Energy Alternatives

How the Energy Policy Act of 2005 Affected the Solar Industry

Reclaiming the environment happens in our homes and kitchens, but it is legislation that opens up the world to change. The Energy Policy Act of 2005 affected the solar industry by providing the tax incentives to make solar energy more affordable. By expanding tax incentives for business and consumers alike, the field of solar energy matured. More people could enjoy this technology due to the savings, and more technology could be developed. As demand rose due to the tax incentives, the price of installing solar panels dropped and solar energy became readily prevalent.

Revolutionizing the World, One Tax Credit at a Time

The Act expanded the former 10% tax credit to 30%. Everyone realizes solar energy is naturally more affordable. Indeed, it pays you to use it. Solar power that is created through the solar panels can be bought back by electric companies. Even if you don’t run your home completely off solar energy, solar panels can substantially reduce your electrical bill. There’s satisfaction in watching your electric meter tick backwards. You save money, and you do your part to save the earth.

The tax credit applies to all costs, from design, engineering, equipment and installation. Installation and design becomes that much more affordable, making it easier to recoup the costs of building the panels. Solar panels will naturally pay for themselves over time. It’s only a question of how long. The Energy Policy Act of 2005 substantially reduced the time it would take to recoup costs of installation by directly lowering the costs by as much as 1/3.

First Residential Tax Credit in 20 Years

The Energy Policy Act of 2005 was the first residential tax credit offered in over 2 decades. Nothing since the Reagan administration had existed to encourage the public to invest in solar technology. The tax credit could be applied to 30% of the cost of the panels, up to $2,000 per home.

Consumers who were at that tipping point- wanting to invest in solar, but not being able to afford it- suddenly had the financial means to make it feasible. The act opened up solar to the individual consumer to green technology. Costs could be recouped faster as homeowners continued to save.

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