Key Ohio Solar Incentives & Rebates

The upfront cost of a photovoltaic (PV) system in Ohio can be anything from $12,000 to $250,000 depending on the size and purpose. Most businesses within the state spend between $130,000 and $250,000 for a 50kW to a 100kW system. While the sheer cost can be intimidating, several solar incentives Ohio offers alongside several rebates, net metering, loan programs, and tax credits can save you up to 100% of your solar cost through its lifetime. We have curated some of the most important solar incentives Ohio offers its residents and businesses.

Solar Renewable Energy Credit Program (SRECs)

The Solar Renewable Energy Certificates (SRECs) program is an Ohio solar incentive that is intricately tied to the state’s Alternative Energy Portfolio Standard (AEPS) and its compliance mechanisms. The SREC is a financial incentive that allows residents and businesses to earn credit for each megawatt-hour their PV systems generate. Credits can be sold in the SREC market at the current market price usually around $6-8 per MWh. To register, generators must register with the Public Utilities Commission of Ohio (PUCO) to become a certified facility, eligible to generate SRECs. After PUCO certification, the generator must also register with an attribute tracking system (such as PJM-GATS or M-RETS).

Renewable Electricity Production Tax Credit (PTC)

Production Tax Credit (PTC) is a federal tax credit that provides a per-kilowatt-hour tax credit for electricity generated by eligible renewable energy systems over the first 10 years of operation. The program offers gradual but significant savings, potentially up to 30% in upfront costs over a decade for commercial and industrial customers only.

Solar systems placed in service from 2022 onwards and beginning construction before 2033 qualify for a PTC rate of 2.75 ¢/kWh. However, the PTC, along with any associated bonuses, starts to phase out for projects commencing construction after 2032, aligning with reductions in annual greenhouse gas emissions. Unused tax credits related to projects can be carried back or forward for a certain number of years, providing flexibility in utilization. To claim the PTC, taxpayers must complete and attach IRS Form 8962 to their tax return.

Business Energy Investment Tax Credit (ITC)

The Investment Tax Credit (ITC) is another commercial and industry solar incentive Ohio offers that has played a pivotal role in promoting green energy growth since its enactment in 2006. Its recent extension in 2022, coupled with new provisions, underscores its importance in fostering innovation and competitiveness within the business sector. For businesses, the ITC offers a significant tax credit of up to 30% when they invest in solar energy systems. This incentive serves as a compelling driver for organizations seeking to reduce operational costs while advancing sustainable initiatives.

Qualified Energy Property Tax Exemption for Projects 250 kW or Less

According to the Ohio revision code, qualified energy systems of 250 kilowatts (kW) or less will not be subject to payment in lieu of property tax. Under this law, the interconnection equipment, cables, devices, and the land (limited to up to 1/2 acre per wind turbine) are also exempt from property tax. Furthermore, Energy facilities with a nameplate capacity of 250 kilowatts (kW) or less (AC) are permanently exempt from public utility tangible personal property tax and real property taxes. As a special Ohio solar incentive, this exemption is available to Commercial, Investor-Owned Utility, Municipal Utilities, and Cooperative Utilities. For projects over 250kW, the state also offers a tax exemption for qualified customers you can take advantage of here.

Keynote: To be eligible for this tax credit, the owner or lessee involved in the sale-leaseback transaction must submit their application to the Ohio Development Services Agency by December 31, 2024, as stated on the agency’s website.

USDA – High Energy Cost Grant Program

The U.S. Department of Agriculture (USDA) is expected to award up to $10 million in solar and energy upgrades for 2024. This is part of its annual energy improvement grant available to commercial, industrial, local government, non-profit, residential, schools, state government, tribal government, and institutional customers. The USDA grant program began in 2000 and it’s eligible for projects that have average home energy costs at least 275% above the national average. Customers can get between $100,000 to $3 million to finance their solar projects as a grant. Application for this grant opens up around October before the next Fiscal year. You can stay up to date on the latest dates on the USDA’s official website.

Modified Accelerated Cost-Recovery Systems (MACRS)

MACRS is a corporate depreciation solar incentive Ohio commercial and industrial customers can take advantage of within the state. The program was first introduced in 1986 and has undergone modification over the last couple of years. Today, the program offers an 80% bonus depreciation for qualified properties. Under this incentive, customers may recover investment on eligible properties by deducting a larger portion of the cost of certain property in the year it’s placed in service, instead of spreading the deduction out over several years.

Keynote: The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. Bonus depreciation steps down by 20% each year beginning with 80% in 2023

Net Metering in Ohio

According to the Public Utilities Commission, you can offset your electricity bills with your solar power and sell off excess energy sent back to the grid with net metering. This is another solar incentive available to Ohio residents and businesses where you get to save up to 100% of your electric bill and earn credits for excess energy generated. Credits can be used to offset future electricity bills for those cold seasons where the sun is scarce.

How to Enroll in Net Metering in Ohio

First, ensure you meet the eligibility criteria established by the Ohio Public Utilities Commission and your utility provider. The PUCO assesses the size and type of renewable energy system you plan to install, ensuring compliance with utility company specifications and technical standards. Contact your utility provider to learn about their net metering program and obtain the necessary application forms and documentation requirements. This is typically handled for you by the solar company handling your solar system.

Additional Local Solar Incentives Ohio: Incentives and Rebates

With an industry worth over $3 billion, there are several local loans and grants you can take advantage of when setting up your solar system. These incentives should be highlighted to you by a solar company and they can potentially offset your solar system cost by 100%. Here are some local solar incentives Ohio offers. 

Ohio Special Energy Improvement Districts

The Ohio Special Energy Improvement District Program is a fixed loan program offered by PACE and coordinated locally by the state of Ohio. Property-Assessed Clean Energy (PACE) offers commercial, industrial, and Residential customers the opportunity to borrow a low-interest loan for energy upgrades. The amount borrowed is typically repaid via a special assessment of the property over 30 years. While this program isn’t available to the entire state, Ohio has authorized certain local governments to establish such programs. To be eligible, a local program at the city or county level must be available in your area. Jurisdictional eligibility rules vary by county and municipality; municipalities in an eligible county are not automatically eligible for PACE financing.

Energy Conservation of Ohioans (ECO-Link) Program

Another solar incentive Ohio offers is the Energy Conservation for Ohioans (ECO-Link) Program, administered by the Ohio Treasury, which provides reduced-rate financing for energy efficiency and renewable energy home upgrades. Ohio homeowners can qualify for a 3% loan rate reduction through participating banks. Eligible upgrades include renewable energy systems such as photovoltaic (PV) systems and other energy upgrades.

To apply for ECO-Link, homeowners must meet specific criteria, including Ohio residency, ownership of an existing home or condominium, approval for a qualifying loan through a participating bank, and utilization of loan proceeds for approved projects. The application process involves locating a participating bank, obtaining pre-approval for a loan, and completing an online application with supporting project documentation.

City of Cincinnati – Property Tax Abatement for Green Buildings

Ohio solar incentive is also available to the most populous metro area in Ohio and the nation’s 30th-largest. The city of Cincinnati offers commercial, industrial, and residential tax abatement up to 100% for residential and commercial buildings constructed or renovated to meet LEED certification standards. To be eligible, an agreement must be executed with the Department of Community Development before construction begins. You can find the rules for receiving the abatement here.

City of Cleveland’s Residential Tax Abatement

Like Cincinnati, Cleveland also offers residential tax abatement for residents up to 100% for a 15-year period.  While the abatement and affordable set-aside criteria depend on the project and Community Reinvestment Area, the value for single-family projects can range from 85% to 100% of the enhanced value, up to $350,000 for new construction and $450,000 for rehabilitation. You can learn more about the program on the city of Cleaveland’s website.

Solar Potential in Ohio: Incentives and Savings

SEIA ranked Ohio at 17th place for cumulative solar capacity in Q4 2023, a significant drop from its 5th place in Q1. However, the state only powers nearly 2% of its state’s electricity with solar power which signifies it’s still in its early stages of solar adoption. Although, according to the Solar Energy Industries Association, the state is projected to triple its MW within the next 5 years which could bring its national ranking to 7th.

When it comes to sunlight, the state falls toward the bottom of the national ranking. However, the state still averages 5.26 hours/day during summer with up to 72 clear days per day. Regardless of its low sunlight in comparison to southwestern states, Ohio’s solar incentives still make the state a viable contender for solar energy from a financial perspective.

Understanding the Electric Utility Landscape and Rates in Ohio

Navigating the electric utility landscape in Ohio involves understanding the various utility providers, their service territories, and the rates they offer to customers. Ohio is home to several investor-owned utilities, electric cooperatives, and municipal utilities, each with its pricing structures and regulations. Customers in Ohio may also have the option to choose their electricity supplier through retail choice programs. 

In the last decade, the implementation of Ohio’s Senate Bill 221 has significantly influenced the energy landscape by requiring utilities to meet renewable energy and energy efficiency standards. Additionally, regulatory changes and initiatives like the PowerForward grid modernization initiative have aimed to promote innovation and address emerging challenges in the state’s electric utility sector. As of recent data, Ohio’s customers pay up to 10% less than the national average, providing consumers with competitive pricing options amidst evolving policy frameworks and market dynamics.

Impact on Solar Energy Decisions

The regulatory environment and policies surrounding solar energy in Ohio significantly influence individuals’ and businesses’ decisions to adopt solar technology. With net metering policies, Ohio solar incentives, and regulatory frameworks playing crucial roles in determining the economic viability of solar installations in the state, individuals and businesses can carefully evaluate the financial implications.

Long-term benefits of investing in solar energy systems can save up to 100% of solar systems with the right incentives and solar companies. Moreover, ongoing efforts to promote grid modernization and renewable energy integration, alongside concerns about energy resilience and environmental sustainability, further shape the landscape for solar energy decisions in Ohio.

Are Solar Panels Worth It in Ohio?

Regardless of its below-average peak sun hours, solar still powers over 298,590 homes in Ohio in 2024, and that number is projected to increase by threefold in the next 5 years bolstering its solar capacity. Alongside the various solar incentives Ohio offers, it makes financial sense for individuals and businesses in Ohio to choose solar. Additionally, with electricity rates in Ohio typically slightly below the national average and the potential for long-term savings on utility bills, investing in solar panels can be a wise decision for homeowners and businesses looking to reduce energy costs and environmental impact over time.