After a rapid passage through the House of Representatives and Senate, the Inflation Reduction Act of 2022 was signed by the President and has now become law. The largest act of its kind, the Inflation Reduction Act of 2022, will direct almost $370 billion to energy security, clean-energy incentives, and climate-change-related programs over the next ten years. The plan is designed to reduce U.S. dependence on high-emissions oil and gas infrastructure by reducing renewable energy costs through tax incentives.
This act will have a positive impact on the solar industry, from the manufacturers to the end users. We’ll examine the three most significant effects of the Inflation Reduction Act and explain what they mean for Californians who are interested in going solar.
Extended Tax Credits
The first question that most homeowners and business owners ask about the IR Act concerns the tax incentives. It is important to note that the federal investment credit was in flux prior to the IR Act. The ITC for systems installed before the end of 2022 was 26%, and the program ended that year. The solar ITC was increased to 30% thanks to the IR Act. Additionally:
The ITC will stay at 30% until 2032.
Retroactively, the higher ITC rate applies to all systems installed after 2021.
The new ITC applies expressly to Solar Batteries even if they are not installed at the same time.
This is an important development for the solar industry, as it removes the uncertainty that many customers face when it comes to incentives. Simply Solar can continue to save our customers thousands of dollars on solar energy systems for the next decade, thanks to the extended credit.
Solar energy will become more affordable for millions of home and business owners with a 30% tax credit. This is a major step in reducing the nation’s carbon emissions.
Expanded Production of Solar Panels
The Inflation Reduction Act contains a tax credit for advanced manufacturing production that is available to manufacturers of clean tech and energy products. It even extends incentives to their supply chain. Tax credits for solar energy are up to $35 per kWh per battery cell and $10 per module. Solar modules are eligible for a number of credits, including
Solar cells
Solar bets
Solar grade polysilicon
Backsheets made of polymeric
Solar modules
Inverters can also get credit for:
Central inverters
Utility inverters
Commercial inverters
Residential inverters
Microinverters
Credits are also given for structural fasteners and torque tubes required for racking. Tax credits for key components such as solar panels, racking, and inverters are expected to boost the production of solar panels. A more robust domestic production will not only ensure better quality but also reduce reliance on imported solar panels. This will lower prices for the consumer.
Electrification incentives
The Inflation Reduction Act places a high priority on reducing emissions. It offers rebates for home energy to encourage the purchase of electric appliances and discounts at the point of sale for new and used electric cars. Electric machines and electric vehicles become more attractive when paired with solar energy systems and battery backup. Would you switch to an electric boiler powered by the solar energy system in your home if you could receive your money back? Who would refuse an affordable EV that they could charge with their home’s battery-powered solar storage system?
The ITC covers most electric HVAC systems and water heaters. So, going solar and all-electric is the best way to benefit from the Inflation Reduction Act and reduce your energy bill at the same.
Take Advantage of Simply Solar
Solar energy will become more affordable for millions of Americans thanks to the Inflation Reduction Act. In 2022, prospective residential and commercial solar customers will be able to take advantage of multiple incentives.
Solar storage tax credit up to $1,000 at 15%
Solar installations are exempt from paying property tax on the additional value.
The SMART program offers incentives to install battery storage along with a solar power system.
Net metering and time-of-use rate.
DAC-SASH offers low-cost Solar for low-income families.
Self-Generation Incentive Program for Systems Smaller Than 10 kW
The Inflation Reduction Act has made it easier than ever to gain energy independence and save money with a solar power system. Simply Solar can help you with solar power for your California home or business. We will provide the best components and professional service.