We’ve gotten a lot of questions from people since Biden’s new “Build Back Better Bill” was first introduced, asking if it would be a good idea to wait for the bill to pass before going solar. For one, I’ll say we’re not entirely sure it will pass yet. We’re following along just like you are in hopes of seeing some clean energy support. But regardless of that outcome, we think it is definitely long past time to go solar. In short, 2022 is definitely the year to go forward.
Here are just a few reasons why:
While it may have originally felt far away, at the moment the Federal Investment Tax Credit (ITC), for those that purchase solar energy systems, is dropping to 22% from 26% at the end of this year (December 31, 2022). So if your system is not installed and operational by then, you will lose out on a tax credit equal to 4% of your system’s total cost. And that 22% will only last for twelve months, at which point the credit for residential solar will drop to zero.
Additionally, it is important to look at a typical project’s timeline. Generally, it takes about 3 months from signature to completion for a standard project (assuming all goes to plan). That means if you want that 26% as I said before, you should be signing no later than September of 2022. And to be safer, particularly with the utilities being slow over the last few years, you may want to add a month and target August for signing.
That of course is also assuming there are no supply chain issues. We haven’t seen a lot of that to date, but we are seeing it creep up on us with a few items. Clearly, supply issues could get better, but it could also get worse. So to protect yourself from potential issues in that regard we’d recommend signing by July or even June. After all, labor as well as materials could also become more of a problem. So maybe we should say getting an agreement signed by May makes the most sense.
And finally, I’d recommend at least one or two months to get quotes, assess installers, and review your various equipment and installer options. Our typical customer takes 2 to 3 months to make a decision from start to finish.
It’s a big project, with lots of “moving parts”, so you certainly don’t want to rush your decision making process if you can avoid doing so.
Lastly, we recommend you think about the Federal Reserve projecting three interest rate increases for 2022. Interest rate increases may adversely impact prices, but also may make your own borrowing costs more expensive (unless of course you are able to pay cash).
You can think about it like this: the Aesop fable with the lazy grasshopper that prefers to sing and dance rather than forage and prepare like his friends the ants. As the winter approaches the grasshopper realizes how unprepared he is and becomes regretful once the winter approaches. Although this is just a story, the characters really set a good example of putting your focus on things that need to be done, and the value of using your time wisely.
It of course benefits us to say all of this, but we believe it also benefits you. I can’t tell you how many people are disappointed each year when they wait till near the end of the year and find out their system won’t be operational before the end of December. This year, alas, could be even more painful than years in the past if you miss that deadline.
And what if a Build Back Better Bill or something similar does pass? Well, in all likelihood that will happen in 2022 and as such, it will almost certainly apply to any project completed this year. 2022 is thus a win if a new solar ITC bill passes, as well as a win if it doesn’t.
So send us an email, fill out our website form, or give us a call. There is no cost to asking what solar can do for you. And if you choose to go forward, we definitely don’t think it will be too early.