What Does it Mean for You & Your Property ?
On Tuesday, August 16, 2022, President Biden passed the Inflation Reduction Act of 2022 - which contains $370 billion worth of tax incentives for solar manufacturing and storage installments over the next 10-years. This also includes a federal tax credit increase, from 26% to 30%, for anyone who install and utilize solar energy on their property. As a result, the Inflation Reduction Act will help expand solar related jobs, increase private investments, and make significant improvements with our economic and environmental sustainability.
The official signing of the Inflation Reduction Act of 2022 from President Biden
Why does this bill exist?
As you may know, adding solar onto your home is a timely and costly process; hence, why many property owners are discouraged from making this transition. However, due to its increase in efficiency over these last few years, the government has decided to create an incentive system for homeowners and businesses across the country to make the transition to green energy more affordable and worthwhile.
Economic Purposes
With regards to the economic purposes of this bill, the government is well aware that energy prices are drastically increasing across the nation. In Fact, by the year 2030:
- San Diego Gas and Electric (SDG&E) prices are predicted to be 70% higher than their current prices.
- California Edison (SCE) rates are predicted to increase by 20%.
- Pacific Gas and Electric (PG&E) residents are predicted to pay 40% more on their utility bill.
(Trabish, Utilitydrive.org, 2021)
The average utility expense in California has already doubled since 2010, and it looks like these prices are not lowering anytime soon. Consequently, it seems like only a matter of time before the state of California experiences frequent shutdowns, power shortages, and/or energy crises - similar to that in China or India.
Statistics from the Foundation for Research on Equal Opportunity Organization (FREOPP.org)
Why does this bill exist?
As you may know, adding solar onto your home is a timely and costly process; hence, why many property owners are discouraged from making this transition. However, due to its increase in efficiency over these last few years, the government has decided to create an incentive system for homeowners and businesses across the country to make the transition to green energy more affordable and worthwhile.
Furthermore, the government is also well-aware that the current demographic for the solar industry is primarily upper to upper-middle class households. These households are typically much larger in scale, requiring far more kiloWatts per hour (kWh). In addition, this demographic usually has better access to financing options for the installation - making the transition much easier, affordable, and convenient. If you are in the lower to middle class, then it can often be more difficult to access the same financial resources to help with the transition.
Therefore, in order to avoid an energy shortage or crisis, President Biden signed off on the Inflation Reduction Act of 2022 to help stimulate both homeowners and business alike to switch to a renewable energy source. Anyone who uses their own green energy instead of the energy from their utility provider will obtain tax credits of up to 30%. Of course, this will provide more economic stability for homeowners who may financially struggle with adding solar panels to their homes.
Enviornmental Purpose
And while economic stability is certainly an important factor, let us not forget the significant impact this bill has on climate change. Currently, the #1 Greenhouse gas emitter is from transportation - then, the #2 emitter is from electricity, which emits over 25% of our Greenhouse gasses in the US.
Roughly 60% of electricity comes from fossil fuels, namely coal and natural gas.
As you may know, adding solar onto your home is a timely and costly process; hence, why many property owners are discouraged from making this transition. However, due to its increase in efficiency over these last few years, the government has decided to create an incentive system for homeowners and businesses across the country to make the transition to green energy more affordable and worthwhile.
According to the Environmental Protection Agency (EPA): there is approximately 6,00 -7,500 million metric tons of CO2 gasses emitted every year. That number has been steadily increasing for the past few decades. Additionally, as temperatures continue to rise in our climate, there will be a greater demand for air conditioning which takes up a significant portion of fossil fuel resources. And thus, since homes and industrial buildings utilize a huge amount of energy for lighting, heating, cooling, and other functions, it is apparent why utility companies are strained to rely on fossil fuels.
Even though switching to renewable energy may be a complicated process in-and-of itself, the immediate impacts on our environmental health are astronomically important. Decreasing forest fire incidents, improving air quality, and shortening temperature spikes are just a few of the powerful incentives for using less fossil fuels from the utility companies.
Solar Panel Systems were already a great investment to make on any given property, as they can add approximately 20% of equity onto your home. However, because of this bill, the transition to solar becomes remarkably more attractive for the average homeowner. After all, a 30% tax credit for using your own energy would obviously benefit anyone. Whether your influences are environmental, economical, political, or something else entirely, this incentive system is likely going to help create a massive window of opportunity for residence across the United States. Thus, it is important to keep in mind that this bill is only contracted to last till 2032. If you are a property owner, time is of the essence to receive these great benefits. The longer you wait, the fewer tax credits you may earn before the contract is up.
To get started on transition and receive these benefits, check out our services and contact us here!
