Master Thread: Energy products and Tax discussions

[jboy210]

A couple of legislators are trying to push a tax credit for all parts, instead of just the active tiles, of a SolarRoof. Let's hope they succeed. Better yet lets make it retroactive!

Democrats aim to boost solar roof tiles in U.S. budget bill

 

[wjgjr]

A couple of legislators are trying to push a tax credit for all parts, instead of just the active tiles, of a SolarRoof. Let's hope they succeed. Better yet lets make it retroactive!

Democrats aim to boost solar roof tiles in U.S. budget bill

That would certainly be huge for the solar roof industry. Seems like they would need to put some limits on it (so as to avoid the situation where everybody builds a roof with one solar shingle to get 26% off) but maybe they could require the roof to be 50% solar (by area) or something to qualify.

(And retroactive would be great for those of us already installed, but I'm not optimistic about that.)

 

[slcasner]

See 26 U.S. Code § 25D - Residential energy efficient property

There have been a several posts in this thread containing this reference to the IRC. At the beginning of that section it says that the credit amount is the "applicable percentage" of the qualified solar electric property expenditure, where the term “applicable percentage” means 35 percent reduced (but not below 20 percent) by 1 percentage point for each $2,000 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year exceeds $15,000. But I don't see any reduction like this on Form 5695. Am I missing something?

 

[wjgjr]

There have been a several posts in this thread containing this reference to the IRC. At the beginning of that section it says that the credit amount is the "applicable percentage" of the qualified solar electric property expenditure, where the term “applicable percentage” means 35 percent reduced (but not below 20 percent) by 1 percentage point for each $2,000 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year exceeds $15,000. But I don't see any reduction like this on Form 5695. Am I missing something?

Just doing a quick look, I think you are quoting from 26 U.S. Code § 21 - Expenses for household and dependent care services necessary for gainful employment which, though in the same subpart (Subpart A) as the ITC, has nothing at all to do with solar. Subpart A covers a number of distinct nonrefundable personal credits, each with their own rules.

 

[PhxSunsFan]

Here’s another bill recently introduced in Congress to keep an eye on as it would reset the federal tax credit to 30% and make it retroactive.

H.R. 4852 Residential Solar Opportunity Act of 2021 was introduced in the House by a couple California lawmakers at the end of July. It would make the federal solar tax credit permanent. The federal tax credit, currently 26%, would be reset to 30% and extended through the end of 2026, at which point it would go back down to 26%, eventually phasing down to a permanent 10% tax credit for solar placed in service 2029 and beyond.

If you read the text for the bill at H.R. 4852 Residential Solar Opportunity Act , the 30% tax credit would be retroactive to solar systems placed in service on or after Jan 1, 2017. So if you purchased a solar system in 2020 or this year under the current 26% tax credit, it would seem you could claim an additional 4%. Let’s hope this bill doesn’t die and does get passed this year.

 

[KHYE]

Just curious if anyone is putting your solar project on hold until the bill is passed. Since this will bump the ITC to 30%, whole solar roof and roof replacement for solar panel installation will qualify as well.

I'm in the process of getting my solar system, if I delay installation till end of year, I will be able to save additional few thousands if the bill passes, But I will take risk of not getting on NEM 2.0. Tough decision.....

 

[tfan2018]

Wonder if this will make it retroactive for any installations in 2021.. as mine got installed this month!

 

[h2ofun]

For us in Calif, no way. NEM3 is coming out first of year and may kill solar

 

[yblaser]

For us in Calif, no way. NEM3 is coming out first of year and may kill solar

NEM 3 is not coming out the first of the year.

A final decision will be made in January on what exactly NEM 3 will entail and implementation will occur sometime later in the year.

 

[KHYE]

NEM 3 is not coming out the first of the year.

A final decision will be made in January on what exactly NEM 3 will entail and implementation will occur sometime later in the year.

That's what I've read and understand as well. The question is how much grace period they will give for NEM 2.0 grandfather.

I might have to delay my installation till end of the year

 

[h2ofun]

NEM 3 is not coming out the first of the year.

A final decision will be made in January on what exactly NEM 3 will entail and implementation will occur sometime later in the year.

One can roll the dice all they want. The amount of money is trivial.

 

[holeydonut]

For Californians I don't think a 4% difference on taxes is worth the risk due to how aggressively NEM 3.0 will de-value residential rooftop solar installs.

And it would be a bad idea to try and time this so it all magically works out sliding in right before the cutover periods. The utilities are too clever at slow-rolling approvals and PTO. There are zero things a homeowner can do to combat all of the PoCo's possible stall-tactics. The CPUC provides zero avenues for a homeowner to get recourse if PG&E is an absolute sh!t.

When I was getting solar in 2020, I had everything finally approved for the main service panel upgrade, battery export, solar export, etc. PG&E granted me a service disconnect. But when the PG&E lineman showed up at my house, he said my going solar + batteries was taking $ from PG&E's pocket. He said he didn't like what he saw at my house and threatened the workers on site that if they did any work, then he wouldn't re-activate my power. Naturally this scared the installer (Sunrun) and they took their crew home. Then when I tried to get my system re-approved, PG&E said I was in violation of the 120 percent busbar rule and refused to authorize another service disconnect unless I took the batteries off the installation.

The whole time, I attempted to work through the CPUC for support since I felt such aggressive/draconian stall tactics were putting my system at risk for the ITC. If Trump were re-elected, the ITC would drop to 22% instead of 26%. The CPUC told me they weren't responsible for executing agreements and enforcement against PG&E. Thanks a lot. The CPUC is useless when it comes to an individual's situation. The CPUC only cares about setting policy and expects the PoCo to be self-regulating. Useless.

With regard to NEM 3.0... Everyone in the California NEM 3.0 debate has accepted the reality that NEM 2.0 is "too generous" to solar customers. It is a standard/accepted point of view that NEM 3.0 will reduce the ROI of a solar installation. So we know NEM 3.0 is going to be bad, and it's likely going to be much worse than the 15% delta (+4% of the 26% current ITC) that is up for grabs from Uncle Joe.

If I couldn't get the CPUC to step in during a case where PG&E literally told me they didn't like my install because it harmed them financially (a clear violation of NEM 2.0), imagine what happens in the following hypothetical scenarios. What're you going to do... sue PG&E? Yeah good luck with that.

1. PG&E tells a prospective homeowner that their solar install requires a new local transformer. While this is supposed to be "free" under current NEM rules, it could easily take them exactly 1 extra day to get that Transformer installed compared to when NEM 3.0 kicks in.
   
   
2. PG&E claims a new meter connection/disconnect is disallowed and refuses to support a service disconnect.
   
   
3. PG&E says their PTO department is understaffed, and can't get things approved until the day after NEM 3.0 comes into effect
   
   
4. Edit: added a 4th scenario... PG&E refuses to grant PTO unless you add them as a named insured on your homeowners insurance. And many insurance companies don't want that type of exposure because they think PG&E causes fires and insurance companies don't like the scenario of liability owed to the USA's most corrupt utility. If you're thinking this is absolute BS... consider that I currently have PG&E named as an insured on my homeowner's policy. Without it, PG&E wouldn't have granted me PTO.

TLDR, solar installations require the PoCo to play ball and work with the homeowner. It's not worth gambling on the PoCo hitting deadlines to slide in before NEM 3.0 goes into effect.

 

[yblaser]

One can roll the dice all they want. The amount of money is trivial.

I didn't say anything about rolling the dice just pointing out that it is not starting "the first of the year."

 

[ucmndd]

This is not exactly the right thread but an interesting topic so I’ll ask anyway. If someone hypothetically adds a powerwall or other energy storage to an existing NEM 2.0 PV system after the NEM 3.0 effective date, does that automatically bump them to NEM 3.0?

 

[gpez]

This point has been discussed on this board and I'll reiterate my position.

Don't wait for demand side incentives to make a purchase. Tax credits such as the ITC simply allow the supplier of the goods or service to raise prices commiserate with the incentive. If you were willing to pay $20k for a system before a 30% credit you'll be willing to spend $28.6k with the credit and those selling systems know this. Your net outlay will likely be the exact same regardless of the incentives provided by local or federal governments.

@KHYE you may have a very unique situation if you can guarantee pricing and the delayed install on the chance of an ITC extension. My comment here is for those that are thinking of waiting months or years.

 

[holeydonut]

This is not exactly the right thread but an interesting topic so I’ll ask anyway. If someone hypothetically adds a powerwall or other energy storage to an existing NEM 2.0 PV system after the NEM 3.0 effective date, does that automatically bump them to NEM 3.0?

If your installer follows the code/law, then yes. The extra battery requires a permit, and affects the PTO agreement on export.

If you can somehow procure a Powerwall and get it shadow-installed without the PoCo finding out, then naturally it can't affect your NEM status.

 

[holeydonut]

This point has been discussed on this board and I'll reiterate my position.

Don't wait for demand side incentives to make a purchase. Tax credits such as the ITC simply allow the supplier of the goods or service to raise prices commiserate with the incentive. If you were willing to pay $20k for a system before a 30% credit you'll be willing to spend $28.6k with the credit and those selling systems know this. Your net outlay will likely be the exact same regardless of the incentives provided by local or federal governments.

@KHYE you may have a very unique situation if you can guarantee pricing and the delayed install on the chance of an ITC extension. My comment here is for those that are thinking of waiting months or years.

Yeah, I think the dream of arbitraging the higher ITC while also getting NEM 2.0 is going to be tough to attain. Your comment about pricing is also very likely as all the PV installers blame supply chain constraints and jack up prices 20% after the new ITC is signed.

 

[jjrandorin]

If your installer follows the code/law, then yes. The extra battery requires a permit, and affects the PTO agreement on export.

If you can somehow procure a Powerwall and get it shadow-installed without the PoCo finding out, then naturally it can't affect your NEM status.

This may change with NEM 2 to NEM 3, but I can tell you 100% that adding "storage only" to an existing NEM agreement did not require moving to a new NEM agreement.

My source is myself, with 2 powerwalls added to existing solar that was (and still is) under NEM 1.0. There was a specific form I signed for adding storage to an existing NEM agreement.

This may change (and my bet would be that the utilities would build that in there), however I dont think its set in stone as there is precedent that adding paired storage does not force being moved from NEM 1 to NEM 2.

 

[yblaser]

So what defines which calendar year the install happens? I assume it is when you pay for the system or provide the down payment for the loan not when the system is actually put on your roof.

 

[jjrandorin]

So what defines which calendar year the install happens? I assume it is when you pay for the system or provide the down payment for the loan not when the system is actually put on your roof.

This sort of comes up every year, around this time, which is why I stickied the tax thread (that I merged this thread into).

One of the threads that discussed this specifically is linked in the first post in this thread, which was:

2020 tax credit

Ran in to a few delays with my solar panel project. Nonetheless, Tesla was able to install the system last week. Got off the phone with Tesla earlier today and the rep said my 26% tax credit rate is locked in since my system has already been installed. I was under the impression that it was PTO...

teslamotorsclub.com

The general consensus was "installed and functional" (so yes, when its put on your roof and able to be turned on). Most people seemed to equate "installed and able to be turned on" vs "Permission to operate granted" (which tends to happen weeks or even months later).