Kansas Solar – A Guide to Going Solar in Kansas and Kansas City

ks-solar

Information about Solar Panels in Kansas

Kansas homeowners enjoy fantastic sunlight – perfect for solar - but the solar industry in the state is unfortunately hampered by unsupportive regulations and scarce incentives available to homeowners considering KS solar.

Don’t let all this get you down, though! If you choose your financing carefully and take advantage of all incentives, you can save money going solar in Kansas. Read on to learn about solar policy, incentives, and estimated savings.

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#1 Overall Solar Grade

C
Overall Grade
12 years Avg. Payback Time (For Cash Purchase)
4.5 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$22,999 Your Net Profit Over 25 Years (Cash Purchase)

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.

With few pro-solar policies, a voluntary RPS, and no state incentives, the solar outlook in Kansas isn’t too sunny. Couple all of this with low net metering incentives, and homeowners are going to have a harder time seeing a timely return on their investment than in other very pro-solar states like California or Oregon. Considering all this, we must give Kansas a C for solar.

#2 Options for Buying Solar Panels in Kansas

There aren’t too many financing options in Kansas. Cash or loan: take your pick.

Buying Solar in Cash in Kansas

If you want to go solar and are looking to save the most money possible, cash upfront is definitely the way to go. Sure, you have to foot that upfront bill (which can be very high), but you get to take advantage of all the tax credits, add value to your home, and see the highest savings you can.

Installing solar in Kansas costs an average of $3.70 per watt, so a 5kW installation costs about $12,961 after applying the 30% federal tax credit.

How much can you save going solar? After accounting for both the utility’s average rate increase of 3.5% each year as well as solar panels’ average production loss of 0.08% each year (due to wear and tear), we estimate you can save about $924.27 in your first year and $22,999 after 25 years (the typical estimated life of solar installations) with a 12 year payback.

Obviously, $23k is a lot of money and you’re probably getting excited right now. But before you go installing solar, there is one very important caveat to these saving estimates. In our calculations above, we assume that you can use 100% of all the electricity you produce in your home, without ever sending any into the grid to be used elsewhere.

With Kansas’ net metering incentives currently below retail rates, your savings will be lower if a portion of your electricity goes into the grid because you will be compensated at the lower net metering rate.

For a more accurate savings estimate customized for you, you’ll need to factor in your utility’s net metering rate as well as how much solar electricity you’ll be able to consume on site. Your best bet is to talk to a few local installers, as they’ll have experience working with other customers with similar needs.

Bottom Line: Even with these net metering rates, you can still save thousands going solar with cash upfront!

Solar Leases in Kansas

If you’re wanting to go solar with a lease or PPA in Kansas, you’re pretty much out of luck. Kansas is one of just 9 states that outright bans solar installers from offering PPAs.

With this ban and the state’s low net metering incentives, many of the national installers that make their money on leases and PPAs (like Sunrun and SolarCity) simply aren’t entering the Kansas solar market.

Don’t feel too slighted, however. As leases decrease in popularity, it’s increasingly harder to really justify financing solar with them anyway. Sure, you avoid that upfront investment – just like a loan – but the homeowner typically saves much less with a lease than with a loan.

Bottom Line: Coupled with the fact that you don’t own the installation – and therefore don’t see any additional value to your property – you can probably start to see how you’re much better off with a cash or loan purchase!

More: Solar Leases

Solar Loans in Kansas

Just like buying a car, solar loans allow you to avoid that high upfront investment. You still reap the benefits of solar ownership – increased home value, fairly high savings, and tax breaks – but you’ll save less with a loan than with a cash purchase. However, you’re putting no money down, so it can still be a great deal.

How much you save really depends on your interest rate, loan length, and any additional fees. Installing the above 5kW installation with a fairly average 15-year loan with 5% interest tacks on an additional $7,840 in interest. This makes your total investment in going solar around $20,801.

Payback increases to 17 years, but you can still see net savings of $15,159 over the life of the installation.

Bottom Line: As solar has grown in popularity, more and more banks, credit unions, and loan companies are offering loans specifically for solar. Be sure to contact a few installers and lenders to see what terms they offer so you can get the best deal possible.

More: Solar Loans

#3 Kansas Solar Policy Information

Kansas has adopted a short list of policies to encourage the growth of solar, but there are serious holes elsewhere.

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Renewable Portfolio Standard

Kansas has a somewhat unique Renewables Portfolio Standard. In most of the 29 states that have adopted RPS goals, the RPS is a mandate that a certain percentage of all electricity sold in the state come from renewable sources.

Hawaii has by far the most aggressive goal of 100% by 2045, with New York and California’s 50% by 2030 coming in a strong second (especially when you consider the huge population of each state compared to Hawaii).

In 2009, Kansas adopted a mandatory RPS that utilities must source 20% of all their peak demand capacity from renewable sources by the year 2020. This means that when their customers are using the absolute most energy (say on a hot day in the summer when everyone is running AC), 20% of all the electricity to meet that demand must be generated or purchased from renewable sources.

Unfortunately, in 2015, the state changed the RPS from a mandatory requirement to simply voluntary, essentially gutting the power of the law. Now, if utilities don’t want to source their energy renewably, there are no consequences. Even still, in the same year (2015) around 25% of all electricity in the state was generated through wind power, up from just 5% in 2009.

We’ll have to wait and see what utilities do in the future now that the goal is voluntary, but with cheap wind and solar constantly decreasing in price, even with a voluntary RPS that’s already been met, hopefully we’ll see even more renewables.

More: Renewable Portfolio Standard (RPS)

Electricity Prices

More than any other component, electricity prices dictate how much you can save by going solar. The higher your utility’s energy prices, the more money you can save by installing your own solar system and avoiding them.

Kansas’ average utility rate hovers around $0.129 per kWh, a bit higher than the national average of $0.128 per kWh. This means you’ll have an easier time saving money than someone in, say, Idaho ($0.096/kWh), but won’t save as much as someone in California ($0.187/kWh – twice as much as Idaho!)

Net Metering

All investor-owned utilities in the state (Westar, Kansas City Power & Light, and Empire Power District) must offer net metering to solar customers.

Any excess electricity you produce is credited to your account to be used in the following months. Before 2014, customers received credit equal to the retail rate of electricity. It meant that if you paid $0.12/kWh for electricity from the utility, they paid you $0.12/kWh for all your excess electricity. This is a great deal and the gold standard for net metering incentives.

Starting in 2014 though, net metered customers in Kansas have been compensated based on the utility’s “monthly system average cost.” This is less than retail rate, but you’ll need to contact your utility to find their specific rate.

Any credits left in your account by March 31st of each year are considered expired, without any compensation to you.

More: Net Metering

Interconnection Process

To make the approval process of connecting your solar installation to your utility grid (known as the interconnection process) quick and easy, the state of Kansas passed laws in 2009 (Article 12 Section 63) that all utilities must use the same simplified process.

Installations must be under 15kW to connect to the grid and utilities cannot require additional liability insurance if installations meet certain safety requirements. The utility will provide a bi-directional meter (which is able to measure electricity both going into your house from the grid and going into the grid from your solar installation) at no charge.

Utilities can require that solar installations have an external disconnect switch, which is simply an off-switch for your system that is installed near your breaker box. Disconnect switches are an additional safety feature typically required of larger installations and certainly aren’t a huge deal to install.

Your solar installer will likely take care of all the interconnection paperwork and approval process, so you really don’t need to worry about the nuances of all this, but it’s certainly good to have a base knowledge of what’s going to happen!

Solar Access Rights and Homeowners Associations

To really protect solar homeowners, states need to adopt two key policies: protection of sunlight and protection of the right to go solar.

Let’s say you spend $15k on your solar installation, then all of a sudden your neighbors build an addition to their home or plant trees that shade your solar panels. What do you do? To combat this issue, many states have passed laws protecting solar homeowners’ sunlight. In Kansas, as in many other states, this protection comes as a voluntary solar easement.

In 1977, the state passed a law (58-3801) that homeowners can create solar easements with their neighbors to protect the airspace in front of their solar panels. These easements must be in writing and recorded with the county. Easements are voluntary legal documents which offer a very important protection for your solar installation.

The second part of any robust solar access protection is simply the right to go solar. Local governments, HOAs, covenants, and other organizations can (and historically have!) stopped homeowners’ solar installations in their tracks. Maybe they don’t like the aesthetics of solar installations or think they’ll negatively affect property values (which simply isn’t true, check out the last section below).

Pro-solar states often pass laws banning HOAs or other organizations from blocking solar installations. Kansas, unfortunately, has yet to adopt any sort of similar law. If you’re going solar in the state, your best path is to talk to your HOA early, stay amiable and flexible, and communicate exactly what you’re doing and how it could (positively) affect the neighborhood.

#4 Financial Incentives, Rebates, and Tax Credits for KS Solar

Kansas homeowners are eligible for the federal tax credit as well as a state property tax exemption.

kansas-state-capitol

Federal Tax Credit

The 30% federal tax credit is the big daddy of all solar tax credits. As an actual credit (not a deduction), it decreases your total federal taxes dollar-for-dollar, in essence giving you a 30% discount on the cost of your installation. So, if you spent $19,000 on your solar system, your tax liability would decrease by $5,700, dropping your total investment in solar to just $13,300.

The credit goes to the owner of the installation, so you’ll need to either pay in cash or loan to receive this credit. You’ll have to file for this credit yourself at tax time and it can be split out over several years if needed.

In 2016, when the credit was originally set to expire, the feds extended the full credit until 2019, at which point it drops in value until 2022, when it dies completely.

More: Solar Federal Tax Credit

Kansas Tax Deduction

The state of Kansas does not offer any tax deductions for homeowners going solar.

Utility Based Incentives

No Kansas utilities currently offer any financial incentives for homeowners going solar.

Property Tax Exemption

Many states offer property and/or sales tax exemptions to sweeten the pot when going solar. Savings are never huge, but they can certainly add a couple thousand dollars to your total savings, so are certainly worthwhile for homeowners to look into.

Kansas offers a property tax exemption for 100% of the value solar installations add to the property (Kansas Statutes Ch 79 Article 2). This means that if you install a $15k installation on your $150,000 home, your property taxes are only based on the $150k value of your home, not the total $165k!

With the average property tax rate at 1.58% in Kansas, if you installed a 5kW system, this tax exemption could save you $300 in the first year alone! The state limits the tax exemption to the first 10 years of your installation’s life.

Sales Tax Exemption

Many states also offer sales tax exemptions on solar equipment and installations. Kansas, unfortunately, is not one of them.

We often forget about sales tax when we are calculating costs and savings, but for a big purchase like solar, it can affect your bottom line. Consider that Kansas’ state sales tax is 6.5%, so avoiding sales tax on a 5kW installation could save you $1,200!

It’s just a dent in your total solar savings, but it’s still enough to pay for that vacation you always wanted!

General Increase in Home Value

Installing solar not only saves you money, but it can also add to the value of your home – as long as you own the installation yourself. In 2015, the Lawrence Berkeley National Lab studied the resale value of homes in 6 different states (though not including Kansas) and found that, on average, solar homes sold for a premium around $4/watt.  So, your 5kW installation could bring an additional $20k in value depending on the age of the system.

For more information on the meeting point between home value and solar installations, read our article What Do I Need to Know When Buying a House with Solar Panels?

More: Buyers Will Pay More for Solar Homes

If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.

#5: Kansas City Solar

If you’re in Kansas City, you might be wondering if your situation is different than the general state info here. First off, you’re obviously still eligible for all of the national- and state-level policies and incentives like net metering, state property tax exemptions, and the federal tax credit.

On the flip side, KCP&L’s rates are a bit lower than the state’s average, so it’ll take you a bit longer to realize a return on your solar investment than homeowners in other areas of the state with higher electricity prices. That being said, installing solar in Kansas City still allows you to save money and add value to your home at the same time.

What to do next?kansas-field

If you’re looking to go solar in Kansas, be sure to contact a few local installers to discuss your potential energy production, costs, and savings. The most important thing you can do is to assess all financing carefully to choose the best option for you. And don’t forget about those incentives!

Image Credits under CC License via Flickr- 3 and Pixabay -  1, 2, 4

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