The complete list of Alaska solar incentives and tax credits for 2023, plus how to take advantage.
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Alaska might not seem like the best place to go solar in the U.S., but looks can be deceiving! Sure, it’s not that sunny much of the time, but with electricity rates nearly double the U.S. average, solar panels can pay for themselves quite quickly in Alaska.
Alas, Alaska hasn’t been very proactive in terms of state rebates and incentives for solar. There are no state tax incentives or rebates, but homeowners can take advantage of local exemptions, no sales tax, and a generous net metering policy. And, if you are served by the Golden Valley Electric Association, you might also qualify for an annual payment if you install a solar and battery storage system.
The federal tax credit remains the biggest financial incentive for going solar in Alaska, though. This can save homeowners several thousand dollars off the cost of going solar at home. The federal credit is set to drop down in 2023, however, and to expire at the end of 2023, so go solar now to take full advantage.
Alaska Solar Incentives
|State sales tax exemption||No exemption, because there’s no state sales tax!|
|State property tax exemption||No statewide exemption but legislation allows local governments to offer exemptions for renewable energy systems.|
|Sustainable Natural Alternative Power (SNAP) program||Customers of the Golden Valley Electric Association can apply for its SNAP program with incentives of up to $1.50/kWh for renewable energy and battery storage systems up to 25 kW|
|Net metering||Statewide net metering requires utilities to credit solar customers for energy exported and used; credits roll over month to month, indefinitely|
State sales tax exemptions in Alaska
Alaska doesn’t have a state sales tax, so all solar installations are already priced without such taxes included!
Local sales taxes do exist in Alaska, however. So far, it appears that no municipalities have offered a solar sales tax exemption.
State property tax exemptions in Alaska
While Alaska doesn’t offer state property tax exemptions for solar, it does have legislation that allows local governments to offer exemptions for renewable energy systems.
For example, the Kenai Peninsula Borough allows for property tax exemption on residential solar energy systems. Homeowners wanting to take advantage of this exemption must apply no later than January 15 of the tax year for which the exemption is sought.
Net metering in Alaska
Alaska has enacted true statewide net metering standards for all utilities. This law requires utilities to offer net metering to owners of all systems up to 25 kW. Under the rules, the energy your system sends to the grid is used to offset the energy you draw from the grid. Any excess is credited to your next month’s bill at a rate set by the utility and approved by the state’s energy commission. Credits are carried over indefinitely!
Homer Electric Association (HEA) was the first Alaskan utility to offer net metering, in 2010. The HEA credits homeowners monthly for any excess exported energy at the Small Facility Power Purchase Rate (SFPPR). Effective April 1, 2022, the current SFPPR is $0.08635 cents/kWh. The average cost of electricity for residential customers in Alaska is around $0.2282 cents/kWh, though, meaning it’s best to size your system to match your needs (and no bigger!).
The SNAP program in Alaska
While the state doesn’t offer any specific solar rebates in Alaska, customers of the Golden Valley Electric Association can take advantage of its Sustainable Natural Alternative Power (SNAP) Program. Homeowners who install solar energy systems can apply for incentives of up to $1.50/kWh for renewable energy and battery storage systems up to 25 kW. These are distributed based on donations to the SNAP Fund, which is replenished annually.
There are also two renewable energy programs for GVEA members: SNAP and SNAP Plus. The SNAP Program is for members who install solar and export energy to the Association’s system (a SNAP Project). The SNAP Plus Program is the Association’s net metering program.
SNAP Projects are eligible for both the annual payment from the SNAP Fund and an energy-related payment on an annual basis based on how much energy the project exports to the grid April through March. SNAP Plus Projects are eligible for an annual payment from the SNAP Fund, plus a monthly credit for energy exported to the grid in excess of the homeowner’s energy drawn from the grid (essentially, net metering). If you still have unused credits at the end of the year, you can receive a check for the difference from GVEA.
Find more details on SNAP here and if you’re interested, apply now. The GVEA limits SNAP Projects to one per substation circuit (with some exceptions), so if your neighbor signs up before you, you may not be eligible.
Final thoughts on state solar incentives in Alaska
Alaska has the fewest peak-sun-hours in the U.S., meaning you’ll need at least a 12 kW array to meet the average U.S. household’s energy needs. Still, with the cost of electricity nearly double the national average, going solar can make sense in Alaska.
Sign up for net metering with your utility and size your system right, and your solar panels could pay for themselves in around 10 years, leaving you with free electricity for the rest of the panels’ 25- to 30-year lifespan.
To keep that solar payback period low, though, you’ll want to make use of the soon-to-expire federal solar tax credit.