The Inflation Reduction Act is the most aggressive climate action in United States history. The Inflation Reduction Act provides a number of incentives for homeowners and businesses who install solar panels and standalone battery storage, including tax credits covering up to 30% of the installation costs. The Solar Futures Study finds that with aggressive cost reductions, supportive policies, and large-scale electrification, solar could account for as much as 40% of the nation’s electricity supply by 2035 and 45% by 2050.
In 2023, solar power installations are projected to expand rapidly due to the Inflation Reduction Act’s incentives. What makes the Inflation Reduction Act different in 2023 compared to when it was introduced in 2022 is that in addition to tax credits on solar systems that are paired with battery storage, it now also covers battery storage installed without solar.
What Is the Inflation Reduction Act?
In answer to the persistent call for global climate reform, Congress passed and signed the Inflation Reduction Act into law in August 2022. This legislation sought to dramatically decrease US carbon emissions by 42% by 2030.
This bill contained multiple objectives, such as amendments to the taxation system in order to finance these new programs, broadening of the Internal Revenue Service (IRS), and minor adjustments to our healthcare infrastructure. The primary focus of the $369 billion package, however, is to reduce our energy consumption. This is done largely in the form of tax credits for solar panel systems, energy efficient home improvements, and certain electric vehicles, just to name a few.
With the latest updates to the Inflation Reduction Act, the non-profit sector is also eligible for credits. This allows 501c3-designated nonprofits, houses of worship, municipalities, and other non profit organizations to participate in the program. Learn more in our blog, “IRA Updates Provide Great News for Businesses and Nonprofits.”
How Do Solar Credits Work?
Homeowners, investors and commercial property owners can take advantage of the Inflation Reduction Act solar tax credits – providing a generous 30% tax credit on solar systems that are paired with battery storage as well as standalone battery storage installed without solar.
By reducing the costs associated with installing solar, more homeowners and property investors will become inclined to invest in this renewable energy source. Considering the long-term energy savings, emissions reductions, home value increase, energy independence, and new tax credits, it’s too good of a deal to pass up.
How Will This Change the Solar Industry?
Expanding the Customer Base
One of the most profound impacts this will have on the solar industry is that it opens up participation to more people than ever before. Ten years ago, installing rooftop solar panels was seen as a luxurious sign of wealth – given the high cost and difficulty of acquiring them.
Solar panels and installation have seen a significant drop in costs since then, making them more accessible to everyone. The cost of solar energy has dropped drastically over the past few years, due to advancements in manufacturing and a surge of new competitors entering the market.
Despite this, solar panels are still an investment that requires financial resources. The recently introduced 30% tax credit makes solar energy far more accessible to typical households, creating a significantly larger potential customer base for the industry.
Improving Energy Storage
In 2023, the Inflation Reduction Act has expanded to cover new standalone battery storage installations without solar. This incentive provides a major boost to the residential energy storage market. For the majority of solar systems, excess energy generated by the sun is sent back to the grid. Once that energy is sent back to the grid, most utility companies* use net metering, which means that they’ll give a 1:1 credit for that extra power in monthly Duke Energy bills.
*Please note certain utility companies, including Union Power, Energy United, Blue Ridge Energy, do not have various rate plans for customers with solar energy.
See The Benefits of Solar For Yourself
If you live in North Carolina or South Carolina, there’s never been a better time to invest in a solar system for your home or business. Since the launch of the Inflation Reduction Act, solar energy has become more accessible than ever before. Now is the perfect time to take advantage of these incentives and invest in renewable energy sources like solar panels or battery storage systems. Contact RED Group today at 877-958-8072 to learn more!