On average, Wisconsin receives 187 days of sunlight every year. This makes it the ideal climate for switching to solar energy.
Solar power systems depend on the sun’s energy, and the more sunny days you have, the better value you get from going solar.
The average cost of solar installation in Wisconsin is around $20,000. However, there are several different ways to save on this initial outlay.
Federal tax credits, sales tax exemptions, property tax exemptions and rebates can reduce solar installation costs to between $12,962 and $17,538. The amount you pay is dependent on where in Wisconsin you are located. Some areas are not eligible for rebates while installing solar power in other areas is simply more expensive.
Below are some of the savings that you can expect when you install a solar power system in your home.
Federal Tax Credit
You get 26% of the total cost of solar power installation as a credit on your federal tax. This amount is credited to the tax that you owe and is not a monetary amount awarded to you in the form of a refund or rebate. That’s more than a quarter of the cost of installation that you will save.
However, you better hurry if you want to take advantage of this incentive. As of the end of this year (2021) the tax credits will be reduced to 22%. At the end of 2024, the Federal Tax Credit incentive will fall away entirely, meaning you will miss out on this saving.
Those who are eligible can receive a $500 rebate on solar power installation costs in 2021. To be eligible, you need to live in areas where the utility provider is a Focus on Energy Partner.
The solar system setup must also meet some requirements. The solar panels must face within 90 degrees due South. The panels must receive no more than 10% of shade from nearby trees, vegetation or structures. There are a couple of other eligibility criteria.
If you are eligible, submit your application for the rebate after the installation has been completed, and you will receive a check in the mail for $500.
Property Tax Exemption
Solar power installation is considered to be a home improvement. A home improvement increases the value of your property and, therefore, the amount of tax you pay.
In Wisconsin, solar installation is 100% exempt from property taxes. In other words, the amount by which the solar system increased your property value will not be taxed.
Sales Tax Exemption
When you buy your solar system, you are exempt from paying the 5% sales tax required for the purchase of all other items in the state of Wisconsin.
While this may not seem like a considerable saving, when you are looking at spending $20,000 on a solar system, it is a significant discount of $1,000.
This amount is not deducted from the cost of the solar system but rather not added to the purchase cost. For example, if your solar system costs $20,000, you would pay $21,000 with sales tax. You only pay $20,000 with sales tax exemption.
Net metering credits you with any energy that the solar system produces that you don’t use. For example, if your solar system produces more kilowatts during the day than your house needs, you will be credited with those kilowatts at night when you are using grid electricity.
However, the system does not work on credit for credit basis in Wisconsin. It costs about 4 cents for a utility provider to produce 1 kilowatt of electricity.
Solar customers are credited with around 12 cents per kilowatt of solar energy. There is currently much debate as to the fairness of this crediting system.
It means a savings of up to 3 times per kilowatt that they can produce and not use for solar power customers. These savings can make a significant impact on offsetting the cost of solar power installation. You need to apply for net metering with your current utility provider to benefit from this program.
On average, solar power amounts to a savings of around $1,500 on an average household utility bill per year. Inflation and increases in power rates may mean that you save even more.
After considering the Federal tax credit, this savings means that your solar system pays for its installation in about 7.5 years.
When taking into account savings from the sales tax exemption and the property tax exemption, the pay off time is even shorter. If you are eligible for the 2021 $500 rebate, you pay your installation costs even faster. And that’s before you take into account net metering.
Once your solar power system has been repaid in full, the savings you make on your utility bill, property tax exemption and net metering can be placed in your back pocket.
Installing a solar power system in your home will provide you with significant savings and add value to your property. Going solar is, therefore, an excellent investment.