Netmetering is a great incentive that your electric utility may offer.  The purpose of the netmeter is to measure power “delivered” (DEL) to your house or “received” (REC) by the utility from your solar array.  At the end of the month, excess kWh credits are used to offset power delivered to your house.  The “net” power delivered to your house forms the basis for calculating your electric bill for that month.

At the end of the month, if you generated more power than you consumed, excess kWh credits carryover to the next month.  The monthly carryover then continues month after month.  Depending on your utility, excess credits expire at the end of each quarter, bi-annually, or annually.  Some utilities may pay for any end of term excess, but many have a “use-it or lose-it” policy and no value is provided.

A tax credit is a dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise pay the federal government.  The Inflation Reduction Act of 2022 extended the ITC at 30% for residential solar projects until 2033. Commercial solar projects are extended at 30% until 2025. Thereafter, the Department of Treasury will determine the commercial ITC based on if the carbon reduction goals have been met. 

In Illinois and other select states, SRECs provide an outstanding solar incentive that helps an owner recoup a solar system’s investment.  SRECs have been created to help States meet Renewable Portfolio Standards (RPS) which set goals for generating a percentage of that state’s overall electricity from renewable energy. In Illinois, for example, an SREC can potentially cover 20% to 40% of the total solar investment.

Typically, one SREC equals 1,000 kilowatt-hours (kWh) of solar energy generated. SRECs accrue as solar electricity is generated and are typically paid out quarterly or other interval defined by each State.

If your state does not have an SREC program, your project may still be eligible to sell the SRECs that your solar system generates into another State’s market. For example, all states surrounding Illinois such as Missouri, Indiana, Kentucky, Wisconsin, and Iowa can potentially sell their system’s SRECs into the Illinois market.

If your farm is located in a rural area with a population size under 50,000— and also meets the definition of “small business”— the USDA REAL grant can provide you with up to 25% of your solar project’s funding. Even farms with several hundred employees can potentially meet the definition of “small business.” This grant is highly competitive, but can provide financial assistance if awarded.