The complete list of Ohio solar incentives and tax credits for 2023, plus how to take advantage.
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The Buckeye State saw a huge increase in utility-scale solar projects in 2020 and 2021 but still ranks 25th for overall installed solar capacity, according to the Solar Energy Industries Association (SEIA). With a bunch of big projects in the pipeline, however, Ohio looks set to install nearly 6,000 megawatts of capacity in the next five years, bumping the state up to 4th in the country.
What about residential solar in Ohio, though? For homeowners keen to put panels on their roofs here, the state offers very few financial incentives. There are state sales and property tax exemptions for solar in Ohio, but only for commercial or industrial taxpayers, not for the average homeowner. Some residents can claim a property tax exemption, however, if they live in certain cities offering the incentive.
Ohio State Solar Incentives
|SRECs in Ohio||Ohio does, technically, have an SREC market but the price is very low and likely to get lower|
|Solar loans in Ohio||Ohio residents may be eligible for a low-cost solar loan of up to $50,000|
|State solar sales tax exemption||Ohio exempts solar equipment from the state sales tax, but only for business taxpayers|
|State property tax exemption||Ohio doesn’t offer a statewide exemption for residential solar; some cities offer this property tax break for residential solar|
|Net metering in Ohio||Net metering is mandated by law in Ohio but not at full retail rate and only for investor-owned utilities|
SRECs in Ohio
Ohio enacted its renewable portfolio standard (RPS) in 2008 through S.B. 221. Technically, this created an Alternative Energy Portfolio Standard (AEPS) with requirements for investor-owned utilities to produce or procure certain amounts of energy from renewable sources. The percentage of renewables was set to increase each year until reaching a 2025 goal or 25% of annual retail electricity supply from alternative energy sources (which could also include retrofitted coal power stations).
Ohio legislators froze the AEPS for two years in 2014, however, and removed the requirement for advanced energy sources. Then they amended the legislation again in 2019, reducing the target further and effectively eliminating Ohio’s RPS at 8.5% in 2026. The same 2019 bill also provided $150 million annually in funding to two nuclear power plants until 2026 and $50 million annually to two coal-fired power plants.
The other big move in the 2019 bill was the elimination of the solar carve-out. This means solar power producers in Ohio no longer generate SRECs as of 2019. Some homeowners who installed solar before 2019 still have carryover SRECs they can sell, but the market for these has tanked. As of 2022, SREC prices in Ohio have dropped to just $4 on average. For most homeowners, this would mean annual earnings of just $32 or so.
All this to say that homeowners looking to install solar in Ohio shouldn’t rely on receiving any income from SRECs. For things to change, Ohio residents would likely to need to elect a different slate of legislators and a new governor.
Solar loans in Ohio
The State of Ohio offers an ECO-Link program to residents who want to borrow money to fund a solar energy system installation or other project to lower their energy bills. This could include replacing windows, roofing, siding, heating and cooling systems, and even upgrading appliances to more energy-efficient models.
Through Eco-Link, Ohioans can lower the interest rate by 3% on a loan of up to $50,000. Eco-Link isn’t the loan provider but helps reduce the cost of borrowing by reducing the rate of interest on a new or existing loan that qualifies for the program.
To get started, residents apply for a loan at one of the financial institutions listed at the Ohio State Treasurer’s website. Once an agreement has been reached over loan terms, the customer and financial institute submit some paperwork to Eco-Link, which then coordinates with the financial institution to reduce the amount of interest on the loan.
State sales tax exemptions in Ohio
Ohio State offers an exemption from state sales tax for solar energy equipment, but only for commercial or industrial taxpayers. Ohio’s typical sales tax is 5.75%, saving these Ohioans a good chunk of money upfront on their solar installation.
State property tax exemptions in Ohio
Ohio does offer a property tax exemption for value added by solar, but the small print is complicated, and the law only appears to apply to commercial or utility-owned solar energy projects.
It’s also important to note is that Ohio state law requires owners of a solar installation to apply for the property tax exemption before December 31, 2024. If you do this, your application is approved, and your array is placed in service before January 1, 2026, your property should be exempt from additional taxes associated with your solar array indefinitely.
If you install solar energy equipment after the cut-off date, it will be considered taxable property subject to taxation under Ohio’s law.
As it stands, homeowners who install a residential solar array don’t technically qualify for this property tax exemption. However, a case could be argued that homeowners who ‘sell’ excess energy to the grid through net metering may actually qualify for the exemption. This would be something to take up with a lawyer, though, if you’re interested in fighting for the exemption in Ohio.
For residents of the City of Cleveland or the City of Cincinnati, Ohio, things are a bit easier when it comes to property tax exemptions for solar.
In the City of Cleveland, homeowners who install a solar array can claim a 100% associated property tax abatement for 15 years. The caveat is that all projects must meet the Cleveland Green Building Standard.
In Cincinnati the Property Tax Abatement for Green Buildings program offers a 100% exemption for 15 years for value added by installing solar panels or solar water or space heating.
Net metering in Ohio
Net metering is the law in Ohio but there’s no stipulation that utilities offer full retail rate. Rural electric cooperatives and municipal electric utilities are not required to offer net metering, though some might still do so.
For policy nerds like me, you can read Ohio’s net metering rules in section 4901:1-10-28 of the Ohio Administrative Code. These rules state that you can apply for net metering if your solar array is primarily intended to offset all or part of your own electricity requirements (up to 120%). The array has to be located on your property.
With most utilities in Ohio, any energy you export to the grid is credited at the utility’s standard service rate, which doesn’t include distribution or transmission charges, so is less than the rate you pay to buy energy from the grid. In other words, net metering customers don’t receive full retail rate for exported energy in Ohio.
The good news is that any net metering credits you rack up can be used to offset charges in future months. These credits are carried forward indefinitely, though, with no payout annually. If you stop your service or move, you’ll likely lose any remaining credits.
Ideally, your home solar energy system will be sized appropriately, so you don’t end up producing a huge surplus of energy. Home solar customers in Ohio may also want to consider installing battery storage, so they reduce the amount they export to the grid and the amount they draw from the grid, saving more money over time.
First Energy offers a more generous net metering program in Ohio. Under their tariff, each kWh of energy received from the customer “offsets the energy delivered to the customer on a one for one basis, up to the amount of energy delivered to the customer during a billing period. Excess energy received from the customer is credited to the customer’s account at the applicable generation component of the customer’s rate schedule.”
Final thoughts on state solar incentives in Ohio
Ohio isn’t the best place in the U.S. to go solar, given the relatively low amount of sunshine and the low cost of electricity. That said, a home solar array does grant a degree of energy independence, helps save the average homeowner money long-term, and significantly reduces a household’s carbon footprint.
Ohioans can also enjoy a possible property tax exemption and net metering. The main financial incentive for home solar in Ohio, though, remains the federal solar investment tax credit, which could reduce the cost of going solar by 30%.