After Obama signed the stimulus bill last week, the renewable energy media was buzzing. Every reporter wanted to weigh-in on how the 1200 page bill would affect cleantech industries like solar and wind.

But, what homeowners want to know is how the bill will help them.

Especially for those who have been looking into home solar electricity for awhile, many homeowners were hoping that the new administration would bring increased solar rebates from the federal government. No such luck with this bill.

So what’s in it, anyway?

There are two main provisions for solar electricity:

1. Cash grant

At the end of last year, as part of the “bailout” plan of 2008, Congress extended the federal solar rebate for 8 years. Under this law, both businesses and homeowners can receive a 30% rebate for the cost of the system in the form of a federal tax credit. Previously homeowners’ rebates were capped at $2,000.

With the new economic stimulus bill passed last week, businesses – but not homeowners – can choose to receive this rebate in the form of a cash grant instead of a tax credit. Homeowners must still take the rebate as a tax credit. So, they must owe enough in taxes to be able to make full use of this government money.

2. Municipal solar financing

There are a few cities, like Berkeley, CA, which have developed programs where homeowners can finance solar electric systems through their property taxes.  Previously it was unclear if homeowners who financed solar in this way were eligible to receive the government rebate. The new economic stimulus bill clarifies that homeowners who go solar with this kind of municipal financing can receive the federal solar tax credit.

So what does all this mean for the solar industry?

The municipal solar financing provision isn’t a big change, but rather just a clarification, and will only affect the relatively small number of people who live in cities with municipal solar financing programs.

The cash grant could be helpful to solar developers who are struggling to raise tax equity, which is what solar businesses need to be able to use the federal tax credit. Unfortunately, though, the cash grant program will likely take several months to get up and running, especially because many Treasury Department positions remain empty. Plus, businesses who rely on the cash grant could stumble in 2010 when the program expires. It’s also a better for a business to use the tax credit instead of the cash grant because it also lets them use a financial tool called accelerated depreciation, which is quite valuable.

Although this economic stimulus bill likely won’t be a game-changer for home solar electricity, solar is still one of the safest places homeowners can put their money in this economy. Call us at 877 SUN MOJO and we’ll tell you more!

Posted by: Sydney Larson on February 27, 2009.