As the adoption of solar energy continues to grow in Ohio, it’s important for you to know about all the financial incentives available to you as a homeowner. These incentives can significantly reduce the overall costs of solar panel installation and increase your long-term savings on energy bills. With programs like the federal solar investment tax credit (ITC) and local rebates, now is a great time to go solar in Ohio.
Federal solar investment tax credit (ITC) in Ohio
The federal solar ITC is one of the most valuable incentives for homeowners looking to install solar panels. This tax credit allows you to deduct 30% of the total installation cost of your solar system from your federal taxes. For example, if your solar photovoltaic (PV) system costs $20,000, you could claim a $6,000 tax credit on your federal tax return, bringing your effective cost down to $14,000.
To qualify for the ITC, you must purchase your system outright or finance it with a loan. If you finance your system with a lease or power purchase agreement (PPA), it’s not eligible for the ITC. If your federal tax liability for the year is lower than your system credit, you can roll over the remaining credit to future tax years until it expires in 2035. Claiming the ITC requires filing IRS Form 5695 with your IRS Form 1040 during the tax season.
State-level solar incentives and rebates
The ECO-Link program provides homeowners in Ohio with the opportunity to get a reduced-rate loan for home-energy-efficiency upgrades, including solar panel installation. With the potential to secure loans of up to $50,000 at a rate 3% below the market rate, this initiative helps make it easier for you to finance your solar projects.
Solar Renewable Energy Certificates (SRECs) in Ohio
The state of Ohio is committed to ensuring 8.5% of its electricity comes from renewable sources by 2026. As part of this initiative, homeowners with solar panels can take advantage of Solar Renewable Energy Certificates (SRECs).
These certificates are awarded for every megawatt-hour (MWh) or 1,000 kilowatt-hours (kWh) of electricity generated by a solar system. This means you could sell these SRECs to utility companies and help them meet their renewable energy goals.
At present, the SREC market in Ohio is in high demand, with certificates being valued at $3 to $5 per MWh as of 2024. For a typical rooftop solar system, this could translate to 6 - 12 SRECs per year, providing up to $60 in cash incentives annually. And since there are companies that will handle the selling of SRECs for you, there’s little to no effort on your part to get the incentive. Just ask your installer how to take advantage of this incentive.
While the financial returns from SRECs in Ohio may seem modest, they still represent another incentive if you install solar panels. When combined with other solar incentives such as the federal solar tax credit, SRECs can further increase the financial advantages of solar energy.
Tax exemptions in Ohio
Ohio no longer offers any state-wide tax exemptions for solar panel installations. Despite some misconceptions, there’s no longer a sales tax exemption on solar purchases. However, you may still benefit from local programs that offer financial relief when going solar. Two notable programs are available in Cincinnati and Cleveland.
City of Cincinnati - Property Tax Abatement for Green Buildings
Cincinnati offers a Property Tax Abatement for Green Buildings, which allows you to defer paying taxes on the increased value of your property following solar panel installation or energy-efficiency upgrades. The program provides a ten-year tax deferral for renovations and a 15-year deferral for new builds, making solar an attractive investment in the city.
Hamilton County - Home Improvement Program (HIP)
Hamilton County’s Home Improvement Program (HIP) provides qualified homeowners with access to low-interest loans for energy-efficient upgrades, including solar installations. Loans of up to $50,000 are offered at a 3% reduced interest rate, helping you finance your solar projects and other home improvements more affordably.
Ohio Property-Assessed Clean Energy (PACE) Financing
The Ohio PACE program collaborates with local governments to connect property owners with approved capital providers and contractors. This exceptional program offers fixed-rate PACE loans with terms that last 15 to 25 years—allowing commercial, retail, industrial, nonprofit, and multi-family property owners to cover 100% of the upfront costs for energy programs. It's a great opportunity that empowers you to invest in energy efficiency with long-term benefits. This program applies to solar energy projects.
How do I get a rebate for solar panels in Ohio?
To qualify for local rebates, you should first check program offerings for your city or county. A licensed solar contractor should be able to provide insights into available incentives and assist with the application process. To maximize your rebate opportunities, it’s essential to ensure your solar system meets all requirements, including installation by an approved contractor.
Net metering in Ohio
Net metering in Ohio allows solar panel owners to receive credits for the excess electricity their systems produce. While net metering policies once offered a full retail electricity rate credit of around 12 cents per kWh for excess solar energy, current regulations now credit the surplus at the generation charge rate, which averages between 4 and 5 cents per kWh.
Despite this reduction, net metering can still help you significantly reduce your energy bills by earning credits for the solar power you send to the grid. These credits can accumulate throughout the year, and Ohio is one of the few states that allows you to request a cash payout for any surplus credits accumulated over a 12-month billing cycle. This feature makes Ohio’s net metering program quite appealing, although proper system sizing is essential to avoid overproduction and the loss of value on unused credits.
Adding a battery storage system can be a smart solution to maximize your solar energy use and minimize exports, especially with net metering credits only 4 or 5 cents per kWh. Batteries allow you to store the excess power your system generates, so you can use more of your own energy when the sun isn’t shining—rather than exporting it at lower rates than you’ll pay for grid power later in the day. This can lead to greater energy independence and long-term savings.
In Ohio, net metering is available regardless of when your system was installed. Utility companies, including Duke Energy Ohio and AEP Ohio, offer this program, which enables you to carry forward your credits continuously. You can significantly lower your electricity bills by strategically managing your energy use.
Estimated cost savings in Ohio
The average cost for installing a 6 kW solar PV system in Ohio is approximately $15,000 - $20,000. With the 30% federal solar tax credit, this cost drops closer to the $11,000 - $14,000 range. By factoring in local incentives and savings from net metering, you can save significantly over the lifespan of your solar system. Over 20 years, it’s estimated that you could save tens of thousands of dollars on energy costs.
Conclusion
Ohio offers a range of incentives that make solar energy an appealing investment. From the federal solar tax credit to local rebates and net metering, understanding these options can significantly reduce your costs and maximize savings. If you’re considering solar, it's important to explore all available incentives and consult with professionals so you don't miss out on potential savings.
If you feel overwhelmed by the various rebates, incentives, and credits, consider contacting us. We can connect you with expert local installers in Ohio who can help you navigate these options and maximize your benefits.
Understanding Ohio solar incentives, tax credits, and rebates FAQs
Is solar worth it in Ohio?
Yes, solar panels are a valuable investment in Ohio, with substantial savings over time.
Can you get solar panels for free in Ohio?
No, while you can't get free solar panels, incentives can drastically lower the cost.