

Year Residential Solar Price ($/Watt) Commercial Solar Price ($/Watt)
2011 $6.19 $5.12
2016 $3.36 $2.11
2021 $2.49 $1.52

Data source: EnergySage Solar Marketplace Intel Report

In fact, Indiana boasts some of the cheapest solar prices in the entire country. The median cost of a residential solar panel system in Indiana is just $2.49 per watt – considerably lower than the national average of $2.69/W.

How Solar Panels Work: The Science Behind the Savings

But how exactly do solar panels convert sunlight into usable electricity for your home? Let‘s take a closer look at the technology behind this renewable energy powerhouse.

Solar photovoltaic (PV) panels are made up of many individual solar cells, typically constructed from silicon semiconductor material. When sunlight hits these cells, it knocks loose electrons from the silicon atoms, setting them in motion and generating an electric current. This DC electricity is then sent to an inverter, which converts it to the AC power that your home appliances and devices use. Any excess electricity your panels produce can be sent back to the grid, earning you credits on your utility bill through net metering (more on that later).

There are two main types of solar panels used for residential installations:

  1. Monocrystalline panels are made from single silicon crystals and are known for their high efficiency and sleek black appearance. They typically cost more than polycrystalline panels but can generate more electricity in a smaller footprint.

  2. Polycrystalline panels are made from many silicon fragments melted together, giving them a distinctive blue hue. While they are slightly less efficient than monocrystalline, they are more affordable, making them a popular choice for budget-conscious homeowners.

Beyond the panels themselves, there are a few other key components of a solar PV system:

  • Inverters convert the DC power from your panels into AC power for your home
  • Racking and mounting equipment secures your panels to your roof
  • Performance monitoring systems track your solar production and send alerts if issues arise

When you get solar quotes, you‘ll see all these components factored into the total system price. But thanks to the falling costs of solar technology, you can now get a complete residential PV system installed in Indiana for under $3/watt on average – a fraction of what it would have cost just a decade ago.

How Much Can You Save with the Federal Solar Tax Credit?

Now that we‘ve covered the basics of how solar works, let‘s dive into the incentives that make it such a smart investment in Indiana. The first and most lucrative is the federal solar investment tax credit, or ITC for short.

The ITC is a dollar-for-dollar reduction on your federal income taxes, equal to 30% of your total solar installation costs. That includes not just the solar panels themselves, but also any other associated equipment like inverters, racking, and energy storage devices.

Here‘s an example to illustrate just how much the ITC can save you: Let‘s say you install a 6 kilowatt (kW) solar panel system on your home, which is about the average size for a single-family house. At Indiana‘s median price of $2.49/W, that system would cost $14,940 before incentives. But with the federal tax credit, you‘d get a whopping $4,482 back when you file your next tax return. That brings your total solar investment down to just $10,458 – a savings of nearly $4,500 right off the bat!

To qualify for the solar tax credit, there are a few key requirements to keep in mind:

  1. You must own (not lease) your solar panel system
  2. The system must be installed at your primary or secondary residence
  3. You must have enough tax liability to claim the full credit amount
  4. Your panels must be placed in service (meaning they are fully installed and operational) during the tax year

If your tax liability is less than the full 30% credit amount, fear not – you can roll over any remaining credit to future years. And thanks to a recent extension by Congress, the ITC will remain at 30% through 2032 before stepping down to 26% in 2033 and 22% in 2034. That means Hoosiers have a full decade to take advantage of this generous solar incentive!

Indiana‘s Solar Policies and Incentives: A Closer Look

While Indiana doesn‘t currently offer any statewide solar tax credits or rebates, there are still several key policies and incentives that can help you save big on your solar installation. Let‘s break them down one by one.

1. Net Metering

Like most states, Indiana has a net metering policy that allows solar homeowners to send any excess electricity their panels produce back to the grid in exchange for credits on their utility bill. These credits can then be used to offset your electricity usage when your panels aren‘t generating enough power to meet your needs, like at night or on cloudy days.

However, Indiana‘s net metering rules have undergone some changes in recent years that solar shoppers need to be aware of. Prior to 2017, utilities were required to credit solar homeowners at the full retail electricity rate for any excess solar energy they exported to the grid. But after the state legislature voted to phase out net metering, utilities are now only obligated to compensate solar exports at the lower wholesale rate.

Some Indiana utilities have chosen to keep retail rate net metering in place for existing solar customers, while others have shifted to the reduced wholesale credit approach. A few utilities have even ended net metering altogether for new solar adopters. The rules vary by utility, so it‘s important to check what policy your electric provider offers before signing any solar contract.

While these changes have reduced the value of net metering compared to previous years, it can still be a significant source of savings for Indiana solar homeowners. And the good news is any excess credits you accrue in the summer months can be rolled over to the winter when you may need to pull more electricity from the grid.

2. Renewable Energy Property Tax Exemption

One of the most valuable solar incentives in Indiana is the state‘s property tax exemption for renewable energy equipment. Under this policy, any value your solar panels add to your home is exempt from property taxes, so you won‘t pay a dime extra in taxes for going solar.

Considering that a typical solar panel system can add tens of thousands of dollars to a home‘s value, this exemption can translate to serious savings over the 25+ year lifespan of your panels. It‘s also a good selling point if you ever decide to move, as your solar home will likely command a premium on the market without saddling the new buyer with a higher property tax bill.

3. Sales Tax Exemption

In addition to the property tax exemption, Indiana also fully exempts solar panels and equipment from state sales tax. With a statewide sales tax rate of 7%, this policy can shave hundreds or even thousands of dollars off your upfront solar investment.

For a typical 6 kW home solar system at $2.49/watt, the sales tax exemption would amount to savings of over $1,000. That‘s a big chunk of change you can put toward your solar installation or keep in your pocket. When paired with the federal ITC savings, these exemptions can dramatically reduce the barrier to entry for going solar in Indiana.

4. Solar Renewable Energy Certificates (SRECs)

Another solar incentive to be aware of in Indiana is the state‘s fledgling SREC market, known as the Clean Energy Credit (CEC) Trading Program. For every megawatt-hour (MWh) of solar electricity your panels generate, you can earn one SREC that can then be sold for cash on the open market.

SRECs act as proof that your solar panels are generating clean energy and help utilities meet their renewable energy targets. While Indiana‘s SREC market is still developing and prices are relatively low compared to other states, SRECs can provide a nice extra revenue stream for solar owners over the lifespan of their system.

According to SRECTrade, Indiana SRECs are currently selling for around $16 apiece. So if your 6 kW solar system generates 8 MWh per year, you could earn about $128 annually from selling your SRECs. Over the 25-year life of your panels, that amounts to an extra $3,200 in your pocket – not a bad bonus on top of your electricity bill savings!

The Environmental and Economic Benefits of Solar in Indiana

Beyond the direct financial savings for homeowners, solar energy provides a range of environmental and economic benefits for Indiana as a whole. Here are a few key statistics that highlight the positive impacts of Indiana‘s solar growth:

  • Lower emissions: According to the National Renewable Energy Laboratory, every kilowatt (kW) of solar installed in Indiana can offset over 4,700 pounds of carbon dioxide emissions over its lifetime. By deploying its 1.5 GW of solar capacity, Indiana is already avoiding over 2 million metric tons of CO2 emissions annually. That‘s equivalent to taking nearly 450,000 cars off the road!

  • Improved air quality and public health: In addition to planet-warming carbon emissions, solar also helps reduce harmful air pollutants like sulfur dioxide, nitrogen oxides, and particulate matter. These pollutants are linked to respiratory illnesses, heart disease, and premature death. By reducing coal and gas combustion, Indiana‘s solar installations are avoiding over $200 million per year in public health damages statewide.

  • Increased energy independence and resilience: By generating more of our electricity from local, distributed solar resources, Indiana can reduce its reliance on imported fossil fuels and make the grid more resilient to supply disruptions and price volatility. Solar can also help reduce peak demand on the grid during hot summer days, improving reliability for all electricity customers.

  • Job creation and economic growth:Indiana‘s solar industry is a major economic growth engine, employing over 3,600 people in manufacturing, installation, project development, and related jobs as of 2021. With the state‘s solar capacity expected to more than double by 2025, the solar sector is poised for continued job growth and economic benefits in the years ahead.

By investing in rooftop solar, Indiana homeowners are not only saving money on their electricity bills – they are also supporting a cleaner, healthier, and more prosperous future for the entire state. Every solar panel installed brings Indiana one step closer to meeting its renewable energy goals and creating a more sustainable economy for generations to come.

Tips for Going Solar in Indiana

If you‘re an Indiana homeowner considering solar, here are a few tips to keep in mind as you start your journey:

  1. Get multiple quotes: As with any major home improvement project, it‘s important to shop around and compare offers from various solar installers before signing a contract. We recommend getting at least 3 quotes to ensure you‘re getting the best overall value for your solar installation. Keep in mind the cheapest quote may not always be the best if it uses lower-quality equipment or an installer with less experience.

  2. Consider your financing options: From solar loans to leases to cash purchases, there are many ways to pay for your solar panels. A $0-down solar loan is often the smartest choice, as it allows you to finance your panels with no upfront cost while still reaping all the benefits of system ownership (including the federal tax credit and SREC income). Be sure to compare the terms, interest rates, and lifetime costs of different financing options.

  3. Evaluate your roof‘s solar potential: Before going solar, it‘s important to assess whether your roof is suitable for panels. The ideal roof is south-facing with little to no shading from trees or neighboring buildings. While solar panels can still work well on east- or west-facing roofs, a north-facing roof is generally not recommended for solar. You‘ll also want to consider the age and condition of your roof, as it may make sense to replace or repair your roof before installing panels.

  4. Understand your utility‘s net metering policy: As we covered earlier, net metering rules can vary significantly by utility in Indiana. Be sure you know whether your electric company offers retail rate or wholesale rate compensation for excess solar energy before factoring those savings into your solar investment decision. Your solar installer should be able to walk you through the details of your utility‘s policy.

  5. Don‘t forget about energy efficiency: Installing solar panels isn‘t the only way to save money on your electric bills. By implementing energy efficiency upgrades like LED lighting, programmable thermostats, air sealing, and insulation, you can significantly reduce your electricity usage and make your solar panels go even further. In fact, it‘s a good idea to tackle these efficiency measures before going solar, as they can reduce the size (and cost) of the solar panel system you need to power your home.

By following these tips and doing your research upfront, you‘ll be well on your way to a successful and rewarding solar installation in Indiana. With some of the lowest solar prices in the country and a growing suite of incentives, there‘s never been a better time for Hoosier homeowners to make the switch to clean, affordable solar energy.

The Bottom Line

As we‘ve seen throughout this guide, Indiana is quickly becoming a hub for solar energy growth, thanks to falling installation costs, lucrative incentives, and a growing commitment to renewable energy. By going solar, Hoosiers can save thousands on their electricity bills, reduce their carbon footprint, and support local jobs and economic development.

Whether you‘re motivated by financial savings, environmental stewardship, or energy independence, solar panels are a smart investment for Indiana homeowners. With the right combination of incentives and careful planning, you can install a solar PV system for a fraction of what it would have cost just a few years ago – all while hedging against rising electricity prices and doing your part to create a cleaner, greener future for Indiana.

So what are you waiting for? Start exploring your solar options today and join the thousands of Hoosiers who are already reaping the rewards of clean, renewable solar energy. Your wallet (and the planet) will thank you.

Additional Solar Energy Resources for Indiana Homeowners

Interested in learning more about solar energy and clean energy initiatives in Indiana? Here are a few helpful resources to check out: