What Are the Types of Solar Incentives?

Solar incentives often make or break the motivation for a homeowner to get solar. Depending on the physical location, your client may be eligible for various types of incentives at the utility, state, and federal level. It’s important for solar sales people to have a firm understanding of the different incentives and rebates and how they affect the financials of their customer’s home solar installations.

In this video excerpt from the Customer Contracts & Agreements course, we hear from the Director of Insights at EnergySage, Spencer Fields, as he explains the two types of solar and storage incentives – one time and ongoing. Tune into the video or read the transcript below. 

To dive deeper into rebates and incentives, consider enrolling in the Customer Contracts & Agreements course.

At a high level, there are really only two main types of solar and storage incentives and rebates – one time and ongoing.   

One time incentives are typically lump sum bulk payments of a cash rebate or a tax incentive. The key characteristic of these types of incentives and rebates is that it doesn’t matter how well your solar or storage system performs. 

It’s an incentive designed to get more people to adopt these technologies overall. So all that matters is that you purchase and install these products.  

For the most part, one time incentives are generally tax incentives. In fact, the Federal Investment Tax Credit, or ITC, which is the best financial incentive for solar, is this kind of incentive. 

Ongoing incentives, on the other hand, pay for the performance of the products. This could be in terms of the amount of energy generated by the solar panels, the emissions avoided by that energy, or grid services provided by your battery, for instance. In other words, ongoing incentives take the form of SREC or performance-based incentive payments.

It can be helpful to think about or frame net metering as this type of incentive too. Ongoing incentives will typically show up as a monthly bill credit, or in some cases, as a monthly check or direct deposit into your customer’s bank account by their utility.  

These financial incentives are offered by three main parties: the federal government, your state government, or your local utility.

In some cases, there will be overlap of the incentives offered by these different entities. For instance, your customers may be eligible for tax incentives from both the federal government and your state government.  But typically, ongoing or performance based incentives are only offered at the state or utility level.