Explore the Solar Systems
Live off the grid with solar panels and green energy
In ancient Greece, praising the sun's power meant you'd give an offering to the sun god Apollo at Delphi for a chance that the oracle would reveal your future. These days honoring the sun's power doesn't cost you a prized goat, but it does offer a more practical return on investment. It can actually put a little "ka-ching" back into your pocket. The federal government is offering a residential solar investment tax credit for certified solar home improvements -- photovoltaic and solar water heating -- until the end of 2008.
Photovoltaic technology is what you see typically on roofs. The panels -- called photovoltaic modules -- trap the energy from the sun through photovoltaic cells, which convert the sunlight into electricity.
Solar water heating uses the sun to heat water in a solar collector. The heated water is stored in a tank that is similar to a standard water heater.
While the sun shines
For a three-year period, the federal government is offering a 30-percent tax credit for residential solar water heating and photovoltaic equipment. While this sounds great, read on before you start going solar. As with everything, there are a few catches:
The improvement must be put in service between January 1, 2006, and December 31, 2008. (You may have heard that this solar credit expires at the end of 2007, but Congress recently extended this credit for another year.) If the solar installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner.
If you install both a photovoltaic system and a solar water heating system, you can apply for $2,000 credit for each system. This means a total of $4,000 tax credit. There's a maximum credit of $2,000 for each system, no matter how much you spend. So if your solar improvement costs $30,000, you still only qualify for $2,000.
The federal credit is taken from the net cost after any state credits or utility incentives are taken. This means that if you are fortunate to find yourself living in a state that offers solar incentives, such as California, New York or Connecticut (in Connecticut, for example, you can receive up to $25,000 back from the state) the federal 30-percent credit is applied after this amount is deducted.
Solar water systems must be certified by the Solar Rating and Certification Corporation (SRCC). Photovoltaic systems must meet applicable fire and electrical code requirements.
Solar improvements take many months to plan and install, depending on the system. So, if you want to qualify for the credit, get started now.
NEXT: Photovoltaic (PV) Systems >> Solar panels can provide enough energy to power your home and sell some energy back to the utility company.