subject: Economic Incentives For Alternative Energy [print this page] With the price of oil constantly rising, alternative energy sources have become an increasingly viable option. The threat of climate change has created even further incentive to seek out alternative energy solutions. As a result, numerous economic incentives are available to homeowners and businesses to use alternative sources of energy. Economic incentives for solar and wind power are particularly prevalent in today's economy.
Solar energy can cost upwards of five times as much as traditional electricity. It can take many years before the switch to a solar energy system will pay itself back. The initial investment is often high and out of the budget range for most homeowners. However, government agencies have started to offer economic incentives for alternative energy. Local utilities or government agencies may offer to subsidize the total cost of the solar system by as much as 60%.
Banks may offer low interest loans specifically for the purpose of alternative energy investments such as solar power. Lenders may also provide extensions on a mortgage or home loan in exchange for the installation of solar panels throughout a home. A new federal law recently mandated a 30% tax credit with a maximum limit of $2000 for the installation of solar water heaters and fuel cells. Economic incentives for alternative energy sources often vary on a state by state basis.
Illinois offers a 30% rebate up to $10,000 for solar panel systems that rate above 800 watts. California offers a multitude of rebates and incentive programs for solar energy. For example, the New Solar Homes Partnership has joined forces with the California Solar Initiative to provide significant financial incentives for builders and homeowners to upgrade to solar energy.
Wind energy is subsidized by the government and there are a variety of credit and rebate incentives for the use of wind energy. Tax credits are available for wind energy at a rate of 1.9 cents per kilowatt hour. Wind energy also benefits from the use of accelerated depreciation when calculating usage. In 2008, the Energy Improvement and Extension Act was passed, which included extensions for wind energy credits. The Act also introduced new tax credits for plug-in hybrid vehicles.
Alternative energy is seen by many as the future of the world economy. Economic incentives are available in nearly every state in the U.S. Companies can receive large economic and tax incentives if they show a commitment to using alternative energy sources.
