A standard 100 kW commercial or agricultural roof-mounted solar panel system in Delaware would cost $225,700 before utilizing any available incentives. The net cost would be $99,094 after the 30% federal tax credit and depreciation.
Pro Tool: Try our solar calculator for a quick estimate of your installation cost and savings.
How To Pay For Solar Panels In Delaware
In Delaware, you have various payment options for your solar panel system.
Opting to purchase the system outright with cash or a loan is a smart choice as it offers the best return on investment. By doing so, you can take advantage of incentives like tax credits, SRECS, and electric savings while also owning a valuable asset that reduces costs.
For those looking to sidestep the initial expense of solar installation, third-party financing options such as solar leases provide an alternative. With a solar lease, you can make minimal or no upfront payments in exchange for monthly installments.
Remember that the third party will maintain ownership of the system and reap the benefits of all available incentives when using a lease. There are often price escalators and other stipulations that you must be aware of beforehand. These agreements can also make it challenging to sell the property.
What Solar Panel Incentives Are Available In Delaware?
Delaware offers several incentives available for your solar panel investment.
The Tax Benefits
The main benefit is the federal tax credit. Homeowners will get a credit of 30% of the system installation cost. For example, if your system costs $25,000, your tax credit will be $7,500.
The solar tax credit is a little more complex for commercial and agricultural systems. It starts at 30% for systems under 1 MW AC and has the opportunity to grow to 70%.
In addition to the tax credit, businesses can capitalize on accelerated depreciation, taking 60% of the federal depreciation in year one. The remaining 40% and state depreciation will follow the five-year MACRS schedule. However, the 60% accelerated portion is only available in 2024. In 2025, it will drop to 40% and continue to drop by 20% until it reaches zero. At that point, 100% of the depreciation will follow the five-year MACRS schedule.
Additional Insight: Visit our commercial tax benefits blog to learn more.
USDA REAP Grant for Delaware Farmers and Other Qualifying Businesses
Qualifying Delaware farmers and other businesses can obtain a USDA REAP grant covering 50% of the installation cost up to $1 million. However, the 50% grant is only available through September 2024 and has limited funds.
We expect the grant to drop to 25% after the 50% rounds end. However, this is subject to change at any time.
Available Solar Incentives from Delaware Utility Companies
Although the State of Delaware currently does not provide grants or incentives, several Delaware utility companies are offering assistance. Customers of Delmarva Power, Delaware Electric Cooperative, and Delaware Municipal Electrical Corporation (DEMEC) may be eligible for additional funds to support the installation of their solar systems.
Delmarva Power customers could benefit from the Green Energy Grant, which provides $0.70/watt for a maximum of $6,000 for residential and $30,000 for non-residential systems. However, this grant requires you to forfeit the rights to your SRECs for the life of the system.
Delaware Electric Cooperative contracted with Energize Delaware to provide funds for qualifying systems. This program offers $0.70 per eligible watt for residential and commercial, with a maximum of $2,000 for residential and $10,000 for commercial. Using these funds will require you to forfeit your SRECs for the life of the system since it’s essentially an SREC pre-buy program.
How Solar Renewable Energy Credits (SRECs) Work In Delaware
Solar owners generate 1 SREC for every 1,000 kWh their solar panels produce. That SREC can then be sold to generate additional income for the system owner.
Delaware residents can participate in the state’s SREC bidding program to lock in a bid. This will allow them to receive that amount per SREC for 10-20 years, depending on the current bidding program contract period.
If you don’t participate in the bidding program, your other option is to sell your SRECs into Pennsylvania’s secondary SREC market.
It’s important to note that if you participate in the Delmarva Power or Delaware Electric Cooperative grant programs, you will have agreed to forego your rights to sell your SRECS.
How Net Metering Works In Delaware
Delaware Net Metering regulations require utility companies and cooperatives to pay all eligible customers with solar energy systems for their system’s production. A system eligible for net metering can not cover more than 110% of your annual electricity usage.
Overproduction is rolled over as a credit to the next billing cycle. No payments are issued for overproduction in Delaware.
If you’re a Delmarva Power customer, your excess credits will be wiped out at the end of your billing anniversary. You’ll start again at zero in the next billing year.
The Average Payback Period For Solar In Delaware
Solar panel systems offer Delaware residents immediate tax savings and long-term energy savings, providing a reliable and consistent payback that can be counted on.
Solar is a front-loaded investment, which is one of the greatest benefits of solar. The federal tax credit and accelerated depreciation for businesses can be utilized in the first year soon after the system is energized.
Here is the typical payback period and ROI that you can anticipate in Delaware (keep in mind that these figures may vary significantly based on your situation):
The average residential payback period in Delaware is 18.6 years, with an ROI of 7%.
Delaware businesses can expect to reach payback in around 11 years, with a high 18% return on investment.
Most solar panels come with a 25 to 30-year warranty and should continue to produce energy for 25 to 40 years. This equates to homeowners enjoying more than 15 years of free electricity, while businesses can reap the benefits for over two decades.
When deciding, consider the solar panel system’s longevity in relation to potential tax savings, energy efficiency, and environmental advantages. While solar panels are a valuable investment for many Delaware residents and businesses, solar energy may only be suitable for some.
* Sources: Average Annual Stock Market Return and Average Annual Roth IRA Return
Tips For Choosing A Solar Installer In Delaware
When choosing a solar company, not all are created equal. To help receive a top-notch installation and get the most out of your savings, it’s essential to:
- Only consider companies with lengthy industry experience and the proper industry and electrical certifications
- Read reviews on Google and SolarReviews.com. Also, ask to speak with past customers
- Make sure the quote clearly defines the system cost, production, and warranties
- Pick a company that offers a production guarantee and workmanship warranty. These should be in addition to the product warranties offered by the equipment manufacturers.
- Verify they will handle all grant, permitting, and utility interconnection paperwork on your behalf.
Confirm that they have a maintenance team available to service your system if needed.
Visit our project gallery to view other solar installations in Delaware.
Frequently Asked Questions When Going Solar In Delaware
Is Solar Right For You?
With Delaware’s sufficient amount of average sunshine, attractive solar incentives, and increasing electricity costs, the case for investing in solar power is both financially and environmentally persuasive.
To discover how solar energy can help you save more of your hard-earned money, simply click the button below to receive your free custom quote.
If you’re not ready for a quote, visit our learning center for valuable blogs, videos, and other tools that will help you on your solar journey.
