Pennsylvania solar incentives, tax credits and rebates

Financial resources for Pennsylvanians in 2024

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beautiful elevated house powered by solar with landscape and big trees behind

There’s no way around it: installing solar panels is expensive. In Pennsylvania, a typical 10-kilowatt residential system costs $29,225 before any financial incentives. That price drops to $20,458 after considering the federal solar tax credit. 

Residents can take advantage of additional financial incentives, statewide net metering and legalized power purchase agreements. In fact, Pennsylvania ranks among the best states for solar.

Key insights

The federal solar investment tax credit (ITC) is the most significant solar incentive in Pennsylvania. Tax credits offset your tax liability, so it’s only useful if you owe federal income taxes in the first place.

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Pennsylvania’s solar rebates and alternative energy credit program can also make clean energy improvements more affordable.

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Leasing or entering a power purchase agreement (PPA) is often cheaper upfront, but you won’t be eligible for the federal solar tax credit and other financial incentives.

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Residential solar panel incentives in Pennsylvania

The federal solar investment tax credit (ITC) reduces your federal tax liability by 30% of the cost of installing solar panels. This tax credit applies to both residential and commercial installations and includes the cost of the solar panels and other equipment, labor and additional features for monitoring the system.

The ITC drops to 26% in 2033 and 22% in 2034.

The ITC is not a rebate or a refund. It only offsets your tax liability; you can't take advantage of the ITC if you don’t owe taxes in the first place. For example, if you spend $10,000 installing a solar panel system, then the ITC is worth $3,000. If you owe $15,000 in taxes, then the ITC reduces your owe to $12,000. To claim it, you have to complete Form 5695.

The credit is nonrefundable. However, if you don’t use the full amount in the year your system becomes operational, it rolls over to future tax years.

Solar water heater rebates in Pennsylvania

Duquesne Light Company offers its residential customers a $300 rebate on a new solar water heating system after installation.

Additionally, the FirstEnergy (MetEdison, Penelec, Penn Power, West Penn Power) residential energy efficiency programs offer a $500 rebate to residential customers who install a new solar water heating system. Equipment must be ENERGY STAR certified to qualify.

More solar incentives in Pennsylvania

What to know about net metering in Pennsylvania

Net metering allows your meter to spin backward when your solar panels produce excess electricity, which is credited at the full retail rate on your next bill. Any remaining excess generation is compensated at the end of the year based on your utility’s “price-to-compare” rate for energy generation and transmission costs. The net metering “year” aligns with Pennsylvania’s June 1 through May 31 compliance period for renewable energy goals.

One resident, Ted in Huntingdon, Pennsylvania, hasn’t paid an electric bill in more than a year thanks to net metering credits. “Penelec owed me money,” he said. “When I went and started generating this, they had to pay me back.”

At the end of each year, utilities in Pennsylvania pay solar customers for surplus credits above 1,000 kilowatt-hours (kWh) at the average annual avoided cost rate. Customers retain net metering benefits for 15 years after installation.

The Pennsylvania alternative energy credit program provides additional compensation for solar power generation — typically $30 to $47 per megawatt-hour (MWh). The state also allows meter aggregation.

  • Alternative energy credits: Pennsylvania law requires electric companies to get 18% of their power from renewable sources like solar. There is even a solar-specific rule that requires utilities to procure a small percentage of their electricity sales directly from local solar panels. So, for every mWh of solar electricity you generate, you earn an Alternative Energy Credit (AEC). You can sell your AECs to the electric companies separately from the power itself. Register your solar panels through the PennAEPS website.
  • Meter aggregation: You can combine multiple meters on properties you own or lease within two miles, which especially benefits farms and businesses with separate buildings. To qualify, you must have an on-site electric load at the location of the solar system. Virtual meter aggregation across your properties is also permitted, with you only paying the utility’s incremental processing costs. Currently, there is a $100 fee to connect your solar panel system to FirstEnergy-affiliated electric companies.

» GREENEST STATES: Pennsylvania ranked 24th in 2024

How much are solar panels in Pennsylvania?

Before considering the federal solar tax credit, solar panel costs in Pennsylvania typically range from $10,229 to $29,225. On the higher end, one solar customer in Pennsylvania told us they paid $100,000 for a system, including a $23,000 battery.

Average solar panel installation cost by system size in Pennsylvania

Solar resources in Pennsylvania

Below are some additional resources to guide you through transitioning to solar in Pennsylvania.

Find solar companies in Pennsylvania

Compare popular solar companies below. Read our guide to finding Pennsylvania's best solar companies for more information.

Do you own or rent?

FAQ

Can I get free solar panels in Pennsylvania?

Pennsylvania doesn’t have programs that offer free solar panels. You can lease or enter a PPA with little to no upfront cost, though.

» FREE SOLAR PANELS: Are they really free?

What is the High Performance Building Incentives Program?

The High Performance Building program provides loan funds to individuals and small businesses that help underwrite the cost of design and construction or major renovation of high-performance buildings in Pennsylvania. Projects with solar systems of all kinds are accepted into this program.

The program is administered by the Department of Community and Economic Development (DCED) and the Department of Environmental Protection (DEP). Loans for individual residential projects are capped at $100,000 and small business loans are capped at $2 million.

There are also grants available for high-performance building projects up to 10% of the total eligible building construction/renovation costs up to $500,000. A matching investment of $1 for $1 of program funds awarded is required as well as a 1% commitment fee on all approved loans.

How can I pay for solar panels?

Paying upfront is the most obvious way to pay for solar panels, but many don’t have that kind of money saved up. If you’re one of those people, you can finance solar panels with a solar loan. It works a lot like any other type of loan — there’s an application and approval process, and you pay it back over time (with interest). You could also go with a lease or power purchase agreement (PPA).

» SOLAR PANELS: Lease vs. buy

How much can I save with solar panels in Pennsylvania?

Over 25 years, Pennsylvania homeowners with solar panels avoid $58,076 in utility costs on average. Your current electric bill is the starting point for assessing the financial benefits of transitioning to solar energy. Knowing your average energy consumption helps determine the size and capacity of the solar system you need. Once you know this, you can figure out potential savings and how long it should take for your solar installation to pay for itself.

Are there any solar options for renters in Pennsylvania?

Legislation to create a community solar program in Pennsylvania passed the state house with bipartisan support in March 2024. A community solar program would open access to renewable energy for thousands of residents who live in homes or situations that do not support solar panels on their property.

The Pennsylvania Public Utility Commission runs PAPowerSwitch, a site for consumers to shop for rates on energy. Among the options are renewable energy sources like solar. Contact your supplier to learn more about their distribution of renewable energy sources. 

» GREENEST STATES: Pennsylvania ranked No. 24

Do solar panels increase property taxes in Pennsylvania?

There is no property tax exemption for solar panel installations in Pennsylvania, and your new system may add value to your property. The added value to your property may result in a property tax increase.

Is my HOA allowed to restrict solar panels?

Possible. Pennsylvania has no laws preventing an HOA from stopping solar installations in their neighborhoods.

What has Pennsylvania’s investment in solar been so far?

Total solar investments in the state equal $3.9 billion, according to the Solar Energy Industries Association.

How do I know if my house is a good candidate for solar?

For optimal sun exposure, it’s best to have plenty of unshaded roof space facing south or west. It’s also smart to upgrade any old, inefficient appliances first. Reducing your electrical loads now means you can get a smaller system, which will be cheaper. The condition of your roof matters too — if it needs replacement soon, do that before installing solar panels. Installing solar panels on an old roof might mean you have to remove the panels, replace your roof and then reinstall the panels. This can be an expensive and frustrating process — avoid it if you can.

Bottom line

When it comes to solar incentives, Pennsylvania has a bit of catching up to do compared with other states. There are a handful of rebate programs and a loan program in place, but the state lags in providing robust incentives for solar panels.

After tax credits, the average 10-kW system is $20,458 in Pennsylvania ($29,225 before the ITC), which is a little more expensive than the national average. It’s still worth it for many residents in Pennsylvania — solar panels typically pay for themselves within 9.5 years.

The ConsumerAffairs Research Team conducted an in-depth analysis to determine how much it is to go solar in Pennsylvania and the average costs in other states.

Solar costs vs. savings: Pennsylvania and nearby states

* For 100% usage offset; ** Over 25 years

Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1. DSIRE, “Pennsylvania Programs.” Accessed April 10, 2024.
  2. EnergySage, “Pennsylvania solar panels: local pricing and installation data.” Accessed April 10, 2024
  3. EcoWatch, “ Solar Panel Cost in Pennsylvania .” Accessed Sept. 12, 2023.
  4. Penn State Extension, “ The Origins and Meaning of Net Metering.” Accessed Sept. 12, 2023.
  5. Environmental Protection Agency, “ Summary of Inflation Reduction Act provisions related to renewable energy .” Accessed Sept. 12, 2023.
  6. Solar Energy Industries Association, “Pennsylvania Solar.” Accessed April 10, 2024.
  7. SolarReviews, “How much do solar panels cost in Pennsylvania, 2024?” Accessed April 10, 2024.
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