Delaware Solar Incentives & Tax Credits for Residents, Businesses

Running your home or business on renewable energy is one of the best things you can do for the environment. It reduces your personal carbon footprint, fights air pollution, and supports the transition to clean energy all at once. And, as if that weren’t enough, it saves you money too. By installing solar panels on a home, business, or nonprofit building, you can cut your electric bill almost to nothing. That can save you tens of thousands of dollars over the long term.

To further sweeten the pot, many states, including Delaware, offer incentives for residents and businesses to go solar. Through tax breaks and other perks, they make solar power more affordable for their citizens. And for those who don’t have a suitable roof for a solar installation, there’s community solar. It offers the same financial and environmental benefits as rooftop solar without the roof.

How much does it cost to install solar panels in Delaware? 

Solar power systems are generally priced by the watt. In Delaware, the typical cost of a solar setup is between $2.38 and $2.91 per watt. That’s not the lowest price in the country, but it’s lower than the national average of $3 per watt. The average Delawarean needs a 6-kilowatt (kW) system to power their home, costing between $14,280 and $17,460. However, a federal tax credit (discussed below) can reduce that cost by 30%. With the credit, a typical home solar setup in Delaware would cost only around $11,130.

That’s still a good chunk of change, but a solar installation starts paying for itself immediately. The average Delaware household’s monthly electric bill comes to around $114. A solar power setup can reduce that to $0, paying for itself in a little over eight years. And it will continue to pay off every month after that. Over its 25-year lifespan, a typical solar setup will save the homeowners over $23,000.

What are solar incentives and solar tax credits? 

By now, it’s clear that the world needs a whole lot more renewable energy to stop climate change. That’s why many states, including Delaware, provide incentives to encourage residents and businesses to install solar panels. Solar incentives can work in two ways. Some reduce the up-front cost of a solar array, while others increase the monthly payoff from owning it. One common type of solar incentive is a tax credit, which lowers your income tax bill when you go solar.

Are there solar tax credits in Delaware? 

The First State does not currently offer any state income tax credit for solar use. However, Delawareans who install solar panels can take advantage of the federal Investment Tax Credit, or ITC.

Federal solar tax credit 

The ITC takes 30% of the total cost of a new solar power system off your federal income taxes. This includes all parts of the system—solar panels, inverter, mounting racks, wiring, batteries, and installation. This credit is available for both homeowners and business owners. Businesses can also claim an additional credit, the Production Tax Credit (PTC), for the energy their systems produce.

Suppose you install a 6-kW system for $15,870, a typical price in Delaware. You can then deduct 30% of that cost, or $4,761, from that year’s income taxes. If that’s more than your total tax bill, you can carry the excess credit over to the next year.

This 30% credit applies to all solar installations through 2032. It drops to 26% in 2033 and to 22% in 2034. After that, it expires completely unless Congress chooses to renew it.

Residential and business solar incentives in Delaware

Although Delaware doesn’t have a state solar tax credit, it offers a variety of other solar incentives. You can earn money for the solar power you produce through net metering and Solar Renewable Energy Credits (SRECs). There are also solar rebates available from the state’s major utilities. And low- or moderate-income households can get their solar panels installed at a steep discount—or even completely free.

Net metering in Delaware 

Sometimes, a solar power system produces more electricity than you need at that moment. If your system is grid-connected, that excess energy goes into the power grid so others can use it. Net metering is a way for your utility to give you credit for it.

Delaware’s net metering program is very simple. For every kilowatt-hour (kWh) you send to the grid, you get a credit for one kWh on your electric bill. If you produce more electricity than you use in a given month, it doesn’t make your bill negative. Instead, the excess credits roll over to future bills for up to one year.

There’s a limit to how large your solar power system can be to qualify for net metering. It can’t produce more than 110% of your typical energy use for a year. It also can’t be larger than 25 kW for a home or 100 kW for a farm. For businesses, the maximum size depends on your utility.

SREC program

Another way to earn money with your solar power systems is through Solar Renewable Energy Credits (SRECs). For each megawatt-hour (MWh) of energy your system generates, you earn one SREC. You can then sell these SRECs to state utilities, which use them to meet state renewable energy standards.

Each year, the SREC Delaware Program holds a two-week auction for SRECs generated in the state. However, this auction works in reverse. Instead of buyers bidding to purchase SRECs, sellers bid on how cheaply they’re willing to sell them. Only the sellers with the lowest bids can make a sale. In 2023, the average price for SRECs from new, small solar power systems (under 2 MW) was $29.44. A typical home solar power system produces between 7 and 12 SRECs per year, worth $206 to $353.

To take part in the auction, start by creating an account at the SREC Delaware site. When the next auction comes around, you can fill out an application and submit a bid. If your bid is accepted, you’ll receive a multi-year contract to sell your SRECs to a utility.

Delaware Green Energy Program 

The Green Energy Program provides grants to offset cost of new renewable energy systems in Delaware. This program is really three separate rebate programs, one for each of the state’s major utilities. You can only apply to the program run by your own utility.

• Delmarva Power. The state’s largest utility offers grants of $.70 per watt for residential solar power systems, up to $6,000 total. For businesses, it pays $.80 per watt, capped at $35,000 (or $40,000 for certified diverse businesses). For nonprofits, the incentive is $1.50 per watt, capped at $6,000. To qualify for a grant, your system must be installed by a participating solar contractor and have a five-year warranty. You must also sign over your SRECs to the Delaware Sustainable Energy Utility (DESEU). You can apply for this program at Green Grant Delaware.
• Delaware Electric Cooperative. Not all DEC customers can qualify for solar grants. In some parts of DEC’s service area—marked in red on this map—new solar installations are not allowed. Outside these areas, you can receive a grant for a solar setup for your home, business, or nonprofit. The system must be at least 500 W and used only for on-site electricity needs. The size of the rebate depends on the size of the system. For homes and businesses, it’s $0.50 per watt for the first 5 kW and $0.20 after that. For nonprofits, it’s $1.05 for the first 5 kW and $0.52 after that. The maximum rebate is $2,000 for customers whose peak energy use is no more than 50 kW a month. For larger customers and nonprofits, it’s $3,500. Applications are available on the DEC website.
• Delaware Municipal Electric Cooperative (DEMEC). The Delaware Municipal Electric Cooperative (DEMEC) includes the cities of Newark, New Castle, Middletown, Clayton, Smyrna, Milford, Lewes, and Seaford. If you live in one of these municipalities, you may qualify for a solar grant though the Municipal Green Energy Program. However, of all the towns in DEMEC, only Newark makes grant applications available online. Residents of other towns can email the program administrator to inquire about how to apply.

You can only apply to the solar grant program run by your own utility. Demand for all three programs is high, and funds are limited and subject to availability. Even if you qualify for a grant, it may take up to a few years to receive it.

LMI Solar Pilot Program

Delaware’s Department of Natural Resources and Environmental Council (DNREC) operates the Low- to Moderate-Income (LMI) Solar Pilot Program. It provides free or discounted solar panels for low- and moderate-income Delaware households.

DNREC defies low-income households as those earning up to 200% of the federal poverty level. The LMI fact sheet lists the income limits for households of different sizes. Households below the cutoff can apply for a grant through the state’s Weatherization Assistance Program. If your tax records confirm that you are eligible, you can receive a solar installation of up to 4 kW, free of charge.

The definition of a moderate-income household is based on the median income for your county. You can see cutoffs for different counties and household sizes on the program website. As with the low-income program, you must submit a tax form to verify that you’re within the income limits.

To apply for a subsidized system as a moderate-income household, contact the program’s approved solar contractors for free estimates. Make sure to tell them you’re seeking a reduced-cost solar installation through the LMI program. The contractor will handle the application process for you. If you qualify, the program will cover 70% of your cost for a new solar installation up to 6 kW.

Community solar in Delaware: Solar benefits without rooftop panels

Installing rooftop solar panels isn’t an option for everyone. Some people don’t have a home with an eligible roof. Some have a roof but don’t own it because they’re renting. Others own a roof but don’t get enough sun. Some can’t afford up-front costs and can’t qualify for solar loans due to poor credit. Or, they live in an area where no more solar is allowed.

For people in these positions, there’s another way to save money with solar energy. Community solar lets you subscribe to a share of the energy produced from a nearby solar farm. You sign up and receive a credit directly on your electric utility bill, like a reward for supporting renewable energy. It’s much more accessible than rooftop solar: nothing to install and no up-front cost. Estimated savings are typically between 5% to 20% depending on the solar farm.

The only catch is you must live near a community solar project. To find out if there’s one near you, enter your ZIP code on our site to be matched to a project in your area.

Is it worth going solar in Delaware?

Delaware doesn’t have as many incentives as some states. No state solar tax credit, no property tax exemption. And since there’s no sales tax on anything, solar doesn’t get special treatment.

Nonetheless, solar is still a good deal for most Delawareans. Solar panels will pay for themselves and more. Even better for low and moderate-income Delawareans, they can get all or most of the cost covered. And for those who can’t install rooftop solar, community solar offers savings and eco-benefits.