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Alaskans are using sustainable and renewable energy sources like never before. The cost of solar equipment is going down quickly, which makes it easier for new people to join. But since Alaska is the northernmost state in the U.S. and has some of the biggest changes in sunlight hours from season to season, it makes sense that Alaskans who want to invest in clean energy sources, especially solar, will want to make sure they’ll get a net positive return before going for it.
In 2022, Alaska’s one and only statewide incentive will treat all green energy sources the same. This will encourage people all over the state to invest in clean energy, even if sunlight isn’t always reliable. Here are the most important facts about solar energy in Alaska.
Solar Power in Alaska
In general, Alaskan homeowners have fewer incentives to use solar power than people in most other states. Alaska, on the other hand, is different from most other states because it has a true statewide net metering law that applies to all utilities. This is good for both consumers and utility companies. Alaskans can also get federal tax credits for investing in solar power if they meet the requirements.
Solar power costs vary a lot from one place to another. The Alaska State Legislature gives local governments the power to make their own laws to offer local incentives and full or partial tax breaks. In Alaska, there is no statewide exemption for property tax increases caused by installing a solar system, which is not the case in some other states. Utility companies and solar installers may be able to offer you other ways to save money.
Alaskans don’t have to pay a general sales tax, and this also applies to investments in solar energy.
Alaska Solar Panel Costs
SolarReviews says that the average cost of a residential solar system in Alaska is $2.41/W, which is $10,678 after the federal solar tax credit of 26% is taken into account. Prices for solar power vary across the state.
Federal Solar Investment Tax Credits
Installing a solar system in 2022 could save you money on your taxes if you meet the criteria set by the U.S. Department of Energy: you must own your home (renters are not eligible), the solar panels must be new or being used for the first time, and you must own the solar panels.
With the solar investment tax credit, you can get a credit for 26% of the total cost of your project. This includes the cost of equipment, permits, and installation. ($1 credit means you pay $1 less in taxes the next year.) This is not the same as a tax refund; you have to owe taxes in order to be eligible and get a reduction in what you owe.
All states can use the federal solar investment tax credit, which starts at 26% for home solar systems bought and installed by December 31, 2022, and goes down to 22% in 2023.
Solar rebates and tax credits in Alaska
In 2010, Alaska’s net metering rules went into effect. The Regulatory Commission of Alaska (RCA) gives people and businesses an incentive to invest in renewable energy systems by letting them sell back the power that their systems produce but that they don’t use. In Alaska, this only applies to renewable energy systems with a capacity of 25kW or less, and large utilities are required to buy up to 1.5% of their average load from customers.
“Customers receive an amount equal to what the utility is able to avoid spending on fuel and operations to make the electricity,” says the Renewable Energy Alaska Project (REAP). And the numbers show that it’s working: renewable energy projects built by customers, especially solar, are growing quickly, and at least one utility is expected to reach the 1.5% cap set by RCA in 2022.
Solar Property Tax Exemption in Alaska
Alaska does not have a solar tax break for property taxes that applies to the whole state. But the Alaska State Legislature lets local governments make their own rules that exempt or partially exempt property owners from paying taxes on clean or renewable energy systems.