Solar Panel Rebate: How it works and how to get it. (2022)

Reducing the upfront cost of solar power systems in Australia in 2022.

Last Updated: 25th Feb 2022

If you buy a solar system in 2022, it is subsidised by a federal government scheme worth about $447 per kW installed (based on a $36 STC price after fees – I explain this later). That’s around $2,950 off on a typical 6.6kW system that is usually applied at the point of sale; i.e. any advertised prices you see almost certainly have the solar rebate already applied.

You can discover the maximum solar rebate you are entitled to with this STC calculator >>

Is this subsidy in danger of ending soon, or being scrapped entirely?

Well – current legislation means the solar rebate started to reduce by one fifteenth every year from Jan 2017 until it drops to zero in 2031. At this point, there’s no confirmed danger of the panel rebate being scrapped entirely for the foreseeable future.

While the subsidy seems safe for now, what most people aren’t aware of is the dollar value of this ‘solar rebate’ can be significantly reduced at any time if demand for solar systems suddenly increases along with other factors coming into play.

How so? I go over the exact mechanism (known as STC creation) further down the page, but in a nutshell, the subsidy system is designed to ‘self regulate’.

What that means is that if the market for solar power runs too hot, the value of the ‘rebate’ may reduce in step with a thing called the ‘STC price’. The STC price can be anywhere from $0 to $40. In other words, $40 is the highest value it is allowed to go to by law.

The higher the STC price the more ‘rebate’ you get.

(Video) Solar energy grants in the UK.

At the moment, the value of the solar rebate is around $36 per STC after fees. This translates into a rebate of roughly $447 per kW installed. But situations can arise where the value is pushed down.

How low could the subsidy go? The lowest STC value was some years ago when it hit about $17. If it hits that again, the ‘solar rebate’ would be worth under $204 per kW installed – a greatly reduced subsidy.

Just to be clear, no-one can pretend to know what the STC price will be next week or next year. All we do know is that it can not go any higher than $40.

The solar rebate that is not officially a rebate!

To make things confusing, the current “rebate” for anyone buying a solar system of up to 100kW is called the STC program. Which stands for Small-scale Technology Certificate. The government says that this should not be called a “solar rebate”.

From the Clean Energy Regulator website:

“Under the Small-scale Renewable Energy Scheme the reduction in the cost of your solar panel is not a rebate. You will not qualify for any Government-based financial recompense at the completion of any process relating to STCs.”

I think what our government friends are trying to get across is that the thousands of dollars you get off your solar system price (usually by assigning the rights to its STCs to your installer) does not actually come from the government.

It is a government program, but it compels other people to buy your certificates. So it is a government run scheme, using other people’s money to provide the subsidy.

Now, you could argue that all government subsidy and incentive schemes use other people’s money!

But I’m not gonna pick a fight with the Clean Energy Regulator (I’ve picked enough fights with the content on this website thank you very much) so from now on I will try to refer to the rebate as the “solar financial incentive” then!

The solar rebate financial incentive subsidises the upfront cost of installing a solar power system and is not means-tested in any way. The only criteria for claiming it are:

1) Your PV system is less than 100kW in size.

2) You get it installed and designed by a Clean Energy Council accredited professional.

(Video) What is the STC Solar Power Rebate? [Solar Buying Guide 2021]

3) You use solar panels and inverters that are approved for use in Australia by the Clean Energy Council.

Note: Do not confuse this ‘solar rebate’ with the Feed-in Tariff (FiT). The FiT is a subsidy where electricity retailers pay you for the electricity your solar system exports to the grid.

What is the rebate financial incentive worth to me?

I’m guessing what you really want to know is:

a) How much can I get off the price of a solar system?

b) How much will a solar power system cost me now, after the subsidy?

The short answer is:

If you want a 6.6kW system (for example), then you can get approx $2,950 off the total cost of the system in subsidies (The ‘rebate’ is worth roughly $447 per kW, so 6.6kW x $447 = $2,950). You will get a proportionally bigger ‘rebate’ for larger systems, and less for smaller.

(If you are confused by this talk of “kW” (kilowatt) then there is a good explanation here)

So how much does this mean you will have to pay for a solar panel system?

Below are some ballpark figures for costs after the solar panel rebate. They will vary either way depending on the brand of panels and inverters each supplier uses, and their overheads, but if these prices are way out of your expectations, then solar panels may not be for you right now.

Keep in mind that adding the system cost to your mortgage can be surprisingly affordable if you take rising electricity costs into account – there is a solar payback calculator here for you to make your own mind up.

Typical cost of an installed 6.6 kW solar system:$9,500
Government Solar Rebate Financial Incentive:$2,950
Cost to you for 6.6kW of solar power:Approx $6,550

Note that the general price range for a good quality 6.6kW system in 2022 is $5,500 – $9,000, depending on installation location and the components used.

If you are interested in the financial payback of a system such as the 6.6kW system above, use our solar payback calculator – it takes into account rising electricity prices and your state’s feed-in tariff.

(Video) Updated - 2022 How the Solar Tax Credit Works | Jaime Greene the Solar Queen

How the solar rebate financial incentive works

The feds have cleverly designed the rebate financial incentive to actually cost the government very little. Sneaky subsidy eh?

Here’s the subsidy scheme in a (8 part) nutshell:

1) The government creates virtual pieces of paper called Renewable Energy Certificates (RECs).

2) The government compels filthy fossil fuel generators to either build a certain amount of renewable generation (wind/solar power) or buy the right to the other people’s renewable energy systems in the form of RECs.

3) When you go and buy a solar power system for your roof, the government gives you a certain number of RECs depending on how big your system is, how much sun your part of Australia gets and the installation date.

4) The special type of RECs you get for a residential solar system are called “Small Scale Technology Certificates” (STCs).

5) You (or more likely your installer, who may also charge a small fee for handling the certificates) sell the STCs to the filthy fossil fuel generators. The value of the STCs is used to offset the upfront cost of the solar system purchase.

6) The STC price is a bit like a share price – it fluctuates on the open market depending on supply and demand. For example, when the solar energy industry is really booming then the STC price can drop.

7) You can see the current market price of a STC here. The blue line on the graph shows STC spot prices. But bear in mind that is the spot price. When you sign over your STCs to a solar installation company, as mentioned they’ll likely charge a fee of a few dollars per certificate to process them (saving you the headache and complexity), and that will come off the STC value.

8) Almost all solar power system prices you see advertised will already have the government solar panel rebate financial incentive included in the pricing – so the cost after the subsidy.

Simple eh?

Why you should consider getting quotes for solar sooner rather than later

As mentioned above, the amount of ‘solar rebate’ you can claim depends on the current market price of an STC. At a market price of $36 after fees (for example), the ‘rebate’ is worth roughly $447 per kW installed. However, in times of high demand for solar panel installations, lots of STCs are created.

When supply of STCs increases too much, the STC price can decrease and the subsidy reduces – supply and demand – gotta love economics 101!

(Video) The Solar Tax Credit Explained [2022]

Some years back, when the government really looked like it was going to scrap the solar rebate entirely, demand for system installations caused the price of STCs to drop to $17.00.

So, if you bought a 6.6kW system today, you’d be eligible for a ‘rebate’ of $2,950 (6.6kW x $447 = $2,950). However, if demand for solar panels goes up too much and the STC price drops to $17.00 again, you’d only be entitled to a ‘rebate’ of around $1,346 for the exact same system.

If you get 3 free quotes for solar now, you’ll be locking in the current ‘rebate’ based on the current STC price – but if you wait, the STC price could drop and significantly reduce the savings from the subsidy you can claim.

Other things you should know about the subsidy

1) The amount of solar panel ‘rebate’ you can claim depends on where you live:

Solar Panel Rebate: How it works and how to get it. (1)

The lower the number the more subsidy cash you get!

Here are some examples for the approximate STC value for a 6.6kW solar system based on a $36 STC price (after fees):

Zone 1: incentive = $3,456
Zone 2: incentive = $3,276
Zone 3: incentive = $2,950
Zone 4: incentive = $2,520

2) A good solar installer will guarantee the value of your solar rebate financial incentive when you sign up for a system and handle the paperwork for you. I wrote an entire blog post explaining this process here.

And finally, if you’d like to get 3 free quotes for solar and lock in the current solar panel ‘rebate’, you can do so here.

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(Video) Want To Install Solar Panels? These Rebates Are The Best in Canada

FAQs

How does the solar tax rebate work? ›

What Is the Solar Tax Credit? If you install solar energy equipment in your residence any time this year through the end of 2032, you are entitled to a nonrefundable credit off your federal income taxes, equal to 30 percent of eligible expenses.

How do I get the 2022 solar tax credit? ›

First, download IRS Form 5695 as part of your tax return. Then, on Part I of the tax form, calculate the credit. You file your solar system as “qualified solar electric property costs.” Then, on line 1, enter your project's total costs as written in your solar contract. Complete the calculations on lines 6a and 6b.

How do I qualify for federal solar tax credit? ›

To claim the tax credit, you must file IRS Form 5695 as part of your tax return. You'll calculate the credit on the form, and then enter the result on your individual tax Form 1040. If in last year's taxes, you ended up with a bigger credit than you had income tax due, you can't get money back from the IRS.

How many times can you claim solar tax credit? ›

How Many Times Can You Claim The Solar Tax Credit? You can only claim the solar tax credit one time for your solar power installation. If you have any unused amount remaining on your tax credit that you are unable to claim in a single tax year, you may be able to carry over that tax credit value for up to five years.

Will there be new solar incentives in 2022? ›

Solar PV systems installed in 2020 and 2021 are eligible for a 26% tax credit. In August 2022, Congress passed an extension of the ITC, raising it to 30% for the installation of which was between 2022-2032.

When can I claim my solar tax credit? ›

Generally, you can claim a tax credit on the expenses related to the new solar PV system that already came installed on the house for the year in which you moved into the house (assuming the builder did not claim the tax credit)—in other words, you may claim the credit in 2021.

Will I get a refund from my solar tax credit? ›

WILL I GET A REFUND? This is a nonrefundable tax credit, meaning you will not get a tax refund for the amount of the solar tax credit that exceeds your tax liability. However, you can carry over any unused amount of the solar tax credit to the next tax year.

Will solar panels get cheaper in 2023? ›

That works out to about $26,125 for an average system of 9,500 watts before taking into account a federal tax credit. For the 2022 tax year, the credit stands at 26 percent of the cost of solar system; it is slated to drop to 22 percent in 2023 and end in 2024.

How much is the federal solar tax credit 2022? ›

Those who install a PV system between 2022 and 2032 will receive a 30% tax credit. That will decrease to 26% for systems installed in 2033 and to 22% for systems installed in 2034. If you've already installed a system in 2022, your tax credit has increased from 22% to 30% if you haven't already claimed it.

How can poor people get solar panels? ›

California Single Family Affordable Homes Program (SASH)

California's SASH program subsidizes the installation of solar panels for low-income single-family homes to the tune of $3,000 per installed kW, up to a maximum of 5.0 kW.

Is a new roof tax deductible in 2022? ›

Unfortunately, you cannot deduct the cost of a new roof. Installing a new roof is considered a home improvement and home improvement costs are not deductible. However, home improvement costs can increase the basis of your property.

Can you claim the solar rebate twice? ›

Yes! Upgrades are eligible for the solar 'rebate'.

Does solar increase home value? ›

Installing solar panels in a home not only helps to reduce current monthly utility bills; it can potentially increase the home's value by up to 4.1% more than comparable homes with no solar panels, according to recent solar research done by Zillow — or an additional $9,274 for the median-valued home in the U.S.

What is the solar tax credit for 2023? ›

It drops to 26 percent in 2033, then 22 percent in 2034, and then ends in 2035, unless Congress continues it. (The new Residential Clean Energy Credit supersedes an older law, set to expire in 2024, that would have provided a 26 percent credit for solar installations this year, and 22 percent in 2023.)

How does the solar tax credit Work 2021? ›

The bottom line is this: When you install a solar power system, the federal government rewards you with a 30% tax credit for investing in solar energy. In short, 30% of your total project costs (including equipment, permitting, and installation) can be claimed as a credit on your federal tax return for that year.

What is the solar tax credit for 2023? ›

It drops to 26 percent in 2033, then 22 percent in 2034, and then ends in 2035, unless Congress continues it. (The new Residential Clean Energy Credit supersedes an older law, set to expire in 2024, that would have provided a 26 percent credit for solar installations this year, and 22 percent in 2023.)

Is the solar tax credit a refundable tax credit? ›

One thing to note about the IRS solar tax credit is that it is a non-refundable tax credit.

Do you get a tax credit every year for solar panels? ›

You can qualify for the ITC for the tax year that you installed your solar panels as long as the system generates electricity for a home in the United States. In 2021, the ITC will provide a 26% tax credit for systems installed between 2020 and 2022, and 22% for systems installed in 2023.

Videos

1. Australian Solar Rebate - How it works, and how to claim it.
(SolarQuotes)
2. How the Solar Tax Credit Works - 2022 Federal Solar Tax Credit Explained
(Kyle Thumm)
3. What Is The Australian Solar Panel Rebate?
(Solaray Energy - Solar Power Installer Sydney)
4. Solar Tax Credit Extended
(Solar Surge)
5. Australian Solar Rebate - 2022 Guide
(SolarQuotes)
6. How The Federal Solar Tax Credit Works in 2021 & 2022
(The Johnsons)

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