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Solar Power

Rooftop Solar

Electricity produced at or near the point where it is used is called  Distributed Generation (DG). Distributed solar energy can be located on  rooftops or ground-mounted, and is typically connected to the local  utility distribution grid. There are a wide variety of policies at the  federal, state and local level that impact distributed solar and  its customers. 

Net Metering

Net metering allows residential and commercial customers who generate  their own electricity from solar power to sell the electricity they  aren’t using back into the grid. Many states have passed net metering  laws. In other states, utilities may offer net metering programs  voluntarily or as a result of regulatory decisions. Differences between  state legislation, regulatory decisions and implementation policies mean  that the mechanism for compensating solar customers varies widely  across the country. 

Solar Rebates & Incentives

Effective direct  incentives for solar energy can take a variety of forms depending on the  administrative abilities of a given state. Some states have chosen to  offer tax credits, others offer up-front rebates administered by state  agencies or utilities, and still others offer performance-based  incentives that are paid by an agency or utility over time based on  kWh production.


Key Principles for Direct Solar Incentive Programs


  • Set incentives for payback targets– The  incentive levels should be set so that solar system owners recoup their  system costs over five-years for commercial customers and ten-years for  residential customers. With lower installed costs, cheaper financing,  and greater tax benefits, commercial systems can be offered lower  incentives than residential systems. Incentives can also be tiered by  system size. In order to build a significant market, states with very  low energy rates or little sunshine sometimes must offer larger  incentives than states with high electricity costs and/or plentiful  sunshine.
  • Encourage efficient systems design– Where  possible, incentives should reward high-performing systems. Direct  incentives can be adjusted to encourage systems that maximize peak  energy production. A performance-based incentive (PBI) is based on the actual energy production of a system. PBIs inherently  incentivize optimal system design and encourage active, ongoing  maintenance.
  • Phase out incentives over times– One of the main  reasons for enacting solar programs is to jump-start a local solar  industry. As the market grows, costs will decline through increased  sales volumes and competition. Solar panels are largely commoditized and  while declining panel prices reduce the installed costs of solar around  the world, developing local installers is still a critical part of  building a vibrant solar market. As the installed cost of solar  declines, incentives can decline as well.
  • Keep it simple– A certain amount of paperwork and  verification is necessary and prudent, but burdening solar customers  with a difficult incentive application process or overly prescribing the  qualifying conditions can hamper or halt an otherwise effective  program.