Utah Solar Tax Credit: What’s New in 2020
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Tax credits, like the federal and Utah solar tax credits, have made solar an affordable option over the years. Utah solar customer’s reliance on these credits continues today.
Tax credits have been the means for the majority of Utahan’s access to renewable energy. Combined state and federal tax credits currently cover over 26 percent of residential solar.
While these incentives are declining, they haven’t disappeared. History has shown us that, despite changes like the 201 trade case and the decline in solar tax credits, the solar industry will continue to move forward.
2017 was a year of upheaval for solar in Utah. The two main bumps on the residential solar path were net metering and federal panel tariffs. These stumbling blocks, however, did not prove fatal and are a reminder that solar isn’t going anywhere.
Rocky Mountain Power’s Transitional Plan for Net Metering
On November 9, 2017, a pivotal moment in Utah history occurred. The solar industry was able to make a compromise with Rocky Mountain Power. In this settlement, the demise of Utah’s thriving solar industry turned into a mere road bump.
This settlement was sensational news, considering the damage that might have otherwise occurred. Berkshire Hathaway Energy, the holding company of Rocky Mountain Power, made a similar move in Nevada just a few years before. These metering changes for a time decimated the thriving Nevada solar industry.
Thankfully, Utah is learning from history instead of repeating it. As part of the compromise, Utah residents that would like to get solar have until the end of the Export Credit Proceeding to be part of a transitional program. This proceeding will end no later than October 1, 2020.
In this program, customers receive 90 percent of their excess solar generation as a credit on their power bill. Every 15 minutes, the utility records the amount of energy pulled and put onto the grid.
How This Change Affects Solar Customers
This new metering of energy use allows the utility to charge extra when there is more energy pulled off the grid. To get the most out of solar, customers can do their high-consumption activities during the day. Completing high-energy activities when the sun is providing power allows solar customers to avoid paying extra.
One hundred percent of the electricity solar-customers produce and use is free, assuming their array is paid off. If their solar array isn’t paid off, they can count on their solar payments not changing, and an end to these payments. Solar customers still see a significant ROI, and Utah solar companies continue to thrive.
201 Trade Case: Mid-Review Report
After not being able to keep up with the competition, a couple of American solar companies relying on domestic manufacturing processes filed a complaint with the International Trade Commission (ITC). In this complaint, it suggested a tariff on imported solar panels.
After the ITC’s debate on the issue, the International Trade Commission validated the complaint. It soon was presented and approved by the President.
Now there is a four-year plan in place that imposes a tariff on imported solar panels. The purpose of this tax is to allow solar manufacturing companies in the United States a chance to regain their footing.
This tax has been the catalyst behind the increase in solar panel costs. Customers who do business with companies that have not leveraged themselves to death have nothing to fear.
The first year of the tariff, 2018, had a 30 percent tax. Over the next three years, it will decrease by 5 percent.
In 2020, the tariff will be 20 percent. The ITC will send a mid-review report to the President on February 7, 2020, to determine the impact.
The good news is that the first 2.5 gigawatts (GW) of each year will not have a tariff. Competition for the first 2.5 gigawatts sold in the year could potentially help stabilize prices, but only time will tell.
Utah Solar Tax Credit Expiration Changes
Utah has a state tax credit for solar. Until December 21, 2020, this tax credit covers the lesser of 25 percent or $1,600 of any residential solar panel array. When customer’s purchase a system, this state tax credit is credited toward Utah state taxes owed and deducted from the solar costs.
Although this state tax credit decreased to $1,600 in 2018, the settlement proposed that it not change again while in the transitional period. The transitional period, however, will end after 2020.
This incentive will decrease by $400 each year after 2020, and it will expire in 2024.
The Impact of Industry Setbacks
Increased solar panel cost doesn’t mean that solar is ending. Although it is a setback, development and growth in the solar industry continues. Solutions to industry setbacks are what make this energy solution a reliable choice for customers.
Go With a Company That Has Stocked Up — It’ll Save You Money
Smart American solar companies stocked up on their particular solar panel brands in the months leading up to the trade-tariff decision. Consequently, the range of solar companies thinned out. Only the ones who handle their money wisely remain.
Those that didn’t have the financial backing to invest in their products were weeded out. This industry thinning is an advantage for the customer, because they can have more confidence in solar moving forward.
Companies that have taken the necessary precautions will not get hit as hard as those that don’t. As a result, the prices of prepared companies will stay consistent longer. It isn’t too late for individuals interested in solar to invest in a solar array.
Where Utah Solar Will Go From Here
Within the past couple of years, there have been a whirlwind of changes in the solar industry. As a result, we have seen that these changes will not stomp out the best solar power companies in Utah.
Don’t be afraid to take a step in the right direction. Solar will win the fight for worldwide renewable energy, regardless of the challenges that competition puts before it.
Fear of the future is inevitable, but the courage to embrace opportunities will secure it. Be among the brave pioneers of renewable energy and see your savings as you take advantage of the federal and state incentives available today.