Connecticut solar rebates and incentives: 2024 guide

Solar panel systems in Connecticut 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 Connecticut.

As a Connecticut homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The two 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 equipment, labor, permitting, and sales tax.

When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization.

Smart E-Loan program

Choosing the best financing solution for your solar panel system can be tricky. Connecticut Green Bank's Smart-E Loan program makes it easier. As long as you live in your home and it doesn't include more than four residential units, you should be eligible. This loan program covers many different types of energy home improvements, including solar, heat pumps, insulation, and more. You'll also need to have a qualifying credit score and debt-to-income ratio.

As of 2024, the loan terms are as follows:

One other benefit of choosing a Smart-E Loan is that you can use up to 25% of it for non-energy-related home improvements. For example, if you need to replace or repair your roof before going solar, you can use the loan to cover at least part of it.

In addition to the great rebates and incentives above, Connecticut 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.

Connecticut no longer offers net metering, but if your solar panel system is less than or equal to 25 kW and connected to the grid, you can benefit from its Residential Renewable Energy Solutions (RRES) program.

Under the RRES program, there are two different types of tariffs you can sign up for, the Netting Tariff and the Buy All Tariff. You're locked into either tariff for 20 years, at which point you'll be put on whatever tariff exists at that time.

Netting Tariff

The Netting Tariff is the best option for homeowners. It's very similar to net metering in that 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. 

Under the former net metering program, you had until March 1 to use your credits. After that date, they were paid out at the wholesale electricity rate, which is much lower than the retail electricity rate, which is what the credits are valued at. With Connecticut's Netting Tariff, your credits can roll over indefinitely, making it better than net metering.

Buy All Tariff

With the Buy All Tariff, instead of powering your home with solar panels, you send all that electricity directly to the grid and purchase all your power from your utility company. The value of the credits you earn remains the same throughout the 20 years at $0.3189 per kWh. You can choose to receive the credits to offset your monthly bill or earn a cash payment every quarter–or you can do a combination of both. A the end of the year, you'll receive a payout for any credits you didn't use to offset your bill. 

The Buy All Tariff makes the most sense for companies that offer power purchase agreements (PPAs) and want to ensure a guaranteed return on investment. 

Learn more about the RRES programs available in Connecticut:

In addition to solar incentives, Connecticut also offers a great battery incentive program to bring down the price of energy storage. If you participate in Connecticut's Energy Storage Solutions program, you grant your utility company (Eversource or United Illuminating) access to your battery when the grid is stressed to reduce peak electricity demand. 

In exchange, you earn an upfront incentive to reduce the cost of your battery and money for every kW your battery dispatches to the grid, which are paid twice a year for 10 years. 

The amount of the upfront incentive depends on the capacity of your battery (measured in kWh), your income, and your home's location, with a maximum amount of $16,000. Low-income customers and households in underserved communities will earn more. Also, if you're a Grid Edge customer, meaning you experience frequent or long-duration outages, you'll get an additional 50% of your incentive amount. It's a declining incentive for standard customers, which means the faster the program fills up, the lower the incentive amount.

The performance incentive amount depends on the amount of energy your battery sends to the grid (measured in kW), how many years you've been in the program, and whether the energy is dispatched in the summer or winter. Unlike the upfront incentive, it isn't based on your income or your home's location.

All batteries above 3 kWh are also eligible for the 30% federal tax credit.