This is an excerpt from EERE Network News, a weekly electronic newsletter.

August 10, 2005

Net Metering, Tax Credits for Solar Energy Included in Energy Act

When President Bush signed the Energy Policy Act of 2005 into law on August 8th, he set the stage for the first federal tax credits for solar energy systems on homes in 20 years. According to the Solar Energy Industries Association (SEIA), homeowners and businesses will receive a credit of up to 30 percent of the cost of installing a solar power system or a solar hot water system. The solar energy tax credit is capped at $2,000 for each type of system, and applies to the cost after accounting for any state and utility incentives. It applies to systems that are placed in service in 2006 or 2007. Homeowners will also earn a tax credit for installing fuel cells, and businesses will earn a tax credit for installing either fuel cells or microturbines. See the SEIA summary of the solar tax credits and see pages 1373 to 1390 of the energy act (PDF 2.6 MB). Download Adobe Reader.

To further encourage homeowners and businesses to generate their own power, the energy act amends the Public Utilities Regulatory Policies Act (PURPA) to require every utility regulatory authority and every non-regulated utility to consider offering interconnection to the power grid and net metering upon request. Net metering allows consumers to offset their electricity use with any self-generated electricity fed into the power grid over the course of a billing period. The utilities and regulatory authorities have two years to decide whether to implement net metering and interconnection. See pages 1146 to 1151 and pages 1173 to 1177 of the energy act (PDF 2.6 MB).

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