Commercial Solar Connecticut: Powering Your Business with Sustainable Energy

Key CT Commercial Solar Incentives

State Solar Tax Exemptions

Tax credits and rebates are very attractive for going solar in Connecticut. Thanks to CT tax breaks for solar, no taxes required on solar panels. The Sales and Use Tax Exemption for Solar and Geothermal Systems, means that you won’t have to pay any taxes on the purchase of your system.

Net Metering

When you put solar panels on your roof, you are entitled to credits from the excess power your system generates. Connecticut’s utilities has a net metering policy that credits you for the extra electricity your system produces, and allows you to use those credits when your system doesn’t generate enough power. A common myth across New England is that solar doesn’t make financial sense that far north due to the long dark winters. Thanks to net metering, businesses can stock up on credits by the excess electricity a properly sized system generates throughout the summer and shoulder seasons. You can use those credits built up in the summer to get you through the winter with cheap electricity. This accelerates return on investment for building owners and businesses.

Connecticut Green Bank’s Solar Incentive Initiatives

The Green Bank of Connecticut started a fund to help commercial properties finance solar energy projects. The C-PACE initiative (Commercial Property Assessed Clean Energy) and the Solar PPA incentive offered by the Green Bank are useful tools to minimize the upfront cost of a commercial array. The C-PACE program provides businesses with the opportunity to fund environmentally friendly upgrades to their facilities. This is achieved through a voluntary benefit assessment seamlessly integrated into the property tax bill. Businesses can leverage this program to secure low-interest capital for the implementation of their solar energy systems.

Key Aspects of the C-PACE

The owner repays over time through a senior assessment place on the property. Assessment stays with the property regardless of ownership.

Eversource offers the top utility net metering program in Connecticut.

Solar Potential in Connecticut: Incentives and Savings

Connecticut offers several compelling incentives for solar energy adoption, each designed to ease the financial burden and accelerate the transition to renewable energy. These incentives make solar installations more affordable and financially rewarding for both businesses and homeowners.

Federal Solar Investment Tax Credit (ITC)

Understanding the ITC 

The Federal Solar Investment Tax Credit is a critical incentive for solar energy adoption in Connecticut. This program allows a 30% deduction on the cost of installing a solar energy system from federal taxes. It is applicable for those who purchase their PV system outright, either with cash or through a solar loan.

Maximizing Benefits 

To fully benefit from the ITC, one must have enough taxable income, as the credit is non-refundable. This incentive significantly lowers the initial investment in solar technology, making it a more accessible and appealing option for property owners.

Energy Efficiency Loan Program

Loan Features 

Connecticut’s Smart-E Loan offers a unique opportunity for eligible families to finance their solar system. The program allows borrowing up to $40,000 with a repayment period of 5 to 12 years. The interest rates range between 4% and 7%, depending on various factors.

Accessibility and Flexibility 

This program is particularly beneficial for those who might not have the necessary capital for an upfront investment in solar technology. It provides a flexible and manageable financing option, encouraging more families to consider solar energy solutions.

Tax Exemptions for Renewable Energy Equipment

Sales and Use Tax Exemption 

The Sales and Use Tax Exemption for Solar and Geothermal Systems in Connecticut ensures that purchasers of solar systems are exempt from paying sales tax on their purchase. This exemption can lead to significant savings, especially for larger or more complex solar installations.

Property Tax Exemption 

The Property Tax Exemption for Renewable Energy Systems is another financial benefit. It prevents any increase in property taxes due to the added value from the solar system installation. This exemption protects homeowners from potential tax hikes, making solar investments more appealing.

Additional Local Incentives and Rebates

Local Rebate Programs 

Many municipalities and regions in Connecticut offer additional incentives and rebates for solar installations. These can include further tax breaks, cash rebates, or other forms of financial assistance. They are designed to supplement state-level incentives and make solar energy even more accessible.

Exploring Regional Opportunities 

Residents and businesses are encouraged to investigate local programs, as they can significantly enhance the overall benefits of adopting solar energy. These local incentives can vary greatly, so it’s important to understand the specific offerings in one’s area.

Net Metering in Connecticut

In Connecticut, the landscape of solar energy incentives has undergone a significant transformation with the introduction of the Residential Renewable Energy Solutions Program (RES Program) in January 2022. This new program replaces the traditional net metering system and is designed to offer equal, if not enhanced, benefits with added flexibility, making solar energy more accessible and financially viable all while decreasing your electricity bills.

RES Program Tariffs

Netting Tariff

This option is particularly favorable for homeowners. It provides monetary credits for any surplus solar energy generated, calculated at the standard retail rate per kilowatt-hour (kWh). One of the key benefits of the Netting Tariff is that it allows these credits to roll over indefinitely. In 2022, customers of Eversource, a major utility company in Connecticut, received an additional financial incentive for every kWh of surplus energy, in the form of Renewable Energy Credits (RECs). This extra payment is part of the program’s strategy to enhance the attractiveness of solar investments.

Buy All Tariff

Targeted towards companies facilitating Power Purchase Agreements (PPAs) with homeowners, this tariff option sets a predetermined dollar amount for the total energy generated by a solar system, fixed for a 20-year period. This tariff includes additional energy credits available for low to moderate-income individuals and residents of state-identified “distressed municipalities,” broadening the scope of solar energy adoption across different economic demographics.

Advantages and Impact of the New System

• The shift to monetary credits in the Netting Tariff, mirroring retail rates, represents an improvement over the traditional net metering system. It aligns more closely with the financial expectations of solar system owners and enhances the appeal of investing in solar technology.
• The RES Program, especially through its Netting Tariff, aims to achieve a specific rate of return on solar investments. This target rate of return, set between 9% and 11%, is intended to make solar investments more attractive compared to other financial options like the stock market.
• The program’s design reflects Connecticut’s commitment to fostering a sustainable and equitable energy future. By providing these flexible options and incentives, the state encourages a broader range of consumers and businesses to consider solar energy as a viable and beneficial option.

The introduction of the Residential Renewable Energy Solutions Program in Connecticut marks a pivotal shift in the state’s approach to solar energy incentives. It not only preserves the benefits of the previous net metering system but also introduces additional flexibilities and financial incentives, making solar energy a more accessible and attractive option for a wider range of consumers.

Understanding the Electric Utility Landscape of Connecticut

Understanding the electric utility landscape in Connecticut is crucial for residents and businesses considering the transition to solar energy. The state’s utility providers, predominantly Eversource and United Illuminating, play significant roles in determining the overall cost-effectiveness of solar installations through their rate structures and policies.

Key Players in Connecticut’s Electric Utility Sector

Eversource Connecticut

Residential Rates

In 2023, Eversource’s residential electricity rates experienced a significant hike at the beginning of the year. However, effective July 1, 2023, there was a substantial decrease in rates, with residential electricity prices dropping from 24.172¢/kWh to 13.082¢/kWh.

Small Commercial Rates

Similarly, rates for small commercial customers were reduced from 23.032¢/kWh to 14.26¢/kWh starting July 1, 2023.

United Illuminating (UI)

Residential Rates

UI mirrored Eversource’s trend with an initial increase in rates at the start of 2023, followed by a reduction on July 1, 2023, from 21.9429¢/kWh to 14.33¢/kWh.

Small Commercial Rates

Rates for small commercial customers decreased from 20.90663¢/kWh to 14.37¢/kWh in July 2023.

Rate Structure

Standard Service Rates

Both Eversource and UI establish their standard service rates based on the cost of purchasing wholesale electricity. This cost is determined through a biannual auction process. Importantly, these utilities are legally required to pass 100% of their wholesale electricity purchase costs directly to their consumers. This means that any changes in the wholesale electricity market are directly reflected in the electricity rates paid by consumers in Connecticut.

Decrypting Supply and Delivery Rates

Delivery Rates

Components and Function

Delivery rates in Connecticut are charges associated with the transmission of electricity from generating facilities to consumers’ homes. This includes the costs of maintaining and operating the essential infrastructure, such as power lines, transformers, substations, and the overall grid management. These components are crucial for ensuring the reliable and safe delivery of electricity to homes and businesses.

Bill Proportion

Delivery rates usually account for a significant portion of the total electric bill – often ranging between one-third to half of the bill. This proportion indicates the substantial role of infrastructure maintenance and operation in overall energy costs.

Factors Influencing Rate Fluctuations

These rates are subject to variation, primarily due to legislative changes, regulatory decisions, and infrastructure modernization efforts. Investments in grid resilience and upgrades to meet increasing energy demands or to integrate renewable energy sources can also influence these rates.

Supply Rates

Nature of Charges

Supply rates specifically cover the cost of the electricity that consumers use. This is the charge for the energy that powers lights, appliances, and all electrically powered devices in homes and businesses.

Absence of Utility Profit on Supply Rates

Unlike delivery rates, supply rates do not include a profit margin for the utilities. These rates reflect the direct cost of purchasing or generating electricity, which is then passed on to consumers without any markup.

2023 Connecticut Rates

In 2023, there was a notable adjustment in supply rates. Eversource, one of Connecticut’s major electric utilities, set its residential electricity rates at 13.082¢/kWh, while United Illuminating (UI) set its residential rates at 14.33¢/kWh. For small commercial customers, the rates are 14.26¢/kWh for Eversource and 14.37¢/kWh for UI.

Impact on Solar Energy Decisions

Criticality of Understanding Rates

For Connecticut residents and businesses considering solar energy, a comprehensive understanding of these rates is indispensable. It forms the basis for evaluating the cost-effectiveness of transitioning to solar power.

Evaluating Financial Benefits

The potential financial benefits of solar energy, such as reduced electricity bills and earnings through net metering, need to be weighed against the existing utility rates. This comparison is crucial to assess the real-world savings and return on investment that solar installations can offer.

Solar as a Financial Hedge

Given the recent trends in rate increases, especially in delivery charges, investing in solar energy can be an effective strategy to hedge against rising electricity costs. Solar installations can significantly reduce or even eliminate the supply portion of the electricity bill and can also impact delivery charges through net metering credits. This makes solar energy not only an environmentally sustainable choice but also a financially prudent one in the face of increasing energy costs.

Is Solar Worth It in Connecticut?

Connecticut, traditionally known for its financial and coastal industries, is now emerging as a rapidly growing state in solar energy adoption. This growth is attributed to the state’s robust solar programs and incentives, positioning Connecticut as a potential model for other states aiming to facilitate the transition to renewable energy.

Solar Energy Adoption in Connecticut

In Connecticut, state and federal incentives significantly enhance the feasibility and attractiveness of solar energy investments. The Smart-E Loan program allows eligible families to borrow up to $40,000 for solar installations at interest rates between 4% and 7%, with repayment terms of 5 to 12 years. 

Additionally, solar installations benefit from tax exemptions, including the Sales and Use Tax Exemption for Solar and Geothermal Systems, which eliminates sales taxes on purchases, and the Property Tax Exemption for Renewable Energy Systems, which prevents increased property taxes due to solar installations. On the federal level, the Residential Clean Energy Credit offers a 30% reduction in the cost of PV solar energy systems, applicable to those who purchase their systems outright. These incentives collectively lower the financial hurdles in adopting solar technology in Connecticut.

The Financial Case for Solar

Cost Reduction

The combination of state and federal incentives significantly lowers the initial investment in solar technology. With these incentives, the financial barriers to adopting solar are greatly reduced, making it an attractive investment for property owners.

Return on Investment

The benefits of solar, such as reduced electric bills and potential net metering earnings, need to be weighed against existing utility rates. With recent rate increases, especially in delivery charges, solar energy can serve as a financial hedge against these rising costs, enhancing its appeal as a long-term investment.

Connecticut: A Unique Blend

Known for its picturesque landscapes ranging from lush forests to scenic coastlines, Connecticut offers a unique blend of natural beauty and cultural richness. Its cities, like Hartford and New Haven, are bustling hubs of activity, steeped in colonial history yet vibrant with contemporary life. The state’s economy is diverse, with strong sectors in finance, manufacturing, and technology, reflecting its blend of traditional industries and cutting-edge enterprises.

Connecticut’s commitment to education and innovation is evident in its world-class universities, like Yale, which contribute to a dynamic and forward-thinking environment. This intellectual capital, coupled with the state’s natural resources, makes Connecticut an ideal place for renewable energy development, especially in solar energy. The state’s progressive policies and incentives for solar energy reflect its dedication to sustainable development and environmental stewardship.

Moreover, Connecticut’s strategic location between New York and Boston makes it a vital connector in the Northeast, facilitating both commerce and culture. The state’s transportation network, combining efficient highways, railways, and ports, underpins its role in regional and national trade, further enhancing its economic vitality.

The Constitution State stands out as its historical heritage meets modern innovation, where natural beauty coexists with urban dynamism, and where the commitment to a sustainable future is palpable in its approach to renewable energy and environmental conservation.

Why choose Commercial Solar for your commercial solar project in Connecticut?

Our track record includes over 40 commercial solar projects across various sectors. Our expertise caters to all sizes of businesses, from family-owned to Fortune 500 companies. Our Director, based in Hartford, CT, is available for in-person discussions about tailoring solar solutions to your property portfolio.

In Connecticut, a 50,000 square foot rooftop can yield $1 million in savings over 25 years, while a 100,000 square foot roof could save $2 million. With an average electricity cost of 16.81 ¢/kWh in Connecticut, solar installations provide substantial savings and immediate ROI, thanks to front-loaded federal and state subsidies, eliminating the need for substantial upfront investment or loans. This approach revolutionizes the traditional capital-intensive model of solar investment, making it a practical and financially viable option for commercial entities.

Expertise

Commercial Solar’s team possesses extensive knowledge and experience in solar technology, ensuring high-quality installations and efficient energy solutions.

Customized Solutions

They provide tailored solar solutions to meet the specific needs and objectives of each business, ensuring optimal performance and return on investment.

Sustainable Impact

Partnering with Commercial Solar contributes to environmental sustainability, reducing carbon footprint and promoting green practices.

Financial Incentives and Support

We assist in navigating various state and federal incentives, maximizing financial benefits for your business.

Ongoing Support and Maintenance

Offering comprehensive after-installation services, Commercial Solar ensures long-term efficiency and reliability of your solar system.

Embrace Sustainable Energy with Commercial Solar 

At Commercial Solar, our mission extends beyond mere installation of solar panels; we’re dedicated to forging a greener, more sustainable future for Connecticut. With a team of seasoned professionals, we’re equipped to assist you at every phase of your transition to solar power. Reach out to us and discover how integrating solar energy can transform your enterprise, significantly contributing to Connecticut’s ecological and sustainable development.