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Two approvals you need before solar goes live
Solar installations require two separate approvals: a building permit from your local jurisdiction (for the structural and electrical work) and interconnection approval from your utility company (to connect to the grid). The utility approval process — not the construction — is often the longest part of the timeline, taking 4–10 weeks in many areas.
Federal tax credit (ITC)
The federal Investment Tax Credit allows you to deduct 30% of the total solar installation cost from your federal taxes (as of 2024). This applies to both equipment and installation labor. A $20,000 system effectively costs $14,000 after the credit. The credit applies to the year the system is placed in service, and unused credit can be carried forward.
State and utility incentives
Many states and utilities offer additional incentives on top of the federal credit. California, Massachusetts, New York, and New Jersey have historically had strong state programs. Check the Database of State Incentives for Renewables & Efficiency (DSIRE) at dsireusa.org for your specific state and utility.
NEM and net metering
Net metering is the billing arrangement that credits you for excess solar power you send to the grid. California's NEM 3.0 (effective April 2023) significantly reduced export credits compared to the previous program. If you are in California, the economics of solar have changed — battery storage has become more important to maximize self-consumption.