| Solar power is a renewable energy source that is | | | | owing the government $3,000. In short, the credit is |
| extremely popular, but has a cost problem. Net | | | | much more powerful than a mere tax deduction. |
| metering is a concept the government is currently | | | | Another area where financial incentives are offered |
| using to offset this problem. | | | | on solar is net metering. Net metering is simply the |
| Solar power works by converting sunlight into | | | | concept of selling energy back to a utility company |
| electricity. With the abundant amount of sunlight | | | | at the same rate it sells it to you. This concept goes |
| hitting the planet each and every day, the potential | | | | a long way to making solar energy competitive. |
| of converting to solar power is massive. Ah, but | | | | Here's how it works. |
| there is one problem. Solar energy platforms are not | | | | Assume you buy a solar panel system for your |
| very efficient. Solar cells currently only convert | | | | home. Your high energy needs tend to happen early |
| sunlight to energy at roughly 8 to 13 percent | | | | in the morning and later in the afternoon. During the |
| depending on the system. This lack of efficiency | | | | week, you have nominal energy needs during the |
| means you must buy large, bulky, expensive solar | | | | day when you are at work. So, what happens to the |
| panel systems to meet your energy needs. Much | | | | energy being produced by the solar panels during the |
| research is being done in the field of nanotechnology | | | | day? Well, you can sell it back to the utility company. |
| solar cells to improve this problem, but the answer is | | | | This is called being "on grid", with the grid being the |
| a few years off. So, what can you do to deal with | | | | platform the utility uses to deliver energy to |
| the cost issue today? | | | | communities. With net metering, the energy produced |
| The government tries to promote certain conduct in | | | | by your panels is fed back into the grid. Your utility |
| two ways. First it makes things illegal such as drug | | | | meter literally spins backwards. You are selling |
| use. Second, it creates financial incentives and | | | | electricity to the utility during the day. At night, you |
| penalties to try to guide our conduct. Taxes on | | | | draw energy off the grid. The end result is you owe |
| cigarettes, for instance, are high and try to motivate | | | | little or nothing to the utility company at the end of |
| us not to smoke. Tax credits offered for the | | | | the month. This will save you a thousand dollars or so |
| purchase of hybrid cars is an example of using | | | | each year. |
| incentives to promote an activity. | | | | Net metering is currently a state concept. While over |
| When it comes to solar energy, the government | | | | 40 states have laws on the books requiring utilities to |
| realizes that there is a cost problem. It tries to | | | | allow net metering, there is no federal standard. That |
| resolve this in a number of ways. The first is to offer | | | | may be about to change. Federal law now requires all |
| tax credits for buying solar panel systems. Tax | | | | states to consider whether they wish to enact net |
| credits are a tremendous financial benefit. They work | | | | metering legislation by 2008. Most are expected to |
| by reducing the tax you owe dollar for dollar. For | | | | pass such laws. When this occurs, net metering will |
| instance, you might figure out your taxes for this | | | | be a cost cutting solution to the solar power energy |
| year and find out you owe the IRS $5,000. If you | | | | problem, making it a more viable energy source for |
| can claim a tax credit for $2,000, you would end up | | | | you and me. |