Nebraska Solar – Everything You Need to Know!
Information about Solar Panels in Nebraska
Nebraska and its Cornhuskers might geographically be in the middle of the country, but the state's solar policies and the political climate around renewable resources put it near the bottom of our list of pro-solar states.
Despite a lack of financial incentives though, Nebraska solar can still be financially profitable. At the same time you'll be helping the environment and reducing our dependency on fossil fuels!
We've run the numbers and researched what incentives are available (such as they are), the tax rebates you'll qualify for, and what policies Nebraska has in place -- as well as the many areas the state can improve -- if you're interested in going solar in Nebraska.
#1 Are Solar Panels Worth it in Nebraska?
Avg. Payback Time (For Cash Purchase)
Estimated IRR (Return on your investment on cash purchase over 25 years)
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.
#2 Options for Buying Solar Panels in Nebraska
There’s a narrow profit margin for going solar in Nebraska, so be sure to use the financiUg option that works best for your wallet in the long-term!
While many people might not be in the position to pay cash for a major purchase, if it’s within your means, cash upfront is a healthy option for buying and installing a new solar system. It allows you to have full ownership from day one, which removes complications when selling your home. Paying in cash also avoids losing money to interest payments, allowing your system to pay itself off more quickly over its 25-year life cycle.
How much can you save? To find out, let’s go over average system costs, electricity costs, power production, and more. This way, you will have a better understanding of what you’ll likely be paying to go solar, and what you could potentially save.
Purchasing a standard 5 kW system (adequate for most family-sized homes) in Nebraska, you’ll end up paying about $17,650 in retail costs for equipment and labor. While this is a significant number, you’ll be able to take 30 percent of that off the top during the first year when making use of the residential renewable energy tax credit (more on that later). This will knock $5,295 off the price and bring the cost down to $12,355.
Now let’s look at the savings. Using in-house data along with solar calculators found online (like National Renewable Energy Lab’s PVWatts), we see that a 5kW system in Nebraska will likely generate about 7,161 kW of power over the course of a year. With the utility’s average electricity prices at a low $.1021 per kWh, you stand to save about $731 on your power bill during that first year.
Since Nebraska utilities increase their rates by about 3.5 percent each year, you’ll save more money as the years pass!
Considering this, you will pay off your cash system in 15 years, make about $13,183 in profit over the 25-year lifespan, and enjoy a 5.8 percent annual return on your initial investment of $17,650. Not bad!
Now, with Nebraska utilities not required to offer retail rate net metering to solar homeowners, these savings estimates come with an important caveat. Scroll down to the Net Metering section for more info.
Taking out a lease on solar panels is an option for folks that don’t have the cash or the credit to purchase their system, and it is a true low-risk, low-reward scenario for those interested in solar.
With a solar lease, you won’t own the equipment. Rather, an installer will put their panels on your home and you will pay them a fee to use the power that they produce.
Under ideal circumstances, you’ll end up paying the installer less each month than you would pay on your power bill. Sunrun, one of the leading residential solar installers in the country, estimates most homeowners can knock about 20% off their monthly electricity bill by installing solar with a lease.
Don’t forget, however, that nothing is perfect. Leasing a solar system carries risks. These agreements are binding contracts, and as such, it is crucial that you fully understand how everything works and how much you will be paying.
Particular attention should be given to any rate increases (called an ‘escalator’ in your lease agreement) or what happens if you choose to sell your home, as those costs can quickly become problematic. Also pay attention to who is responsible for maintenance and repair charges. Your solar installer (ie the system owner) will cover most issues, but who is liable for lightning damage, power outages, or other ‘Acts of God’? Know before you sign!
More: Solar Leases
Not having enough cash on hand to pay for a solar system up front doesn’t mean that there aren’t alternatives that still make financial sense. Getting a low-interest loan for a system is very possible, and you can even use a home equity line of credit (HELOC) or Home Equity loan (ie, 2nd mortgage) to pay for the home addition!
We’ve seen what we can expect for costs and savings for a 5 kW system in our cash example, so here we’ll look at the difference between it and a loan. As with any investment, the most significant difference will be the loan interest.
With a fairly standard 15-year, 5 percent loan, you’ll pay around $7,473 in interest over the life of the loan. That hurts, but remember that you may find a better rate or even pay off the loan early, allowing for those interest payments to be reduced.
Factoring in this increased cost, we are now looking at around 21 years to pay off the system on paper, lowering our return to just $6,182. Don’t forget, however, that you will still be seeing a 2 percent ROI with this investment while putting little to no money down – all while helping the environment at the same time!
More: Solar Loans
#3 Nebraska Solar Policy Information
Even if the people living in a state are head-over-heels for solar, the real test of a technology’s chances of adoption lies in the state legislature. Some states make it much more lucrative to make the jump to solar, while others seem bent on holding things back. Unfortunately, Nebraska falls into the latter category.
Renewable Portfolio Standard
Much like the concrete slab that a home is built upon, a state’s renewable portfolio standard (RPS) is the foundation of every other piece of legislation and policy that comes after it. It outlines the goals of the state’s overall future solar vision. Typically, it mandates a certain percentage of power generated in the state must come from renewable sources by a specific year, with benchmarks to hit each year to make sure that the utilities are staying on track.
Since the generation is state-mandated, utility companies have an incentive to start their own renewable projects as well as subsidize residential production to meet their quotas. Unfortunately, Nebraska has not yet set an official RPS.
As such, their local utilities don’t have any reason to make solar, or any other renewable for that matter, cheaper for their residents because it will be more expensive for them to do so (for now). If Nebraska wants to spur their renewable production, they will need to get serious with a vision for their future.
For inspiration, they might want to check out Hawaii’s RPS, which mandates that renewable energy produce 100 percent of its electricity by the year 2045 – wow! If that’s a bit too intense, take a look at Colorado‘s RPS goal of 30% by 2020.
As if a lofty renewable vision wasn’t enough, many states also choose to add a solar carve out that specifies that a certain amount of the renewable energy come from solar power (Colorado specifies that 3% must come from ‘distributed generation’, ie rooftop solar). Unfortunately, without an RPS, Nebraska can’t have a solar carve out!
Most people are limited to their local utility company for electricity and, depending on where they live, they might be forced to pay handsomely for their electricity compared to other people in the United States. From a solar perspective, this is a significant variable to consider. The more expensive the energy is locally, the more a person will be able to offset by switching or supplementing with a new solar system.
Nebraska currently enjoys some of the lowest electricity prices in the country, and as of December 2017 residents were paying $.1021 per kWh, compared to the national average of $.1250. Spending 22 percent less than the average American means that locals aren’t feeling the pinch that has driven people in more expensive states to switch to alternative energy supplies.
Typically, a solar system will provide more than enough power for a home during the day and switch to power provided by the utility company at night. A state’s net metering rules define the terms between the resident and the utility regarding how much the utility will pay for any net excess power generation.
While some states require utilities to compensate residential solar owners for excess power at the full retail rate, Nebraska’s net metering law says utilities are only required to do so at their avoided-cost rate — basically how much money they would have spent if they generated the power themselves.
While this rate fluctuates, one example as of the time of this writing is Nebraska Public Power District’s photovoltaic rate of only $.0514 per kWh, or about half of retail.
This net excess generation is credited to the account holder on a monthly basis, rolling over until the end of the year. At that point, any earned excess is forfeited to the utility company with no compensation for the resident. While it is a great way to even out power savings over the course of a year, there is actually financial incentive to have a solar system not quite big enough to cover all your power needs. That way, money isn’t lost over the long-term.
As such, you’re ‘losing’ money on any electricity you produce but can’t use in your home and which subsequently goes to the grid. In our savings examples above, we assumed you can use 100% of the electricity you produce in your own home. However, in reality this isn’t quite possible, though exactly how much you can use depends on when you use your electricity and whether it coincides with your solar generation.
For more information on how net metering and avoided cost affects your savings, check out our article Is Life Without Net Metering a Life Worth Living?
More: Net Metering
Solar systems are pretty incredible, as they transform a home into a tiny power plant. Up until a few years ago, Nebraska didn’t have a clear system in place to hook these little power plants up to the local utilities. However, in 2015 new interconnection standards were put into place for that very reason.
These standards determine how residents go about connecting their system to the grid to receive power when needed and to give power when excess is being produced. Under the rules, any system under 25 kW is allowed (this will be nearly every standard home system).
Unfortunately, homeowners might end up footing the bill for any extra costs incurred during the installation of the system and it must be able to automatically disconnect itself from the grid if there is a problem (though almost all modern inverters are able to do this).
On the plus side, there is no requirement for extra liability insurance, a requirement in some states, as long as all of the work is done to code. Without additional insurance, you stand to save a bit more cash – always a good thing!
Solar Access Rights
Like most other property rights, solar access rights (typically in the form of property easements) exist to protect the electrical production capacity of the solar equipment. Residents and businesses are allowed to create binding easements on their property to make sure that the necessary sunlight isn’t obstructed and some states allow local governments to develop zoning regulations for larger installations and applications.
In Nebraska, residents are able to create binding easements between parties involved (for example, between neighbors) to ensure that they are able to keep the sun shining on their panels (basically, the neighbors agree not to build a treehouse or anything else that shades the panels). The state also gives local governments the ability to create special zones to protect and support solar and wind infrastructure.
#4 Nebraska Solar Incentives, Rebates, and Tax Credits
As with any major purchase, the more financial incentives and goodies available to reduce the cost the better. Unfortunately, one of the best parts about going solar in many states falls flat in Nebraska, as there aren’t any significant ways to save money.
Federal Tax Credit
In terms of financial incentives, there is simply nothing better for solar than the federal residential Renewable Energy Tax Credit. Under the conditions of this law, residents are eligible for a 30 percent credit on any solar costs incurred during the current year including labor, parts, and necessary electrical work.
This means that a $20,000 installation would qualify the buyer for an incredible $6,000 federal tax break. Although the credit is nonrefundable, unused portions can be carried forward into future years so that the benefit isn’t lost.
This tax credit might not be around forever, as the recent Bipartisan Budget Act of 2018 (pg. 208) reaffirmed the current phase-out schedule already in place. Starting in the year 2020, the credit will fall to 26 percent and then to 22 percent in 2021. After that, this amazing incentive will be gone unless Congress decides to extend it!
More: Solar Federal Tax Credit
Nebraska Tax Credits/Rebates
In addition to the awesome federal tax credit, pro-solar states will often add their own state-level tax breaks to provide even more incentives for residents to consider going solar. Unfortunately, the lack of an RPS with clear goals for the future means that there is really no reason for the state to lift a finger to help anyone with solar.
At this time, there aren’t any state-level credits or rebates to take advantage of.
Utility Based Incentives
Similar to state tax credits, utilities don’t have much reason to offer financial incentives for solar if they aren’t being compelled to increase their renewable energy generation. Without an RPS, the utilities will happily burn whatever fossil fuel is cheapest for them at the moment, ignoring the real costs of pollution and, by extension, global warming.
At least one utility, Lincoln Electric System, provides a small one-time rebate for solar systems less than 100 kW. The formula for the credit depends on which direction your panels face, with south-facing installation raking in $375/kW and west-facing installations worth $475/watt. If our 5kW installation above faces west, that’s $2,375 in rebates!
Property Tax Exemption
Home ownership involves a lot of hidden costs, and one of these is the property taxes assessed by the local government based on the value of the home and land. Adding expansions, renovating areas of the house, and other projects that increase the value of the home often also increase the property tax bill after the improvements have been assessed.
As an added benefit to encourage greater solar adoption, many states have chosen to exempt from property tax the additional value solar installations add to your home.
Unfortunately, unless you have a home that fields a 100 kW or more system, there is no such property tax break in Nebraska.
Sales Tax Exemption
Similar to a property tax exemption, allowing residents to exempt themselves from sales tax on qualifying solar equipment and its installation is a great way to help subsidize the costs of going solar. In Nebraska, however, you’ll only get this break if your purchase exceeds the $20 million mark – a bit too high for most people in the state.
General Increase in Home Value
We mentioned earlier that Nebraska doesn’t offer a property tax exemption for their residents. But it is worth pointing out that when selling a home, a solar system has the potential to be a fantastic selling point: it represents a cost-effective way to lower electricity bills and save money, possibly making it more appealing than other homes. With this in mind, those panels may pay for themselves when the home is sold.
A multi-year study from the Lawrence Berkeley National Lab of home values across 8 states (though not including Nebraska) showed that homes with a solar system could demand about a $4/watt premium when sold compared to similar homes without them. This means that a standard 5 kW system would add about $20,000 to the value of a home, which would pay back the cost of any solar installation and then some.
Of course, talk to a few local realtors about the value of solar for your specific area before moving forward!
If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.
#5 Lincoln Solar
Despite a state legislature’s lack of solar endorsement, it is not uncommon for different areas within the state to be more progressive than others in the march towards free energy. In the case of Nebraska, their capital is such a place, with the local utility (Lincold Electric System) offering a small rebate incentive for residents that go solar (read up on their offering in the Utility Based Incentives section above).
Every little bit helps in reducing the installation and labor costs of solar! We are happy to see that one utility company is doing something, especially because they aren’t being forced to!
What to Do Next?
Even if Nebraska isn’t the ideal place to consider purchasing a new solar system, it can still be a good investment, and there is the added benefit of helping to save the earth at the same time! Hopefully, the state will get serious and create a renewable portfolio standard that will kickstart state and utility-backed financial incentives for its residents. Without that, the future doesn’t look bright for Cornhuskers going solar.
Remember that the information we are sharing here is just a baseline to get you started, and things can change quickly with new technologies. Check with local providers and installers to see the most accurate prices in your area and do all the research you can before committing to the process!