New York solar rebates and incentives: 2024 guide

Solar panel systems in New York are expensive, but incentives from the state and federal government can help you reduce the upfront cost. Between the federal tax credit and other state-specific incentives, you can save thousands on solar panels, making them well worth the investment. Here's how you can lower the cost of solar if you live in New York.

As a New York homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The three below are some of the most impactful ways to bring down your solar costs.

Residential Clean Energy Credit

The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including the equipment, labor, permitting, and sales tax. 

Megawatt Block Incentive

New York’s Megawatt Block Incentive is part of the NY-Sun Initiative aimed at making solar energy more accessible. It provides an upfront dollars-per-watt ($/W) rebate for both commercial and residential solar panel systems. 

Your rebate amount depends on the size of your system, your region, and your income. Low-to-moderate income (LMI) households qualify for the Affordable Solar Residential Incentive, which provides a higher rebate amount. The incentive is declining, which means its value declines over time. As of March 2024, here's what you can expect for residential systems up to 25 kW in size:

New York Solar Energy System Equipment Credit

The New York solar tax credit can reduce your state tax bill by 25%, up to $5,000. Unlike the ITC, you don't need to purchase your solar panel system to receive this tax credit. If you enter into a written solar lease or power purchase agreement (PPA) that lasts at least 10 years, you'll still qualify.  

If you don't have enough tax liability to take advantage of the full tax credit, you can roll over any remaining credit for up to five years.

In addition to the great rebates and incentives above, New York also offers tax exemptions for solar panel systems. The solar sales tax exemption ensures that you won't have to pay a sales tax on your system, while the solar property tax exemption means you don't need to pay a higher property tax for adding solar panels to your house.

If your solar panel system is less than or equal to 25 kW in size and it's connected to the grid, you can benefit from net metering, one of the best solar panel incentives available in New York. With net metering, you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. Net metering makes it so you will owe very little, or even nothing, on your electric bills with solar panels. 

New York is in the process of transitioning from net metering to a new Value of Distributed Energy Resource (VDER) tariffs, though the timeline isn't clear yet and you can still sign up for net metering as of 2024. 

The VDER tariff is based on five key factors: the locational-based marginal pricing (LBMP), capacity (ICAP), environmental value (E), demand reduction value (DRV), and locational adders (LSRV). If this sounds confusing, that's because it is. The easiest way to see your expected VDER tariff is by using New York State Energy Research and Development (NYSERDA)'s free Value Stack Tariff calculator.

Due to its complexity, the VDER tariff rate is a lot less predictable than net metering. In most cases, you'll save a lot more over 20 years by signing up for net metering while it lasts instead of the VDER tariff. As of March 2017, any solar panel system interconnected in New York can lock in net metering for 20 years. 

Starting in 2022, you now have to pay a capacity-based Customer Benefits Constribution (CBC) charge each month with a solar panel system. The charge is higher for net metering customers than for VDER tariff customers, but it's still usually best to sign up for net metering. Here's how much the CBC will cost you for a residential solar panel system in 2024:

*The VDER tariff is not available to LIPA customers.

New York doesn't offer any state-specific battery incentives for residential systems. However, all batteries above 3 kWh are eligible for the 30% federal tax credit. In New York, batteries can help protect you from blackouts and provide more energy independence.