Dolle’s Salt Water Taffy, Rehoboth Beach
Delaware, our very first state! With that title, you just know there’s a ton of important history to protect in Delaware. With some of the most beautiful parts of the Atlantic coast too, Delaware takes its natural environment seriously too. Using green power like nice clean solar energy will help the state take care of both its natural and cultural heritage so that we can enjoy it for many more generations. Delaware has made tremendous strides in promoting solar power recently, and is now one of the best places in the country to make the switch to solar. What makes solar policy so strong here? Let’s have a look …
Delaware’s Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of rebates and performance payments when you switch to solar power.
Delaware has a strong RPS, mandating 25% renewable energy by 2025-2026 (compliance years run from June to May). The current minimum level of renewable energy is 8.50% of total retail electric sales. That requirement will raise by 1.5% per year through 2019-2020, and then by 1% per year through 2025-2026.
The RPS also includes a specific carve out for Delaware’s solar power. Currently 0.40% of total retail electric sales must come from solar power. That minimum will raise by 0.2% per year through 2015-2016, and 0.25% a year through 2025-2026, for a final solar requirement of 3.5% of total electric sales. 3.5% may not sound like a lot, but when you consider how much energy the millions of residents here consume (more than 12 billion kilowatt-hours (kwh) per year), it adds up. 3.5% is also one of the strongest solar-specific carve-outs we’ve seen. Kudos to the legislature for recognizing the value of solar, even amongst other renewable energy options.
Solar Performance Payments in Delaware
Delaware offers performance incentives on solar power production through a Solar Renewable Energy Credit (SREC) purchase program. Basically, for every megawatt-hour (mwh) of electricity you produce, you get 1 SREC that you can sell to utility companies. You can sell your SRECs anywhere, even other states, but Delaware has an in-state option to make getting that cash simpler.
In short, the utilities have the option of purchasing your SRECS for credit toward their RPS goals, rather than actually producing more renewable energy themselves. While that available purchase option does not guarantee that the utilities will be lining up to purchase SRECs, it has worked pretty well in practice so far. How much you get for each SREC will vary depending on market conditions, but at the last report the average price was a solid $310 per SREC.
Delaware Solar Utility Rebates
Delaware also offers a strong solar rebate program to help offset the initial costs of installing your new solar power system. The Delaware Green Energy Program is split into three separate programs for investor-owned, municipal, and cooperative electric companies. If you’re a customer of Delmarva Power (Delaware’s only investor-owned utility), you get a rebate of $1,250 per kilowatt (kw) for the first 5 kw, $750/kw for the next 5 (5-10 kw), and $350/kw for the next 40 (10-50 kw). The maximum rebate is $15,000.
If you get your power from Delaware Electric Cooperative your rebate is $900/kw for the first 5kw and $450/kw thereafter, with a maximum incentive of $7,500.
The municipal utilities get a bit more complicated. First off, the utilities serving New Castle, Clayton, Smyrna, and Seaford do not offer rebates. All other municipal utilities, except Dover Public Utilities, offer a rebate of 33.3% of installed costs, up to $15,000. If you are a Dover Public Utilities customer, you get the same offer as Delmarva customers – $1,250/kw (0-5 kw), $750/kw (5-10 kw), and $350/kw (10-50 kw).
Solar Tax Credits in Delaware
Delaware lacks any tax credits for solar power. Given the strength of the state’s performance payments and rebates, we can’t raise too much of a stink about the lack of a tax credit here. That said, every little bit does count, and we certainly wouldn’t complain if a solar tax credit were added to bring your costs down even more.
Solar Tax Exemptions in Delaware
Delaware also lacks any tax exemptions for solar power systems. Of course, Delaware has no sales tax, so that exemption (that we see in many states) simply doesn’t apply here. What does apply, however, is the missing property tax credit. That’s kind of a big deal. And by kind of, we mean a really big deal! When you add a solar power system to your home, your home goes up in value by twenty times your annual electricity savings. That means your property taxes also go up. Passing an exemption for those property taxes is an easy way to save you money on your solar power system, making the switch easier for you without the state ever having to actually remove money from its coffers. Sounds like a win-win to us!
Utility Prices in Delaware
Delaware pays an average of 13.55 cents/kwh of electricity. That’s comfortably above the national average of 11.43. Yes, we know those 2 cents add up. Yes, we know you hate that monthly electric bill. But that’s only until you’ve made the switch to solar power! That 2 cents per kwh does indeed add up. Right now it adds up to higher bills, but once you’ve made the switch to solar, it adds up to higher savings!
Not to mention, electricity costs are only going to rise. Currently far too much of our energy comes from nonrenewable, dirty fossil duels. As the long-term costs associated with fossil fuels start to really kick in, standard electricity prices are going to skyrocket. When that happens, you’re going to look like a regular Einstein for having made the early switch to producing your own power.
Delaware Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume. If you run an electricity surplus, you get credit for it. Delaware’s net metering law is straightforward and pretty much perfect. Any net excess generation (i.e. any surplus electricity) you produce is applied to your next bill as a credit at the full retail rate. If you run a surplus for a full 12-month period you may elect to have the electric company cut you a check for the surplus, again at the full retail rate. Note, however, that nothing in the net metering law requires you to request the check. If it’s easier for you, you can just keep the credit rolling over onto your bill indefinitely.
Interconnection is equally strong here. Delaware has established a sensible tiered system that simplifies procedures for smaller renewable systems. Your home’s solar power system (assuming it is less than 10 kw) is eligible for fast-track procedures that are completely exempt from any processing fees. Systems under 10 kw are also exempt from insurance requirements. The one minor tweak we’d like to see is the elimination of the requirement to install a redundant external disconnect switch.
5kW Example Return on Investment in Delaware
What do all the numbers add up to for you? Let’s check:
Installing a typical 5kW solar system should start at about $25,000. Don’t worry – that’s going to drop fast!
- We start with the state solar rebate, right off the top. Subtract $6,250, for a new price of $18,750.
- Next figure in those SREC payments. Subtract $1,814, for a new price of $16,936.
- The feds calculate your 30% solar tax credit on out-of-pocket costs, i.e. after the state rebate. Subtract $5,625 (30% of 18,750) for a new price $11,311.
- Finally we subtract you annual electricity savings of $793, for a final solar price after year one of $10,518
- Your solar power system should pay for itself in a lightning-fast 5 years. After that you start turning a profit to the tune of nearly 38 grand over the next 20 years that your system should be churning out clean solar power.
- Oh yeah! Least we forget, all that clean solar power is good for the earth as well. How good? The equivalent of planting 103 trees every years!
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
Delaware Solar Consensus
Solar power is looking sunny indeed here! With the RPS’s built-in purchase program backing a strong SREC market and solar power rebates available across the state, Delaware boasts huge up-front discounts, low year 1 costs, and one of the shortest payback timeframes in the country. This is one of the easiest “A” marks we’ve ever given out.