Connecticut Solar Incentives and Rebates Guide
Key Takeaways
- The northeastern state of Connecticut offers many U.S. government-funded financial initiatives.
- The federal solar tax credit is a federal incentive that offers residents of Connecticut a 30% tax credit through the year 2032.
- Local solar incentives include rebates that work with Connecticut utility providers.
- The Residential Renewable Energy Solutions (RRES) Program offers Connecticut residents a chance to earn credits for their excess solar energy and reduce their electricity bills.
Per an ecowatch report, “The average home solar power system in Connecticut costs $26,175. But after you file for the federal solar investment tax credit, the average net cost comes down to roughly $18,323.”
Even after the solar investment tax credit, spending nearly $20K for a photovoltaic (PV) system—no matter how good the environmental benefits are—is a lot for most residents. That’s why it’s important to dive into other initiatives that can lower your system costs. These initiatives are offered at the Connecticut state and local levels and supplement the Federal Solar Investment Tax Credit (although this initiative is significant alone). Here’s a look at the programs Connecticut residents may be eligible for.
Connecticut Solar Rebates and Tax Credits
Connecticut ranks as one of the top 10 states with the highest electricity bills, with monthly bill totals higher than the national average. Any initiative to help offset energy costs and lower utility bills is a welcome program for residents of this state. Energy efficiency improvement programs can help increase installation and use of renewable energy systems and efficient solar equipment, including energy storage.
Property Tax Exemption
The Connecticut property tax exemption helps homeowners concerned with increased property taxes make the leap to solar. Generally, any property-increasing improvements will up your property taxes—sometimes causing homeowners to put energy-saving and efficiency improvements on the back burner. With property tax exemptions offered through the Connecticut Department of Revenue Services, however, homeowners can install solar panels without worrying about higher annual taxes.
Sales and Use Tax Exemption for Solar and Geothermal Systems
This program allows commercial and residential solar customers, solar installers, and contractors to take advantage of the 100% sales tax exemption for the following solar systems: solar water heat, solar space heat, and solar photovoltaics. You won’t pay sales tax, and you can factor in this tax savings when calculating the overall cost of your solar installation and payback period (more on payback periods later). With no expiration date, this program covers both installation costs and equipment costs-related taxes.
Residential Renewable Energy Solutions (RRES) Program
While Connecticut does not have net metering, the state did implement the Residential Renewable Energy Solutions (RRES) Program. This program was launched in 2022 and replaces the state’s net metering program. The program provides tariff compensation to solar system owners in the residential sector. Similar to net metering, the program compensates solar energy system owners for how much energy their systems produce and send back to the electric grid, but the RRES program also includes increased compensation for low-income communities. This program is offered through two of Connecticut’s regulated electric companies: Eversource Energy and The United Illuminating Company (UI).
Once you apply and are accepted to this program, you have two ways of getting compensated for your energy. The first is called the buy-all incentive, where all the power your solar system produces gets sent to the grid. Under the other option, called the netting incentive, your solar system will be responsible for supplying your energy to your home first before excess electricity from your solar panel system is sent to the grid. (This process is similar to net metering).
Power Purchase Agreement
Connecticut offers a power purchase agreement (PPA), which is available for eligible low-income households. A PPA is a financial arrangement where a developer manages the design, permitting, financing, and installation of solar panels on a customer’s property at little to no upfront cost. The developer then sells the generated electricity to the customer at a fixed rate, typically lower than the local utility company rate, reducing the customer’s electricity costs. The developer benefits from electricity sales and tax incentives. The agreement usually lasts at least 10 years, and the developer is responsible for the maintenance and operation. At the end of the term, the customer can extend the agreement, have the system removed, or purchase it.
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Local Solar Incentives
The Connecticut Green Bank offers loans for homeowners looking to increase their energy efficiency any way they can. The bank’s site includes resources to find a reputable contractor and outlines the steps to obtain a Smart E-loan. To be eligible for this loan, the home must be an owner-occupied residential building with one to four units. A Smart E-loan includes no money down and has low-interest financing.
Connecticut Property Assessed Clean Energy Program (C-PACE)
The Connecticut Green Bank also offers funding for eligible commercial buildings through the Connecticut Property Assessed Clean Energy program (C-PACE). The long-term funding provided through this program can last up to 25 years and help commercial properties save money by reducing their overall building maintenance costs.
Roof Leasing Opportunities with Green Bank
The solar roof lease option allows commercial buildings and nonprofits to utilize the space on their roof for the greater good. You can offer your roof to the Green Bank to install solar panels and obtain regular revenue while increasing environmental benefits. According to the Green Bank’s website, this is a win-win for both the bank and commercial buildings looking to generate more regular income. For buildings with a roof that cannot accommodate solar panels, a solar company can install panels on the ground so you can still reap the benefits.
Furthermore, with many businesses making their environmental, social, and governance (ESG) goals public, installing solar panels can help your clients see that your business is taking concrete steps to realize its benchmarks.
Connecticut Green Bank Solar For All Program
Many low- and moderate-income communities are slower to adopt energy-saving measures, often based on the perception that funding is out of reach. The Connecticut Green Bank Solar launched a program in 2015 for low- and moderate-income households, and since then, more than 3,000 solar installations have been installed for low- and moderate-income homeowners through the program. Residents who have taken advantage of the program have seen significant savings, especially during the summer when the monthly bill for electricity is high because of air-conditioning use.
Federal Incentives for Solar Panels
Federal Tax Credit
Connecticut residents can take advantage of federal tax credit incentives in addition to the above-mentioned solar incentives. The government’s tax credit program helps all residents of the United States save on solar-associated costs. The Inflation Reduction Act of 2022, which gave us the federal solar tax credit, offers a 30% tax credit on systems installed from 2022 through the end of 2032. In fact, according to Consumer Affairs, this initiative is the most noteworthy solar incentive for many Connecticut homeowners. For residents who install their system after 2032, up to a 26% federal tax credit can be obtained. For installations in 2034, solar system owners could see up to 22% in savings. This federal program has no financial limit, which means large installation projects can take advantage of these valuable savings.
Federal Solar Investment Tax Credit
| Through 2032 | 30% |
|---|---|
| 2033 | 26% |
| 2034 | 22% |
Impact of Payback Period on Your Solar Energy System
Knowing how and when you will see savings once you take advantage of solar incentives depends on various factors, including your upfront costs and the incentives you are eligible for. Once you’ve factored in your expenses and subtracted costs saved by the solar incentives you get, you’ll be closer to determining your solar payback period. But what exactly is a payback period?
A payback period is the length of time it takes for the savings generated by an investment to match its cost. State, local, and federal incentives help decrease this time, so you have a shorter payback period. Most Connecticut residents pay off their panels in 5 to 11 years. System size and local electricity rates are key factors that affect your payback period.
| Typical 6kW solar system installation cost | $17,700 |
|---|---|
| 30% Federal Tax Credit | $5,310 |
| Total Cost After Incentives Not including local incentives, which vary | $12,390 |
| Assumed Electricity Produced by a 6kW Solar System in Connecticut | 8,836 kWh |
| Annual Electricity Cost Reduced or Offset Assuming 100% utilization by the home | $2,608 |
| Sample Payback Period | 5 years |
Sources: https://www.nrel.gov/docs/fy22osti/83586.pdf, https://globalsolaratlas.info/map (Bridgeport); https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a
Conclusion
For residents of Connecticut, solar panels may once have been considered a pipe dream—too expensive to install. But with Connecticut’s participation in local, state, and federal programs, residents and businesses can use solar initiatives and hire a solar installer to help them generate their own clean energy and reduce their payback period. Residents and businesses in Connecticut can get on board with taking steps to reduce their carbon footprint and their electric bill.