Connecticut offers multiple incentives for solar power systems. Homeowners can also qualify for solar loans with an APR as low as 4.49%.
Connecticut is among the states with the highest electricity prices, but the savings you can achieve with solar panels are equally high. The Constitution State also offers tax exemptions and low-interest loans for solar energy systems, combined with a favorable net metering policy.
State Solar Incentives
The Connecticut state government exempted solar panel systems from sales taxes and property taxes. Homeowners also have access to low-interest loans to pay for solar systems through the Connecticut Green Bank.
Sales and Use Tax Exemption for Solar and Geothermal Systems
Incentive Value: 6.35% of solar PV system costs
Frequency: Single-use
Connecticut has a sales and use tax exemption for solar energy systems, which means you save 6.35% of project costs right away. Assuming you purchase an 8-kW home solar system for $21,440, you are saving $1,361.44 in sales and use taxes. This incentive is not only available for homeowners, but also for contractors and commercial buildings.
To get the sales tax exemption for your solar energy system, you must present Form CERT-140 at the time of purchase. You can download the document from the Connecticut Department of Revenue Services website.
Property Tax Exemption for Renewable Energy Systems
Incentive Value: Varies depending on local property taxes
Frequency: Continuous (annual tax exemption)
Connecticut has some of the highest property taxes in the country, which exceed 2% in some areas of the state. But the state does have a property tax exemption for solar panels and other renewable energy systems.
If you own a $400,000 home in Connecticut and solar panels increase its value by $30,000, you will get taxed only for a $400,000 home. Assuming a property tax rate of 2%, you save $600 a year with the exemption.
Connecticut Green Bank: Smart-E Loan
Incentive Value: Solar loans with an APR of 4.49% to 6.99%
Frequency: Single use
Financing a solar installation with a low-interest loan is a smart financial decision. Your loan payments should be much lower than your annual savings, which means the solar panel system covers its cost.
The Connecticut Green Bank offers the Smart-E Loan program, which lends up to $40,000 for home energy efficiency upgrades. Smart-E loans have terms of five to 12 years and an APR of 4.49% to 6.99%, according to the following table:
Loan Term | 5 years | 7 years | 10 years | 12 years |
---|---|---|---|---|
APR | 4.49% | 4.99% | 5.99% | 6.99% |
Owner-occupied residential properties that have one to four units are eligible for Smart-E loans. People can use the loans for more than 40 types of home energy upgrades, including solar panels and energy storage.
Connecticut Net Metering Explained
Net metering refers to an energy billing method that works in both directions: homeowners with renewable energy systems can send their surplus energy to the electric grid in exchange for power bill credits.
Connecticut has the Residential Renewable Energy Solutions Program, which offers net metering for 20 years. You can participate if your solar panel system is no larger than 25 kW, and you can choose between two net metering tariffs:
- Buy-All Tariff
- Netting Tariff
Under the Buy-All Tariff, the local power company purchases all the electricity produced by your solar panels. The customary tariff is 29.43 cents/kWh, although low-income households get a bonus payment of 3 cents/kWh. For comparison, the average electricity price in Connecticut is 34.32 cents/kWh. The Buy-All Tariff is similar to a power purchase agreement, but in this case, you’re the seller and the local electric company is the buyer.
The Netting Tariff works like a traditional net metering program in which you export only the excess energy that you don’t use. Unused credits roll over to the next month, and each kilowatt-hour is subtracted from your energy bills at full retail price. If you accumulate power bill credits over a 12-month period, the power company pays you at the avoided cost.
- Eversource customers under the Netting Tariff get paid for renewable energy credits (RECs) generated by their solar panels at a rate of 3.18 cents/kWh.
- This benefit is not available for United Illuminating customers.
The Buy-All Tariff is slightly lower than local retail rates, but you also get 29.43 cents/kWh for excess generation. The Netting Tariff credits your solar energy at the full retail price, and you can roll over unused credits to the next month. However, surplus production over an annual period gets paid at a lower wholesale cost.
How To Enroll in Net Metering
Electric customers served by Eversource and United Illuminating (UI) gain access to the Residential Renewable Energy Solutions Program. Here you can check the application process and specific requirements of each utility company:
Federal Solar Tax Credit
The 30% federal tax credit has been a major incentive for the U.S. solar industry since 2006. The concept is simple: for every $1,000 spent on a solar panel system, you can claim $300 on your next annual IRS return. This is a nationwide benefit that you can combine with state incentives to offset the cost of your new energy system.
- This incentive is officially called the Clean Energy Investment Tax Credit (ITC), and it was improved by the Inflation Reduction Act in August 2022.
- Before the 2022 revision, the tax credit was 26% and only available for solar power.
- Now the tax credit is 30% and is available for all renewable energy systems.
- The solar ITC was originally scheduled to end in 2024, but it will now remain available through 2034.
The average cost of solar panels in Connecticut is $2.68 per watt, according to a solar cost survey conducted by the MarketWatch Guides Team in 2023. You can expect to pay $21,440 for an 8-kW home solar system, and the net cost gets reduced to $15,008 after subtracting the solar investment tax credit ($6,432).
Keep in mind that you can’t claim the tax credit if you sign a solar lease or a power purchase agreement (PPA) because the system belongs to the provider. The ITC can only be claimed by the legal owner of a renewable energy system.
Estimated Solar Savings in Connecticut
Connecticut has some of the highest electricity prices in the country, but the good news for users of solar is that the state receives a decent amount of sunshine per year. You can see specifics in the World Bank Global Solar Atlas. This means solar panels in Connecticut can achieve high productivity and generate a valuable electricity output because of high local tariffs.
For example, a 6-kW rooftop solar system can generate more than 8,400 kWh per year in Hartford. At a tariff of 29.43 cents/kWh, that electricity output saves $2,472 a year. You can expect to pay $16,080 for a solar energy system of this size, but the net price reduces to $11,256 after the federal tax credit. The best solar panels can last more than 25 years, and in this example, their payback period is only 4.6 years.
You can also benefit from the Smart-E Loan program. With an interest rate of 5.99% and a 10-year term, the upfront cost of $11,256 gets converted to monthly payments of $124.91. In this example, the annual loan payments add up to $1,498.92, but you save $2,472 in energy costs.
Top Solar Installers in Connecticut
We have compiled a list of the top companies in Connecticut based on key factors such as cost, financing options, brand reputation, and warranties using our comprehensive rating methodology to make the process of finding a solar installer simple. We recommend requesting a quote from at least three of the providers below before making a final decision.
The Bottom Line
Going solar is a savings investment for Connecticut residents. Local electricity prices are twice the national average, and a 6-kW solar system can save more than $2,400 in annual electric bills. If you take a low-interest loan from the Connecticut Green Bank, your solar panels can pay for themselves over time.
The best solar companies are familiarized with the solar incentives available in Connecticut. They can make sure your solar installation qualifies for tax exemptions, net metering and low-interest solar loans.
Frequently Asked Questions (FAQ) About Connecticut Solar Incentives
It’s worth getting solar in Connecticut because of the multiple solar incentive programs. These include sales and property tax exemptions, favorable net metering policies and low-interest solar loans.
Connecticut also has some of the highest electric tariffs in the country, and you can recover your solar investment in a few years.
Solar photovoltaic systems have a typical cost of $2.68 per watt in Connecticut (before subtracting the 30% federal tax credit). You can expect to pay $13,400 for a 5-kW solar system, which drops the net price to $9,380 after the federal tax credit.
As of 2023, Connecticut doesn’t offer solar rebates.
- The Residential Solar Investment Program (RSIP) offered rebates before 2022, but it was replaced by the Residential Renewable Energy Solutions Program, which has no rebates.
- Battery storage systems can qualify for a rebate of up to $7,500 through the Energy Storage Solutions Program.
Both programs are managed by the Public Utilities Regulation Authority (PURA).
No, but the Connecticut Green Bank offers Smart-E Loans for home energy upgrades. These loans have interest rates ranging from 4.49% to 6.99% and terms of five to 12 years.