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Pennsylvania solar incentives, tax credits and rebates

Resources for going solar in 2023

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

After tax credits, the average system is $15,173 in Pennsylvania ($21,676 before incentives), which is cheaper than in many other states. The national average for a solar system is $16,715.

Key insights

  • Pennsylvania has solar renewable energy credits (SRECs), rebates and loan programs.
  • In Pennsylvania, the average solar panel system costs $15,173 after the federal investment tax credit ($21,676 before ITC).
  • Philadelphia residents can qualify for a $200 rebate for every kilowatt of solar power installed.

Solar incentives in Pennsylvania

The federal solar investment tax credit (ITC) is the best way to make a new solar system more budget-friendly for Pennsylvania homeowners. If you decide to install a residential solar panel system by the end of 2032, you can get a federal income tax credit for 30% of the total cost on your federal income taxes. That includes everything: equipment, labor and permits.

For example, let’s say you get a solar setup that costs $20,000 before incentives. By using the ITC, you can claim a $6,000 credit when you file your federal taxes, effectively bringing your out-of-pocket expenses to $14,000.

The federal solar investment tax credit drops to 26% in 2033 and 22% in 2034.

Don’t get confused — the solar tax credit is not a rebate or refund. You must claim it when you file federal taxes for the year that your solar panel system was installed. You have to complete Form 5695 to save some cash while embracing clean, green energy in the Keystone State.

» MUST-KNOW: The tax benefits of owning a home: must-know deductions and secrets

Residential solar incentives

Pennsylvania doesn’t offer solar tax breaks for homeowners, but it does have a loan program to help pay for your new solar panel system. It also offers rebates on permits and solar water heaters.

Solar rebates

If you live in Philadelphia, you get a permit fee break for your solar installation. You'll only pay $25 for every $1,000 of labor. To qualify, your system must be 10 kilowatts (kW) or less and installed on a one- or two-family residential unit.

Residents can also take advantage of solar water heater rebates from their electric company. Duquesne Light Company’s residential energy efficiency program helps customers save $300 on solar water heaters. If you're a customer, you just need to fill out a rebate form and submit it to the company for payment within 60 days.

Solar loan programs

The High-Performance Building Program helps residents secure up to $100,000 with a fixed-rate loan to assist with building or renovating homes that will include solar. To qualify, the home you’re putting solar panels on must be your primary residence and must meet several building requirements. There is a $100 nonrefundable application fee to apply.

What to know about net metering in Pennsylvania

Net metering lets people with solar panels get credit for extra electricity they generate. This helps lower overall utility costs. In Pennsylvania, all electric companies must offer net metering to solar customers. Systems under 50 kilowatts (kW) qualify, while larger ones over 50 kW can use virtual net metering.

How net metering works

When your solar panels make more power than you need, the extra goes back into the utility grid. This earns you credits on your bill based on how much unused power you produce. If your solar panels produce less power than you use that month, the net metering credits help cover what you owe the utility.

The average estimated 25-year net savings for going solar are $23,634 in Pennsylvania.

For example, Huntingdon homeowner Ted 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 solar alternative energy credits program provides additional compensation for solar power generation — typically $30 to $47 per megawatt-hour (MWh).

» GREENEST STATES: Pennsylvania ranks No. 22

More incentives in Pennsylvania

Most of the solar incentives in Pennsylvania are for commercial use. The state and many cities offer loans, grants, building incentives and even industry recruitment perks for going solar in commercial, industrial and other sectors.

» MORE: Commercial solar panels

Incentive typeIncentive amountApplicable sectorsAdministratorAvailable statewide
Sustainable Development Fund Financing Program (PECO Territory) Loan Varies Commercial, industrial, nonprofit, schools TRF Sustainable Development Fund
Penelec SEF of the Community Foundation for the Alleghenies Loan Program (FirstEnergy Territory) Loan Varies Commercial, industrial, local government, nonprofit, schools, state government, federal government, institutional Community Foundation of the Alleghenies
Met-Ed/Penelec Sustainable Energy Fund Grant Varies Commercial, industrial, local government, nonprofit, schools Berks County Community Foundation
Sustainable Energy Fund (SEF) Loan Program (PPL Territory Loan Varies Commercial, industrial, local government, nonprofit, schools, state government, agricultural Sustainable Energy Fund of Central Eastern PA
West Penn Power SEF Commercial Loan Program Loan Varies Commercial, industrial The EMS Energy Institute of Pennsylvania State University
Metropolitan Edison Company SEF Loans (FirstEnergy Territory) Loan Varies Commercial, industrial, local government, nonprofit, schools, state government, federal government, institutional Berks County Community Foundation
Penelec SEF of the Community Foundation for the Alleghenies Grant Program (FirstEnergy Territory) Grant Varies Commercial, industrial, local government, nonprofit, schools Community Foundation of the Alleghenies
Small Business Advantage Grant Program Grant Up to 50% of equipment costs Commercial Small Business Ombudsman, Department of Environmental Protection
High-Performance Building Incentives Program Grant/loan Varies Commercial, residential Department of Community and Economic Development
Pennsylvania Alternative and Clean Energy Program (ACE) Grant Varies Commercial, industrial, local government, nonprofit, schools Department of Community and Economic Development
Alternative and Clean Energy Program Loan Varies Commercial, industrial, local government, nonprofit, schools Department of Community and Economic Development
Duquesne Light Company - Residential Energy Efficiency Program Rebate $300 Residential, multifamily residential, low-income residential Duquesne Light Company
FirstEnergy (MetEdison, Penelec, Penn Power, West Penn Power) - Residential Energy Efficiency Programs Rebate $500 Construction, residential, installers/contractors, low-income residential Metropolitan Edison Co., Pennsylvania Electric Co., Pennsylvania Power Co., West Penn Power Co.
City of Philadelphia - Streamlined Solar Permitting and Fee Reduction Green building incentive Permit fee reduction Commercial, residential, multifamily residential City of Philadelphia
Solar Alternative Energy Credits Solar renewable energy credit (SREC) Varies Commercial, industrial, local government, nonprofit, residential, schools, state government, installers/contractors, agricultural, multifamily residential, low-income residential Pennsylvania Public Utility Commission
Solar Energy Loan Program Loan Varies Commercial, industrial, local government, nonprofit, schools, agricultural Department of Community and Economic Development (DCED) and the Department of Environmental Protection (DEP)
PPL Electric Utilities - Business Incentive Program Rebate $250 per kW of peak demand reduction, $0.075 per kWh of peak energy reduction Commercial, industrial, agricultural PPL Electric

Solar resources in Pennsylvania

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

» GUIDE: Solar panel installation guide

Find solar companies in Pennsylvania

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    Can I get solar panels for free 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?

    How much can I save with solar panels in Pennsylvania?

    In Pennsylvania, the average savings is $23,634 over 25 years. Even if you don’t generate 100% of your energy needs, you can still save a lot of money versus paying traditional utility bills.

    Are there any disadvantages to going solar in Pennsylvania?

    Buying a home with leased panels is a nightmare, according to Erika in Harleysville. Another problem is that the state only gets 2.5 to 3.5 average peak sun hours per day, making it difficult to get enough sunlight to produce 100% of the energy your home needs if you don’t have space for many solar panels.

    » MORE: Solar energy pros and cons

    Is my HOA allowed to restrict solar panels?

    Unlike many other states, Pennsylvania has no laws preventing an HOA from stopping solar installations in their neighborhoods.

    How can I pay for solar panels?

    You can pay for solar panels upfront, but you can also finance solar panels with a solar loan. If you aren’t worried about owning your solar equipment, you could go with a lease or PPA (power purchase agreement).

    » SOLAR PANELS: Lease vs. buy

    Bottom line: How much are solar panels in Pennsylvania?

    In Pennsylvania, after factoring in tax credits, the average cost of a solar system comes to approximately $15,173. Pennsylvania offers various incentives, including loan, grant and rebate programs, but most of them are for commercial and nonprofit use — not for residential solar customers.

    One good thing about going solar in Pennsylvania is the net metering program. It lets residents earn compensation for excess energy production. This helps you rack up savings over the decades you own your solar system.

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

    Solar costs: Pennsylvania vs. nearby states

    Upfront cost*Typical system sizeAverage cost per wattITC value (30%)Payback period**Estimated net savings
    Pennsylvania $21,676 8.5 kW $2.55 $6,503 10 years $23,634
    New York $19,183 6.5 kW $2.94 $5,760 10 years $24,387
    West Virginia $29,040 11 kW $2.64 $8,712 13 years $19,893
    Virginia $30,250 11 kW $2.75 $9,075 12 years $21,692
    Ohio $23,040 9.5 kW $2.56 $6,912 12 years $19,272
    Connecticut $21,000 7.5 kW $2.80 $6,300 8 years $42,705
    *Before the federal solar investment tax credit (ITC); **When you pay in full upfront

    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 Sept. 12, 2023.
    2. EcoWatch, “ Solar Panel Cost in Pennsylvania .” Accessed Sept. 12, 2023.
    3. Penn State Extension, “ The Origins and Meaning of Net Metering .” Accessed Sept. 12, 2023.
    4. Solar Energy Industries Association, “ Pennsylvania Solar .” Accessed Sept. 12, 2023.
    5. Environmental Protection Agency, “ Summary of Inflation Reduction Act provisions related to renewable energy .” Accessed Sept. 12, 2023.
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