Ohio Solar Incentives: Tax Credits & Rebates Guide

Solar power is an attractive option for Ohio homeowners who want to decrease their electric bills and embrace clean energy. However, the high up-front costs can be a significant hurdle. Fortunately, various incentives, tax credits, and rebates are available to make solar power more accessible for Ohio residents. This comprehensive guide explores the best solar incentives in Ohio, additional rebates, and other savings opportunities to help homeowners weigh the pros and cons of going solar.

The Best Solar Incentives, Tax Credits, & Rebates in Ohio

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The Best Solar Incentives, Tax Credits, & Rebates in Ohio

Ohio offers several incentives to encourage homeowners to adopt solar energy. These programs can significantly reduce the solar system’s cost from federal tax credits to local property tax abatements.

Federal Solar Investment Tax Credit (ITC)

The Federal Solar Investment Tax Credit (ITC) is one of the best incentives available to Ohio homeowners. This program offers a 30% federal tax credit for home solar systems purchased and installed by the end of 2032, thanks to the recent passage of the Inflation Reduction Act. For example, a homeowner who invests $20,000 in a solar panel system could receive a $6,000 credit on their next tax return.

Ohio Ohio Solar Sales Tax Exemption

Ohio residents benefit from a solar sales tax exemption, so they do not have to pay the standard 5.7% state sales tax on their solar panel purchases. This exemption can lead to significant savings, especially when combined with other incentives like the Federal Tax Credit.

Interested in going solar? Check out our favorite Ohio-based company, Icon Solar, for more information.

Ohio Net Metering

Net metering allows homeowners who generate excess energy to use it as a credit on their next energy bill. All energy providers in Ohio are required to offer this option to homeowners. However, credit rates in Ohio tend to be on the lower side compared to some other states. Despite this, net metering remains valuable for maximizing the return on investment in a solar energy system.

Solar Renewable Energy Credits (SRECs)

When a home generates solar renewable energy, the homeowner can earn credits and sell them online for additional income. However, the average SREC credit in Ohio is currently around $9. While prices may fluctuate, this program still offers a way for homeowners to earn some money from their solar investment.

Energy Conservation for Ohio Homeowners (ECO-Link Program)

The ECO-Link Program helps reduce the cost of solar energy loans by up to 3% for a maximum of 7 years. This program can make financing a solar system more affordable for Ohio homeowners. By lowering the interest rate, the ECO-Link Program effectively reduces the overall cost of borrowing, making solar more accessible to a larger demographic. Interested homeowners can apply for this program through participating lenders who offer ECO-Link loans.

City Property Tax Abatements

While Ohio doesn’t offer a statewide property tax exemption for solar installations, some cities have implemented their programs. These localized initiatives further improve the economic feasibility of going solar for homeowners in specific regions.

City of Cincinnati Residential Property Tax Abatement

Property taxes remain unaffected by solar panel installation for 15 years on new construction and 10 years for retrofits. A minimum investment of $2,500 is required to qualify. This long-term tax reduction makes it easier for Cincinnati residents to see a quicker return on their solar investment, encouraging more people to consider solar energy solutions.

City of Cleveland Residential Property Tax Abatement

Like Cincinnati, Cleveland offers property tax abatement for solar installations, helping homeowners avoid increased property taxes due to their solar investment. This program adds to the various incentives available to Cleveland residents, further enhancing the city’s financial attractiveness of solar energy projects.

Solar Easements and Rights Laws

In addition to financial incentives, Ohio also supports homeowners through legal frameworks that protect solar installations. For instance, the state enforces solar easements and rights laws, ensuring that homeowners can install and maintain solar panels without facing restrictive covenants or local ordinances that would otherwise hinder these installations. Such laws are essential for preventing disputes between neighbors and protecting the homeowner’s investment in renewable energy.

Commercial Ohio Solar Incentives

While many solar incentives apply to both residential and commercial properties, some programs are specifically designed for businesses and nonprofits in Ohio. These sector-specific incentives can help drive larger-scale adoption of solar energy, contributing to Ohio’s broader renewable energy goals.

Solar Incentives for Nonprofits and Businesses in Ohio

The Green Energy Ohio program offers grants of up to $1 million for installing solar energy systems in nonprofits and businesses. These grants can significantly reduce the initial capital expenditure required for solar installations, making it a viable option for organizations with limited budgets.

USDA REAP Grant

The United States Department of Agriculture’s Rural Energy for America Program (REAP) provides loan financing and grant funding to agricultural producers and small rural businesses for renewable energy systems. This can be an excellent option for those in rural areas of Ohio looking to implement solar energy solutions. The REAP grant program aligns economic growth with environmental sustainability by supporting rural economies and promoting renewable energy.

Federal Solar Tax Credit for Businesses in Ohio

Commercial business owners in Ohio can take advantage of the Federal ITC tax credit for renewable energy. This credit allows businesses to claim 30% of the cost of their solar system installation against their federal corporate income tax. This reduces the net cost of installation, thereby shortening the payback period and increasing the return on investment for commercial solar projects.

First Energy Ohio Renewable Energy Credit

First Energy Ohio offers a program to purchase Solar Renewable Energy Credits (SRECs) from commercial and school contracts each calendar year. While this program requires setup and acceptance, it can provide an additional revenue stream for larger commercial buildings or schools with solar installations. By monetizing the environmental benefits of solar energy, organizations can better justify their investment in renewable energy infrastructure.

Why Go Solar in Ohio?

Solar-powered homes typically require little to no additional energy from local providers, as their solar panels significantly reduce dependence on the grid. By lowering reliance on non-renewable energy sources, you contribute to a greener environment and pave the way for future generations.

Environmental Impact

Adopting solar energy is one of the most impactful ways for Ohio residents to reduce their carbon footprint. Solar power produces no greenhouse gases during operation, making it a clean and sustainable energy option. By reducing dependence on fossil fuels, solar energy helps decrease air pollution, combat climate change, and protect natural ecosystems.

Energy Cost Savings

While energy costs in Ohio are slightly lower than the national average, bills can still spike during extreme weather conditions. Large homes in Ohio, in particular, could benefit from the energy efficiency provided by solar power systems. Over the lifetime of a solar panel system, homeowners can save tens of thousands of dollars on their energy bills.

Increased Property Value

Numerous studies have shown that homes equipped with solar energy systems have higher property values and sell quicker than non-solar homes. This is because prospective buyers recognize the potential for long-term energy savings and value the environmental benefits of solar energy. Investing in solar panels can be a wise financial decision for homeowners looking to sell in the future.

Energy Independence

Solar power provides homeowners with a measure of energy independence. By generating their electricity, they become less vulnerable to price fluctuations in the energy market and potential power outages. In times of grid instability or rising energy prices, a solar power system can provide security and reliability.

Ohio Solar Cost

Installing solar panels in Ohio typically ranges from $15,000 to $30,000. The exact cost depends on factors such as home size, installation requirements, and applicable financial incentives. While the initial investment may seem high, various programs and incentives can help offset these costs over time.
Several factors can influence the cost of a solar installation:

• System Size: Larger systems that generate more electricity typically cost more upfront but offer more significant long-term savings.
• Panel Quality: High-efficiency panels may be more expensive but can generate more electricity in a smaller space.
• Installation Complexity: Roof type, shading, and system configuration can affect installation costs.
• Financing Options: Loans, leases, and power purchase agreements can influence the overall cost and payback period.

Our team recommends collecting quotes from multiple solar installers for the best deal. Comparing these quotes allows you to understand the cost components better and select a system that meets their needs and budget.

How Much Can You Save on Solar in Ohio?

Although Ohio doesn’t offer a direct state program to decrease solar panel costs, homeowners can take advantage of federal programs, tax credits, and rebates. Additionally, loan programs are available for those who need financing options.

In 2024, homeowners can expect to save $5,000 or more on an Ohio solar power installation, depending on the size of their system and the incentives they qualify for. Over the solar panels’ lifespan, typically 25 to 30 years, these savings can accumulate to substantial amounts. Annual energy savings combined with incentives can make the upfront investment worthwhile.

Beyond the immediate savings, solar power offers long-term financial benefits. As utility rates continue to rise, the value of generating your electricity becomes more apparent. Solar panels can also act as a hedge against inflation, providing stable and predictable energy costs for decades..

Key Takeaways: The Best Ohio Solar Incentives

While Ohio may not offer as comprehensive a suite of solar incentives as some other states, the combination of federal tax credits, local property tax abatements, and programs like SRECs and net metering still make solar a viable option for many homeowners. 

For Ohio homeowners considering solar, it’s crucial to research all available options and consult with local solar providers to understand the potential savings and benefits specific to their situation. With careful planning and utilization of available incentives, solar power can be both an environmentally friendly and financially savvy choice for Ohio residents looking to reduce their energy costs and carbon footprint.