A Residential Solar System is many thing to many people.  If it is installed on a house in your neighborhood, is it residential?  The electric utility companies generally define residential grid tied solar photovoltaic PV systems as anything less than 10 kilowatts of power generation capacity, anything larger is considered a commercial solar production system for electricity.

From the end user point of view, residential generally implies net metering, another confusing term to be defined on more detail later.  At the end of the year, when youare net metered, you either pay to, or get paid by, the electric company based on your usage for the year less your generation for the year. Most utility companies limit your generation to 120% of your usage.

The good news: the electric power company generally pays you more up front to offset the cost of your solar system; the bad news is that in the long run, since all you can ever do is balance the meter, you cannot make solar a revenue producing income stream.

So how does the savvy homeowner get around this problem? Assuming this homeowner is affluent, there is a good chance they may be consuming enough of the electic juice to need a system larger than 10K.  If you have a pool, or sauna or hot tub, lots of square feet and use a couple hundred bucks in electricity each month, then you could become what is known as a commercial elecricity producer.  More on that later.

So, you can have a larger than 10K solar photovoltaic grid tied system installed in a residential setting, and gain all the benefits of a commercial electric production system.

If you claim the cost of the solar system on your personal taxes, you may qualify for a 30% tax credit, but this credit is against your tax liability, so if you generally do not pay tax, then this may not help the home owner.  On the other hand, if you do this as part of a business, and have a basis in that business, then you can claim that 30% as a solar tax rebate and get a check from uncle Sam generally in 60-90 days of connecting to the utility company.

For many, though, all that is needed is a little 5K system, and at today’s prevailing prices of $8 per watt, although the initial sticker shock of a system costing $40,000 may be alarming, after you get the $17,500 back from the utility company and claim the $12,000 tax rebate you are only out about $13,000 for a system that lets you own your electricity instead of renting it.

You are thinking about putting solar on your house.  At an average price around $8 per watt installed, that is a lot of money.

But wait, if you have a big utility company like XCEL or Black Hills they will give you $2 per watt towards equipment, and another $1.50 - $2.00 per watt for your green tags, so now the price is getting to be around $5.00 a watt, which is a fairly decent price.

Of course, the banks got into trouble, and congress and the new president decided to bail them out, to the tune of TRILLIONS of dollars, some of which can be had by YOU, as either a residence or business purchasing renewable energy, like solar.

So, what is the difference between the resident and the businessman when it comes to help? Both get a 30% tax reduction, but the individual gets it in the form of a credit (to be deducted from what you owe, so if you owe less, you get less of a write-off), whereas the commercial business entity gets it as a rebate: that is right - they get a check from Uncle Sam himself for 30% of the out of pocket price (after all other rebates, grants and credits).  Now we are talking about $3.5 a watt for a solar installation that will keep paying you in free electricity for life.