Solar incentives: why invest in solar energy?

There are several reasons why to invest in a solar energy installation. These solar incentives vary from financial incentives such as  subsidies, tariffs and credits, to higher property value once solar has been installed.

Solar power systems have become increasingly popular in recent years, and that’s for a good reason. Of all Renewable Energies, solar energy is now the fastest growing green energy. Renewable energy doesn’t rely on mineral fuels such as oil, gas or coal. Solar systems use sunlight as its ‘fuel’ and it is nearly unlimited in quantity.

Is there enough sunlight available?

By 2050 our population on earth will have grown from 7 to around 9 billion people. The total energy need will have increased to about 30TW. The sun provides us with 120,000 TW per year, which is more than enough!

Advantages of producing your own solar energy

  1. If you’re willing to go off-grid, you can create complete independence from the grid. No more electricity or utility bills!
  2. A solar system comes with lower upfront capital cost compared to other renewable energy systems like wind and bio-mass.

In several countries, there are great incentives from the government and utility companies for installing your own solar system. See an overview here at PV-Tech of the latest tariffs worldwide.

Solar incentives, why invest in solar energy?Solar incentives, why invest in solar energy? 

Other incentives for installing your own solar system

There are several other ethical and social benefits of going solar and producing clean energy like playing your part to control emissions and sustaining the environment. As long as solar energy is more expensive than regular electricity, end-users rely on federal or provincial government to offer incentives in order to promote solar energy. Incentives differ from country to country and are based upon the concept of grid parity. Grid parity is reached when the cost of producing electricity from solar systems is comparable to the cost of producing electricity by conventional means like coal or oil. Generally, fewer incentives are provided in areas where grid parity is achieved and vice versa.

Solar incentives

Financial incentives provided to the consumers can be categorized in three different categories:

  1. Subsidies
  2. Tariffs
  3. Credits


The investment subsidies lower the upfront costs of a pv installation.  Governments refund the customer a fraction of the total cost of the installation. Like with any other government grant or subsidy, this financial burden falls upon the taxpayers. These subsidies are usually dependent upon the installed capacity of the system (in kw). Larger and bigger systems will get a higher subsidy and vice versa. These incentives are great because they reduce the total cost of procurement and will increase the ROI of your solar system.


These are also referred to as Feed in Tariff (FIT). Under this type of incentive arrangement, the producers of solar electricity sign a multi-year contract with the local utility company for a fixed price of the electricity that will be fed to the grid. This contract price is usually higher than the grid price. These types of incentives do not reduce the upfront solar installation cost but provide guaranteed incentives and cost paybacks throughout the length of the contract.


These credits are offered to electricity producers in the form of Solar Renewable Energy Certificate (SERC).  The producers earn these certificates by meeting certain targets based upon the electricity production and sold power. One SERC is awarded for every 1000 kW Hour of electricity produced by an eligible, certified and registered solar facility. These certificated could later be sold at the current market price (fluctuates based upon current supply and demand economics).

Higher re-sale value of your home

While everyone talks about Government credits and subsidies when it comes to incentives, one thing we forget is that installing a solar panel will increase the resale value of your house. Who wouldn’t want to buy a house that will produce its own electricity for the years to come? Depending upon where you live, and the value of your house, the resale value of the house could increase from 3%-8% of the total selling cost. Sometimes, to promote the installation of solar energy systems to a greater degree, a combination of one or more of the above mechanisms is used. It is best to check with the local utility company or a local system installer to understand the types of incentives that are available where you live.

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