Wisconsin Solar – Everything You Need to Know
Information about Solar Panels in Wisconsin
America's Dairyland might be known for its cows, cheese, and snow, but it is also a very nice place to be if you are interested in going solar! Wisconsin solar is very viable, thanks to rebates, credits, and other benefits.
Despite those long winters, relatively small energy needs coupled with excellent rebates and tax credits mean that you can pay off a system fast and start enjoying the benefits of solar very quickly. Depending on where you live, you might also get some benefits from your local utility.
Read on to see how you can make money by helping the environment in Wisconsin!
#1 Are Solar Panels Worth it in Wisconsin?
* 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 Wisconsin
Anyone interested in purchasing a new solar system in Wisconsin is probably wondering, “What’s the best way to actually get the system?” We’re going to take a look at each option to help determine which method is best for you. Don’t worry, though, because no matter which way you choose, you’ll be making a positive return on your money!
Purchasing and installing your system with a cash payment is an excellent way to ensure that you’re getting all of the perks and benefits associated with going solar in Wisconsin. Paying cash means that you will own the system right from the jump and you’ll be entitled to the all-important tax breaks! Let’s see how much we will spend, and save, with a 5kW system in Wisconsin:
Comparing many cost estimates brings us to a good starting average of $14,433 for a system that size in the state. Take off the 30% federal tax credit of $4,329 and Wisconsin’s 12% rebate of $1,731, and you’re left with a total cost of only $8,371 – a hugely discounted price!
To discover the real financial potential of solar we can’t just look at the expenses, however. We’ll need to look at how much money your system will be saving you over the course of its 25-year life.
Taking into account the fact that the system’s performance will decline about 0.8% each year and how much power you are estimated to use and generate from your system, we find about $1,016 in savings just in the first year! Add to that the fact that your utility is likely to increase your rates by about 4.1% each year and you’ll see how quickly those savings will grow over time!
If we allow those numbers to run out over the 25-year lifecycle, then we find that paying cash for a solar system in Wisconsin will generate $30,028 in profit, take only eight years to pay back, and have a 14.5% annual return on the initial investment.
Unfortunately, it’s actually against the law to lease solar power from a third-party owner. If this were to change in the future, then you would likely be able to find a solar lease that allows you to save a little money on your monthly electric bill while helping the planet at the same time!
More: Solar Leases
If you don’t have $14,433 lying around your house, don’t worry. Taking out a loan to purchase your solar system is still a quality option. You’ll get all of the perks of ownership, but those extra interest payments will definitely take a chunk out of your profits over the long run.
Remember that taking out a loan to buy a solar system isn’t the same as doing so to buy a new boat or TV. That’s because a solar system is an asset that produces electricity and it should be treated much more as an investment than just financing a purchase.
If we factor in a 15-year, 5% interest loan into our cash example, you’ll still be making $23,027 in profits over the 25-year lifecycle and enjoy a 7.4% annual return on your initial investment (which was $0!).
More: Solar Loans
#3 Wisconsin Solar Policy Information
A state’s policies surrounding solar energy assist in determining how easy it is to go solar, and also how motivated utility companies will be to provide incentives of their own to help spur adoption. In Wisconsin, there is definitely a lot to be happy about!
Renewable Portfolio Standard
Perhaps the biggest indicator of the future adoption of solar in a given state is what’s included in its renewable portfolio standard (RPS). This document is incredibly important because it is here that the state legislature will outline how much energy it wants to be produced from renewable sources and what year it wants the goal met by.
This can be great news for residents interested in solar, because an aggressive goal, along with stiff penalties on utilities for noncompliance, often means significant incentives for going solar.
Unfortunately for residents today, however, Wisconsin has already met its once-aggressive goal as of 2015. Although Wisconsin was the first state to craft an RPS back in 1999, the lack of an update to the original plan means that utility companies aren’t going to be in a huge hurry to provide financial incentive programs to its customers.
For reference, the original end-goal for Wisconsin was that 10% of the power produced in the state should come from renewable sources by the year 2015.
Since you’ll be producing electricity with your solar system, it makes perfect sense that the price of electricity in your state will be a huge part of your financial equation. The higher the prices they are charging residents for power, the more money you will be saving with your system!
For example, residents of Wisconsin are typically paying $.1505 per kWh (as of June 2017) for their electricity. This compares to a national average of only $.1322 per kWh. Since your 5 kW system will be generating about 6,756kW per year, you’ll be avoiding paying your utility about $1,016.78 during your first year of operation — a huge amount of savings, and more than many other states will be able to enjoy.
Taking into consideration that utility companies in Wisconsin increase their rates by about 4.1% each year, you’ll be saving more and more the longer you have the system!
Since we’ve established that owning and operating a solar system on your rooftop turns your home into something like a small power plant, it is necessary to talk about how that power is handled between your system and the grid.
To legally operate your system, you’ll need to interconnect it to the local utility’s power grid. We’ll talk a little more about what that means in the next section, but for now, you just need to know that being connected to the grid means that you can take power from it or give power to it depending on what is going on with your energy production and usage.
Because of the nature of solar technology, nearly all of the energy produced by your solar system will be generated during the day when the sun is out. This means that you’ll likely be sending excess energy to the grid during the day and drawing power from it at night. How the utility compensates you for this extra power, called net excess generation (NEG), is defined in a state’s net metering laws.
Wisconsin’s net metering laws vary dramatically in that each investor-owned utility in the state is handled a little differently, and electric cooperatives aren’t mandated to include net metering at all.
For residents, net metering is all about the rate at which the utility will compensate you for your power, and they typically come at the retail rate (the $.1505 per kWh we talked about earlier), or the avoided-cost rate (how much it costs the utility to make that power, somewhere around $.03-.04 per kWh).
Here’s how the four utilities shake out:
- Northern States Power Company Xcel Energy – NEG will roll over at the retail rate, and any extra is paid to the resident at the end of the year at the avoided cost rate (pg 27).
- Wisconsin Electric Power Company We Energies – NEG will be paid out at the “Buy-back energy rate” which is $.04245 per kWh (pg 254).
- Madison Gas and Electric – NEG roll over or are paid monthly at the “Energy Credit Rate” which can change depending on the circumstances.
- Wisconsin Public Service Corporation – NEG will roll over at a special rate that includes capacity, transmission, and energy costs.
Note: At least one electric cooperative, Vernon Electric Cooperative, offers net metering to its customers provided that they pay certain one-time fees. Be sure to check with your local cooperative to see what they offer!
Your net metering rate, and whether your utility bases credits on retail-rate or avoided cost, is an important consideration that can affect your bottom-line savings. Be sure to talk to your solar installer about your utility’s NEM regulations and your savings.
More: Net Metering
We just mentioned that once your system is interconnected to the grid, you’ll be able to enjoy net metering on your system. But we didn’t provide many details about how exactly you’ll go about connecting it to the grid. Although your installer will handle all of the technical stuff, Wisconsin’s interconnection rules will further specify any special requirements that you’ll need to meet.
According to the rule, as long as your system is less than 20kW (this will be nearly everyone), you will fall into category 1 and there won’t be many restrictions. It also allows you to use the net metering offered by your utility (if any).
You will, however, have to carry at least $300,000 worth of liability insurance for your system unless you can negotiate a financial responsibility agreement with your utility. You might also need to install a disconnect switch, but it is at the discretion of your utility.
All in all, Wisconsin has very reasonable interconnection rules that might allow you to connect very inexpensively to the grid. You might have to do a little negotiating in the process though.
Homeowners Associations and Solar Access Rights
As with most things in life, just because you are on board with the benefits of solar doesn’t mean that your neighbor or local city officials are as enthusiastic.
It is quite easy to imagine a scenario in which you’ve just installed your shiny new system on your rooftop, and your neighbor decides to plant a redwood tree next to your house or add a second-floor balcony that will obstruct the sunlight from reaching your panels. If that happened, you would stand to lose a lot of production!
Luckily, many states have adopted solar access right laws that protect their residents with solar systems. Although there are some caveats, Wisconsin’s laws provide great coverage for solar systems from both local zoning ordinances and neighbors.
It likewise prohibits any homeowner’s associations from banning the systems as part of their code. You won’t have to worry too much about installing or protecting your system in this state!
#4 Wisconsin Solar Incentives, Rebates, and Tax Credits
In addition to the rights and protections afforded to you by Wisconsin’s state laws, there are also several financial incentives that can help bring down the cost of your system significantly. These rebates and credits mean that it will take less than ten years to pay back your system and then it’s all profits!
Federal Tax Credit
The shining jewel of any solar installation is the potential federal tax break that you can get from the residential renewable tax credit. With this single credit, you’ll be able to knock an incredible 30% of the cost of your system’s equipment and installation right off the top after your first year of ownership. A $18,000 system, for instance, would mean $5,400 in savings on your tax bill for the year.
If you don’t owe that much in taxes, it’s not a problem. Even though the credit is nonrefundable (you can’t get money back if you owe $0 in taxes), you’re still able to break it up over several years to get the full amount.
Something important to note here is that although this credit is the best thing in solar right now, it’s not here forever. Federal lawmakers renewed the full credit until the year 2019, but after that, it will drop to 26% in 2020, 22% in 2021, and then die off completely in 2022. We’re all hoping that they decide to renew the credit one more time!
More: Solar Federal Tax Credit
Wisconsin Tax Credits/Rebates
With that massive federal tax cut floating around, it’s not as common to see states offering up their own tax incentives or rebates. Despite the fact that its RPS is a bit of a lame duck right now, Wisconsin is still offering up a pretty juicy incentive for installed residential solar systems that you should definitely take advantage of!
Called the renewable rewards program, this incentive provides a rebate of 12% of your total installation cost, up to a maximum of $2,000. For the 5kW, $14,433 system that we’ve been discussing, this equals a $1,731.96 rebate check just for living in the state!
Utility Based Incentives
Depending on the solar landscape within a state, utilities might be so eager to avoid paying stiff penalties for not complying with renewable energy quotas that they will begin offering rebates and other payments to residents that adopt solar.
Up until their RPS goal was met in 2016, there were two major utilities offering incentives of $.25-$.30 per kW of installed solar, which would be a nice cherry on top of the other financial incentives already available. Unfortunately, both Madison Gas & Electric and River Falls Municipal Utility companies have already made their numbers and have closed up shop on the payments.
As of the time of this writing (September 2017) there is at least one nice incentive available. The only problem is that it’s available from a small provider, Vernon Electric Cooperative, that only services about 10,000 people in Wisconsin. Still, their $250 per kW of installed capacity with a $750 maximum could knock almost another year off of your payback time!
Property Tax Exemption
Just like any other home addition, a solar system has the potential to increase the value of your home in a meaningful way. The ability to create dramatic electricity savings over the course of its lifetime is a huge benefit to the homeowner and, energy production aside, the equipment itself has value on its own.
As a way to help further mitigate the costs of going solar, many states -including Wisconsin – have chosen to let any increases in home value that solar brings to the table be exempt to property taxes each year. In Wisconsin, the law covers all active solar systems and doesn’t carry a time limit or any other restrictions.
This is great news because although most states allow for an exemption, they often let it expire when the home is sold to another owner. This way, you get to keep the benefit even when selling your home!
Sales Tax Exemption
Similar to the property tax exemption, some states also allow solar equipment and installation costs to be exempt from state sales taxes as well. According to Wisconsin’s Renewable Energy Sales Tax Exemptions law, there is a 100% exemption for solar photovoltaics, which is an excellent way to save money!
Since Wisconsin’s sales tax rate is from 5-5.6% you’ll be saving anywhere from $721-808 in taxes!
General Increase in Home Value
We just mentioned that you’d get a beautiful property tax exemption for your solar system, allowing you all the benefits of the property value increase without any of the negatives. Now, we’ll talk about how much we can expect your home’s value actually to increase!
If you take a look at this study from Lawrence Berkeley National Lab, a federally-funded institution, you’ll see that you can expect a home value increase of about $4 per watt of your solar system’s capacity. This stems from the fact that your system will be offsetting energy costs for your home over the next 25 years or more!
As an example, if you decided to install that 5kW system that we’ve been discussing, you could expect about a $20,000 in home value increase just for owning and operating it. You’ll save money on your property taxes but still be able to sell your home with a higher price tag. Nice!
If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.
#5 Madison Solar Information
Some cities tend to be a bit more progressive than others, and there are definitely standouts when it comes to solar energy. The local government could help spur development within their own borders by creating special incentives for its residents.
If you are living in Wisconsin’s capital, you’ll be able to take advantage of all of the usual opportunities that you would get in most other parts of the state, but there won’t be much in the way of special perks. These expected benefits would include the federal income tax break, the state rebate, and all of the tax exemptions.
No matter the city, solar is a great deal in Wisconsin!
What to Do Next?
Despite the RPS that has put the breaks on some of the larger utilities’ incentives, Wisconsin is still a great place to go solar, with its short payback period of only eight years when you pay in cash. Hopefully, they will renew their RPS soon and create an even better landscape for the future of solar!
As always, be sure to use the information here as a baseline for your research into going solar. You should always reach out to local installers to get the most up-to-date prices available to you in your area. Asking neighbors that already have solar is an excellent way to find out who is the best to work with!
If you are living in Wisconsin and have solar, or you’re interested in getting it, leave us your comments below!