Solar Power in Michigan: All You Need to Know

Michigan Solar Power: Check Your Savings, Costs, Tax Breaks, Incentives and Rebates

Michigan Energy rates are slightly above average, which means more solar savings for youHomeowners in Michigan have an opportunity to save plenty of money by going solar.

Energy rates in the state are slightly above the national average, which means more savings for every kilowatt-hour you don’t purchase from local utilities.

Besides, the state receives average rates of sunlight above four peak sun-hours per day, and as much as six peak sun-hours during the summer.

These are average sunshine rates for Michigan, but every property is unique. You can get a assessment of your home by getting in touch with our trusted solar installers near you.

Return on Investment for Residential Solar Power in Michigan

Both the initial investment and the monthly savings achieved with solar power depend on the installed capacity of your photo-voltaic system.

The optimal system size in kilowatts depends on your available rooftop area and yearly energy consumption, but most homes can get decent results with a 5-kW photo-voltaic system. Therefore, we will analyze the project financials for a system of that size.

The costs and savings for a 5-kW PV system in Michigan can be broken down as follows:

- The installed cost of a 5kw solar system is around $20,000.

- However, the federal tax credit allows you to recover 30% of the investment as a tax credit, so the net outlay is reduced to $14,000.

- Also, remember a PV system starts generating savings right away. You can expect to save around $750 during the first year, further reducing the initial expenses to $13,250.

- You can expect a payback period of 15 years. After that, you will get at least a full decade of free energy, since solar panels typically have a 25-year warranty. You can also expect to - make a net profit of nearly $16,000!

- There’s another financial benefit: your property will increase in value by more than $15,000.

- The environment also gets a benefit from your investment, equivalent to planting around 100 trees per year.

Although there are sunnier states than Michigan, the average electricity price is around $0.14/kWh, which is above the national average. This makes solar power a sound investment, because every unit of energy produced is worth more than the average price of electricity in the US.

This analysis is for a 5-kW photo-voltaic system exposed to the average sunlight conditions of Michigan.

However, every project is unique due to site specific conditions, to see an estimete that better fits your home, visit to our solar power calculater page.

In general, the best locations for solar PV systems are those with the following conditions:

- A south-facing rooftop: the northern hemisphere gets more sunlight from the southern portion of the sky.

- No obstacles blocking a significant portion of incident sunlight.

If you like math and statistics, you can check out the NASA Atmospheric Science Data Center website. The site allows you to input your exact coordinates to generate a wealth of meteorological information, which includes data tables for solar power.

You can even break down the sunlight availability at your exact location by month and by solar panel tilt angle!

Contact our experts to learn more about solar power and to get in touch with the best solar installers in Michigan, who can carry out a detailed assessment of your property.

Michigan Solar Power Incentives, Tax Breaks and Rebates

The main incentive for going solar in Michigan is the state’s favorable net metering policy, which requires utilities to give you full credit for any surplus energy your PV system produces.

Michigan is lacking in terms of rebates and tax credits for solar power, but the 30% federal tax credit compensates this.

Unfortunately, there are no tax exemptions: solar PV systems are subject to the sales tax, and also increase your property tax by driving up the value of your home.

Michigan RPS

Michigan had a Renewable Portfolio Standard requiring all utilities to get 10% of their energy from renewable sources by 2015, but the goals have already been met and the RPS has not been renewed with a new goal and deadline.

There are currently no rebates and performance payments for solar power, but this could change for good if the RPS is updated with a new renewable energy goal and deadline. Performance payments have existed in the past, but no further information has been released after the RPS goals were met in 2015.

Michigan Tax Credit

Michigan offers no state tax credits, but the 30% federal tax credit applies and lets you get back a huge portion of your solar power investment as a tax deduction within one year.

If you don’t owe enough taxes to use up the whole tax credit at once, don’t worry: you can split it among two consecutive years.

The 30% ITC is great, but the benefit will not last forever: it is currently set to expire in 2020, when it will be reduced to a more modest 10%.

If you are planning to install a PV system in your Michigan home, we strongly recommend you do so before 2020 so that you don’t miss a huge tax break.

 

Michigan Electricity Rates

The high electricity bill favors uv power in MichiganThe high price of electricity is one of the strong points in favor of solar power in Michigan. At $0.14/kWh, Michigan is above the national average, and for a residential PV system owner this just means more savings.

Besides, a 5-kW system has a comparable environmental impact to planting 100 trees per year.

To illustrate how high electricity prices are beneficial for residential solar power, let’s compare the savings offered by 5000 kWh of solar power in Michigan with those obtained from the

same amount of energy in a state where the electricity price is $0.10/kWh.

Solar power savings in Michigan = 5000 kWh x $0.14/kWh = $700

Savings at $0.10/kWh = 5000 kWh x $0.10/kWh = $500

The savings are increased by 40% in this scenario. Over the service life of a solar PV systems, the extra savings can be considerable.

 

Is There Net Metering in Michigan?

The net metering policy is another strong point that favors solar power in Michigan:

- cElectric utilities are required to monitor your energy production and consumption, and give you credit for any surplus at the full retail price.

- redits never expire, so you can accumulate them over several months and use them later. For example, you can take advantage of the extra sunlight in summer to accumulate credits for the winter!

However, keep in mind that you get credits, not cash or a check!

This means that you can’t oversize your PV system with the goal of always having an energy surplus and billing your electric company.

If you want to meet all of your energy needs with solar power, your PV system must be sized just right… but not over-sized or the utility will be getting free energy to sell to other customers from your investment!

The interconnection policy in Michigan is also favorable for homeowners: electric utility companies can’t force you to pay extra insurance fees, and they can’t charge you more than $100 for the entire application and reviewing process.

The best way to make sure your PV system is properly sized and connected is to hire a qualified solar panel installer. Our experts can help you get in touch with the best solar installers in Michigan.

 

Are There $0 Down Payment Financing Options in Michigan?

If you want to install a solar PV system in Michigan for $0 down, you have two options:

- Getting a loan to pay for the solar PV system and its installation, preferably a low-interest loan such as a HELOC (home equity line of credit).

- Using a solar PV system owned by a third party: If you go for this option, you can choose between a solar lease or a Power Purchase Agreement.

The advantage of the first option is that you are the system owner and are entitled to the tax credit.

With the second option, the tax credit goes to the company leasing you the PV system.

 

Solar Lease in Michigan

Leasing a solar PV system is not much different from renting a home or a car.

The basic concept is very simple:

- A company installs a PV system on your rooftop, you pay 0 down, and instead agree to pay a fixed monthly fee for using the system.

- Leases may have terms in the range of 15 to 20 years, and in some cases you are allowed to purchase the system at a discounted price at the end of the leasing agreement.

- The idea is to pay the monthly fee with your savings, and any cash left goes to your pocket.

If you sign up for a solar lease in Michigan, you can expect to save more than $1000 over 20 years.

The savings are much smaller than if you purchase the system, but consider you get it for $0 down and without taking a loan.

 

PPA Option in Michigan

with the PPA you won't be affected if the weather is bad and solar rates are lowA power purchase agreement (PPA) is very similar to a lease, with only one key difference: There is no fixed monthly payment, and instead the PV system owner sells you all of the energy produced at a rate below electric utility rates.

The main advantage of a PPA is that you will not be affected if a month is bad for solar power due to the weather.

With a lease, on the other hand, there is always a fixed fee to cover.

However, the long-term financial performance of both options is comparable: a PPA in Michigan will also save you around $1,000 over 20 years.

 

Solar Loan

Going solar through a loan is very smart from the financial stand point, because you can claim the 30% tax credit within one year and then use that cash to start paying the loan.

Keep in mind your solar PV system will also generate yearly savings, which further contribute to covering loan payments.

In short, the tax credit and savings pay off a huge portion of the loan and you will only have to cover the difference, which is much more manageable than paying the full price of the solar PV system upfront.

Purchasing a solar PV system in Michigan through a loan results in savings of more than $7,000 over a 25-year period, which is great for an asset obtained for $0 down.

 

Leasing VS Purchasing: What’s Best for Michigan Homeowners?

This question has different answers depending on your cash availability and home equity owned.

Purchasing a PV system in Michigan

Purchasing a PV system in Michigan is strongly recommended for homeowners with either cash availability or a lot of equity.

A cash purchase maximizes total PV system savings, but a purchase through a low-interest loan yields the highest return per dollar spent. In both cases, you get a huge tax credit in less than a year.

Leasing a PV system in Michigan

Leasing a PV system in Michigan is only recommended if you don’t have the home equity for a low-interest loan.

Otherwise, the loan is the top choice because it gives you seven times as much savings than a lease while also being a $0 down option.

 

What is the Solar Power Installation Process in Michigan?

The solar PV system installation process in Michigan is simplified thanks to the favorable interconnection framework which sets equal rules across the board regardless of the utility company.

Anyway, we recommend you hire experts in order to make the process as fast and smooth as possible, while making sure you get top quality workmanship.

If you have already taken the decision to go solar, the process to follow is very simple and you can start right away:

1. Fill our solar installation form, providing basic information about your property.

2. Talk with trusted solar contractors near you to get detailed quotes.

3. Compare quotes and choose the best option for you. We recommend you get at least three.

4. Have your contractor install the PV system, and enjoy clean power while helping the planet.

The installation process only takes from three to four days after you sign the agreement.

Remember the case study in this article is for a 5-kilowatt PV system, assuming the average sunlight conditions of Michigan.

Once you get a proposal from your contractor of choice, you will know exactly what to expect.

 

Conclusion

advantages of going solar in Michigan include a low electric bill and a favorable net metering policyMichigan offers a favorable net metering and interconnection policy for solar power, which simplifies the installation process and eliminates unnecessary expenses that are sometimes imposed by utility companies.

Energy prices in Michigan are higher than the national average, which increases your savings per kilowatt-hour produced.

On top of that, the 30% ITC from the federal government makes sure you get a huge portion of your investment back within a year.

Michigan can improve the outlook for solar power by renewing its RPS, which would likely result in rebates and performance payments from the local utilities.

The state government could also consider easing the tax burden for solar power, or even introducing a tax credit.

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