Alaska Solar Incentives: Solar Tax Credits, Rebates, Alaska Sunlight Guide

So, many residents wonder, are solar panels worth it in Alaska?

This complete guide explains how Alaska solar incentives work to reduce the cost of solar panels in Alaska, and explains why even some solar energy is better than none, reducing your energy costs.

Alaska Sunlight Guide: Daily Peak Sun Hours

Alaska’s winter is unlike anything many people have ever experienced.

Wintry conditions start to appear in the first weeks of September and last through April, but in addition to the bitter cold, there is also darkness. A lot of darkness.

In some areas of the state, the days get shorter and shorter until the sun is completely absent for weeks on end.

Several cities only experience a few hours of daylight each day before darkness drops like a dark curtain once more.

Some towns in the state’s northernmost region experience months of total, almost impenetrable darkness.

Here are a few cities in Alaska and how much sunlight they receive each day on average in every month throughout the year.¹

City	Jan	Feb	Mar	April	May	June
Anchorage	5.40 hrs	7.45 hrs	10.25 hrs	13.25 hrs	16.55 hrs	18.45 hrs
Barrow	0.00 hrs	4.15 hrs	9.20 hrs	14.15 hrs	19.45 hrs	24.00 hrs
Fairbanks	4.05 hrs	6.58 hrs	10.09 hrs	13.38 hrs	17.05 hrs	20.35 hrs
Juneau	6.36 hrs	8.12 hrs	10.38 hrs	13.16 hrs	15.45 hrs	17.50 hrs
McGrath	4.54 hrs	7.25 hrs	10.18 hrs	13.30 hrs	16.38 hrs	19.25 hrs
Nome	4.15 hrs	7.10 hrs	10.04 hrs	13.33 hrs	16.54 hrs	21.25 hrs
Portage	5.42hrs	7.55 hrs	10.24 hrs	13.20 hrs	16.15 hrs	18.23 hrs
Prud. Bay	0.00 hrs	4.45 hrs	9.24 hrs	14.10 hrs	19.08 hrs	24.00 hrs
Sitka	6.54 hrs	8.29 hrs	10.41 hrs	13.08 hrs	15.34 hrs	17.25 hrs
Wasilla	5.28 hrs	7.31 hrs	10.22 hrs	13.27 hrs	16.23 hrs	19.06 hrs

City	July	Aug	Sept	Oct	Nov	Dec
Anchorage	19.14 hrs	17.09 hrs	14.11 hrs	11.20 hrs	6.38 hrs	6.04 hrs
Barrow	24.00 hrs	24.00 hrs	14.48 hrs	11.07 hrs	5.50 hrs	0.00 hrs
Fairbanks	21.28 hrs	18.14 hrs	14.34 hrs	11.22 hrs	7.54 hrs	4.40 hrs
Juneau	18.12 hrs	16.32 hrs	14.15 hrs	11.25 hrs	8.57 hrs	6.55 hrs
McGrath	20.06 hrs	17.32 hrs	14.30 hrs	11.32 hrs	8.11 hrs	5.32 hrs
Nome	22.03 hrs	18.10 hrs	14.32 hrs	11.26 hrs	7.59 hrs	4.49 hrs
Portage	19.08 hrs	17.05 hrs	14.12 hrs	11.32 hrs	8.33 hrs	6.12 hrs
Prud. Bay	24.00 hrs	21.33 hrs	15.37 hrs	11.02 hrs	6.21 hrs	0.00 hrs
Sitka	17.55 hrs	16.12 hrs	13.51 hrs	11.34 hrs	9.08 hrs	7.13 hrs
Wasilla	19.34 hrs	17.25 hrs	14.22 hrs	11.27 hrs	8.26 hrs	5.58 hrs

So how you may ask, are PV systems going to function in an environment where if it’s not cold, it’s dark, and if it’s not raining, it’s snowing?

Solar Power in Alaska

It all comes down to light and the cost of electricity.

Traditional thought in the solar industry is that a PV system has value and is worth installing if the household electricity consumption exceeds 500kWh per month; the electricity rate prices are high for the area,² and there are 3 to 5 hours of peak sun on average a day.

Alaska has a land mass of 1,481,353 square kilometers and a population of 730,000 people. Out of the approximately 325,000 homes in the state, the average amount of energy consumed every month is 590 kWh.

The cost per kWh across the state fluctuates around 24 cents /kWh, which places Alaska in 8th place throughout the United States for expensive electricity rates.

There are parts of Alaska that don’t see the light of day for months on end, and there are months when cities are subjected to 20 hours a day of sunlight.

When averaged out, it has been calculated that 3.99 hours of peak sun is available for solar cells to absorb.

Technically, with all these statistics, solar power is classed as a viable energy resource for Alaska.

There are a few factors to weigh into the decision-making process to increase performance and get the most out of your PV system, and Alaska solar incentives are just one of them.

• If you are self-installing, make sure to angle the panels at 60 degrees and face south for maximum solar absorption.

• Purchase high-quality panels that are highly rated for snow loading. Installing bi-facial panels may be an option as they can absorb light from both sides.
  This is beneficial because even if there is snow on the top side, light is reflected from the surface of the snow underneath and the panel is still being very productive.

• Calculating your payback period will help you decide if solar energy is the right choice for your household.

Solar Panel Installation Cost Alaska: Solar Investment Tax Credit (ITC)

There are many reasons why the electricity rate is so high in Alaska, from remoteness between communities, difficulty in installation due to the terrain, and connecting the systems to the main power station.

Villages with small microgrid systems that have to be powered by specially flown-in diesel fuel have to contend with those additional costs involved as well as unreliable deliveries due to bad weather.³

Also, repeated power outages caused by adverse weather conditions continue to add to the costs as repairs need to be undertaken constantly.

Installing rooftop solar panels would eliminate the power supply uncertainty from either the main grid or community microgrids.

With a price tag of $14,460 for a 6kW system before any credits or rebates, many Alaskans wonder why are solar panels so expensive in their state, not realizing that compared to many other states the cost is a lot cheaper than they think.

The Solar Investment Tax Credit (ITC) will reduce that figure to $10,122 from a  30% federal tax credit program that is made available to all homeowners across the United States who are engaging in this type of home improvement project.

The discounted amount, in this case, $4,338, is credited against your yearly tax liability and can be claimed over a 5-year period by presenting form 5695 when you submit your taxes.

If your taxes are not enough to cover the amount fully, the balance is rolled over to the following year and so on until it is completely accounted for. If after 5 years there are still credits remaining,  then it will not be possible to claim them, and they will have to be forfeited, which will affect your final cost of solar panels in Alaska.

However, the ITC is one of the most beneficial incentives and has afforded millions of Americans the opportunity to install photovoltaic systems.

Some solar installers and financial agencies offer Power Purchase Agreement loans if paying for the system upfront in cash is not possible. Leasing is also an option, but it would have to be a lease/purchase agreement as one of the criteria for receiving the federal energy credits is that you have to be the owner of the system.

But if you are leasing your home, you would not be eligible for the ITC so leasing could then be an avenue worth exploring.

There are several advantages to purchasing and owning your system if it’s financially practical to do so.

Alaska Solar Incentives (Alaska Solar Tax Credit)

Sadly, Alaska does not have many solar incentives to entice its sparsely populated state in implementing solar energy.

There are no sales taxes in Alaska so no savings can be made there in the form of exemptions, and no property tax exemptions either to keep the cost of solar panels in Alaska as low as possible.⁴

Each municipality has the freedom to waive the taxes on the increased property value due to the solar installation.

At first sight, it may appear that Alaska is one of the worst states for solar energy incentives. But 2010 saw the implementation of net metering regulations to encourage its inhabitants, both residential and commercial, to invest in renewable energies.

Alaska Solar and Net Metering

The Regulatory Commission of Alaska (RCA) recently passed laws allowing homeowners with PV systems to sell for cash the excess energy they produced but did not use, as opposed to only receiving a credit on their bills.

This pertains to renewable energy systems that are 25kW or less to enable small businesses to be able to participate in this program as well.

Known as the Renewable Energy Alaska Project (REAP), it is just as responsible as the ITC for the interest shown in solar power in the state, and several communities have turned into innovators to highlight how solar energy can be better than the easy option of just sticking to an unreliable and expensive electricity supply from a fossil fuel powered, climate-damaging grid.

Inspired by REAP, small neighborhoods have started grassroots campaigns that are being adopted and even supported by the U.S. Department of Energy.

Starting over a decade ago, it occurred to these cooperatives that if they banded together, they could purchase solar arrays at cheaper prices and share the benefits of cheaper electricity as well as distribute whatever profits were generated from feeding unused electricity back into the grid.

Too small to be called solar farm as they literally just consisted of 5 or 6 arrays, they nevertheless proved to work incredibly well.

Grouped together, they vastly reduced the installation cost that would normally have been paid by individual homeowners.

Described as “collective purchasing,” the idea that started in Portland continues to grow and has spread to Anchorage, Fairbanks, Willow, the Goldstream area, and even the Kenai Peninsula.

Convincing people was a slow process, but with social media and word-of-mouth extolling the virtues and cost savings of joining, the initiative gathered steam.

The size of these micro solar farms is nothing in comparison to the utility-scale farms set up on 20-30 acres of land in some states that supply 40,000 homes.⁵

These cooperatives cater to 80 homes or sometimes just 10, but for those households or businesses, the savings are better than they could have imagined.

Related Reading: 2023 Federal Solar Tax Credit Guide: How To Claim Clean Energy Credits

Financing for Solar Panels (Alaska Solar Incentives)

The ITC is a non-refundable incentive that saves money, but the full benefit cannot be realized immediately. In some instances, not for 5 years if the 30% tax credit is deferred several times because of insufficient personal tax liabilities.

That means that, minus any other incentives, the full cost of solar panels in Alaska that are spread across your rooftop has to be paid for out of your account or a loan. But there is one type of loan that has been designed just for this scenario – a combo loan.

You can look at it as a 2-4-1 special where the entire amount is signed for and then divided into two parts.

The primary loan is the full amount to cover the PV system including batteries, if there are any, and installation expenses, minus the 30% ITC deductible. The secondary loan is then created based on the value of the tax credit.

Payment on the primary begins as soon as the installation is complete while the secondary is frozen for 18 months.

You will then have those 18 months to pay off the entire frozen second part of the loan from the taxes saved, or it will be added to the primary loan amount and the monthly payments will be increased accordingly.

That’s not to say that you actually have to wait and use the taxes saved to pay off the secondary loan. It can be done at any time, and the funds can come from another revenue source.

There is another option if you don’t believe that paying off the bridging loan within 18 months is not going to be possible, then an alternative is a re-amortizing loan.

With this method of borrowing, the entire PV price is wrapped in a standard agreement over a specified term, with the proviso that a one-time lump sum can be paid at any time.

It can either fully pay off the 30% ITC amount, or a partial payment can be made to reduce the amount, but it can only be paid once for the entirety of the loan.

Once that is done, the monthly installments will be reduced based on the lump-sum payment made.

Solar Panels for Home in Alaska (Solar Panel Installation)

Eliminating the cost of installing individual solar arrays on just 10 rooftops is a substantial saving.

And even further savings can be made from each household not having to purchase an expensive battery storage kit that would, especially in Alaska, be an essential piece of equipment to have.

The same cannot be said in regards to connecting directly to the local electricity grid which often involves a lot of work in isolated areas in Alaska.⁶

There are some months when daylight lasts for 20 hours a day. And others where the light shines for less than 5 and the sun, when it can be seen, is hardly at its peak intensity.

It is under these circumstances when very minimal levels of solar irradiation are being absorbed, that this stored electricity comes in handy.

Net metering makes all this possible. It credits participants through bidirectional meters in their homes that record how many kWh are used from the grid, from the PV system, shared or personally owned, and the difference that is transferred back to the grid.

When there is a shortfall in sunlight, the smart meter automatically kicks in and uses the stored credits to power the household.

If that runs out, the local grid power kicks in. If it doesn’t, more credits will be added and subtracted as and when needed.

This is proving to be a popular agreement between the solar producer and the local energy supplier.

The electricity rate in Alaska is 24 cents per kWh while the buy-back from the solar producer is 10.4 cents per kWh. When an imbalance occurs, the extra solar-generated electricity can then be sold back for a tidy profit.

How Does the Solar Tax Credit Work if I Don’t Owe Taxes? (And Still Get the Tax Credit for Solar Panels)

One of the criteria for claiming the credits under the ITC program is that you must owe taxes. How does the solar tax credit work if I don’t owe taxes? If there is no tax liability, even if you are working, then there is nothing to be deducted from the 30% tax credit that is available nationwide.

As a member of a “collective purchasing” cooperative,⁷ that doesn’t have to be the case.

The ITC can be applied for by one member of the organization who can be classified as the owner of the installation for tax purposes. The credit can then be applied and the savings distributed evenly among the participants.

The simple fact of the matter is that since Alaska solar incentives are a little sparse, to put it mildly, being able to capitalize on the federal tax credit is a big deal and a big saver.

Consider that for just one property the cost of installing a photovoltaic system minus the battery bank is still a significant investment for a household at nearly $15,000.

Many households have to deal with quotes that are easily double or treble that figure to realize their goal of living independently from the utility grid.

Alaska is an ideal state to embrace your personal off-grid energy supply and become independent from an unreliable and expensive local grid system.

Isolated communities are more prone to electricity failures and higher rates simply due to location.

The federal solar investment credit can help in either instance to allow a single household or a collective to be in control of their own energy supply, bearing in mind that the cost of the solar panels for 10, 20, or 30 houses is still going to be a considerable investment.

Ensuring that at least through one participant that the collective will be eligible for the credit,  will save thousands from a quote that can easily be over $200,000.

That figure may seem exorbitant for solar power, but once it is divided among 30 homeowners, it can equate to just $6,600 per household before the ITC.

With $60,000 deducted, in real terms that price diminishes to $4,600, saving each member a further $2,000.

These prices and quotes can vary depending on the members’ household requirements, and getting several quotes to compare the cost of solar panels in Alaska and crunching the numbers is crucial before taking the leap.

There is no way that a rooftop system could be installed for $4,600 for one property and still be able to provide enough electricity to sever the connection to the utility grid if that were your ultimate goal.

Some members may be happy sticking to their normal energy-saving routine in winter and staying tethered to the energy grid even under the cooperative solar collective scheme.⁸

There is nothing wrong with being cautious and maintaining a connection to the energy grid for those just-in-case scenarios when the weather is all gloom and doom for longer-than-normal periods, and not enough electricity becomes stored for those bleak periods.

The upside is that those sky-high monthly energy bills that have plagued you for years will be cut to about $0 before you know it.

But time is running out for you procrastinators as all good things must come to an end.

In 2033 the ITC will be reduced from 30% down to 26%. This was actually supposed to have occurred in 2020, but the Inflation Reduction Act delayed this action.

The following year, in 2034 it will be further dropped down, this time to 22%, and then it will cease to exist in 2035.

If you want to go solar for energy stability among other reasons, but you’re concerned that your small or non-existent tax liability will make you ineligible for the ITC, get onto social media and find one that you can join.

Or knock on the doors of your neighbors the next time there is a blackout and ask them if they’re tired of living in the dark every other week and still paying through the nose for intermittent electricity.

Alaska Solar Rebates (Solar Tax Credits, Rebates)

There is a distinct lack of solar rebates from the government in Alaska.

Some electric associations, such as the Golden Valley Electric Association (GVEA), offer rebates that are open to all, however.

All customers of GVEA are eligible to claim a $1.50 credit for every kWh transmitted to them from a solar array.

Other companies offer rebates from $200 to $1,000 for purchasing an EV or installing a level-2 charger.

Individual municipalities as well as utility providers and solar installers, have rebates and solar incentives on offer every now and then. Even if you already possess a PV system or are associated with one within a collective, enquiring about any new programs can’t hurt.

Will Solar Incentives Increase in Alaska?

It would be nice to think that Alaska solar incentives would all of a sudden increase to the same level as some other states that are throwing everything but the kitchen sink into the mix to reduce the PV prices to their inhabitants.

But it seems unlikely in the near future.

Lawmakers seem reluctant to enact policies that would facilitate the transfer of power, so to speak, from the grid to the solar panel, despite the growth of off-grid houses popping up all over the state.

Their support would boost the renewable industry considerably, especially as Alaska is primed for solar energy and the entire state could easily make the transition away from fossil fuels if the will was there and the incentives were increased.⁹

Not only that but with the ever-decreasing price of an entire solar system, the payback period in Alaska is only between 4-10 years.

A payback period can be described quite accurately as a return on investment. It is calculated when all the savings from your utility bill exceeds the initial investment made so any savings then are as good as in your pocket.

Carbon Footprint Solar Panels (Alaska Solar Incentives)

Alaska is synonymous with outdoor clean living, and solar panels are equally known for being a clean source of renewable energy.

That is true during the middle of its 25-30 year lifespan, but not so at the beginning nor at the end.

Silicon-based solar cells are manufactured under a very carbon-intensive process that involves separating the basic silica from rocks and sand which plays a major role in the cost of solar panels in Alaska and around the country.

After that, coal-fired furnaces at incredibly high temperatures mold the silicon into ingots where they are either sliced or shattered to form a specific type of cell, either monocrystalline or polycrystalline which are the most popular.

Thousands of gallons of water are used at this stage, and the greenhouse gas emissions created are anything but climate-friendly.

The carbon footprint at this point is huge, and this is where questions arise about how clean an energy source are solar panels. For the solar array to offset this level of carbon pollution takes years of clean energy production but the balance is eventually reached.

And then it starts becoming a problem again.

That’s because, after 20-plus years of continuous use, end-of-life solar panels that are no longer producing electricity to a decent level of efficiency are being thrown away into landfills.

This has been occurring all over the country as every year more and more PV systems are deemed unworthy and casually discarded, and the time and effort required to harvest any useful parts are deemed too expensive.

Concerned that environmental contamination was likely to damage local ecosystems from leakages, nationwide management practices have been introduced.¹⁰

The intention is that technological improvements will enable precious metals and even the silicon fused within the cells to be harvested, separated, and reused in reconditioned models.

To avoid this problem of carbon footprint solar panels in the future, new solar panels are being made with recycling in mind so that they can be dismantled a lot easier and, along with initiatives like the Alaska solar incentives, cheaper.

Alaska doesn’t have this problem at the moment but as long as the day is planned for when it does arrive then recycling old solar panels will be easier and carbon-footprint free.

Related Reading: Solar Panel Recycling vs Reuse? How Disposal Works (Problems Explained)

Solar Power Alaska: Is It Worth It?

The pros of having solar panels in Alaska outweigh the cons.

Alaska has one of the highest electricity rates in the country and some of the remotest communities that are plagued by frequent blackouts. Not only that but their reliance on diesel-power generators is having a negative impact on the environment.

Adopting solar energy will make those generators obsolete and deliver stability to the supply chain despite months of total darkness in some parts of the state.

This natural phenomenon is contrasted by months of pure daylight, where solar irradiation can be absorbed and stored through net metering for those dark days.

Understanding how Alaska solar incentives can help lower the cost of solar panels in Alaska is a great way to generate an off grid power source that can help you decrease carbon emissions.

Frequently Asked Questions About Alaska Solar Incentives