Massachusetts legislators have done an outstanding job of providing our state with solar incentives. Bay Staters have access to state rebates, tax credits, property and sales tax exemptions, and ongoing performance payments — due in large part to a strong RPS and solar carve out. In addition, they have set an amazing example of meeting their established solar goals, and even upping them!
If you are confused about how these numbers work and would like some personalized assistance, or a quote of your own, simply give us a call or click the button, and our super friendly team will walk you though it.
Bay Staters pay a more than the national average for electricity, and those rates are rising. Massachusetts’s average electricity price is 23 cents/kWh — WAY above the national average of 13 cents/kWh. This has obviously provided an important reason to look for effective energy alternatives. Fortunately, solar power has received a good bit of legislative attention (and incentives), and Massachusetts’ leadership is encouraged to keep it in focus as they move forward. That means while you currently see larger bills, you could be seeing bigger savings!
Higher electricity prices means greater opportunity to save money by producing your own clean, earth-friendly solar power. Not to mention the fact that the rising environmental costs and dwindling supply of fossil fuels is going to lead to even faster increases in energy prices, likely sooner rather than later. When energy prices start going up and up (and up), you’re going to be saving more and more (and more) money for making the switch to solar now. Just remember to thank us later.
To lease or not to lease?
Here’s the basic deal: If you choose to lease your panels, you benefit from no out of pocket costs and an immediately reduced total electricity payment. Because of this, many regard this option as a no-brainer, since there isn’t any downside to think of. The only hiccup you’ll start to experience is when you consider the long term financial benefit of owning the solar panel system yourself.
In many situations, if you can afford the outlay or can easily secure financing, the cost of the install becomes an investment with a return outpacing even the strongest performing mutual funds. In addition, there’s significantly less principal risk, since the energy credits you will be producing are tied to the sun coming up in the morning instead of our financial markets!
Keep in mind, if you go the leasing route, you must forfeit to the solar leasing company all the credits and performance payments you would receive by owning the system yourself.
Tax Credits and Financial Incentive for Solar Power Users
Since 2001, the Commonwealth of Massachusetts has created a variety of incentives for the use of solar PV. Today, the state is leading the nation in solar power use, thanks to these incentives, rebates, tax credits, and other programs that make it easier to enjoy the benefits of solar power. The federal government also has a credit that can help decrease the upfront costs of installing a solar PV system. More in-depth information on programs for Massachusetts residents can be found at the Massachusetts Clean Energy Center website at masscec.com.
Tax Credits and Rebates
At the federal level, owners of residential solar PV systems may be eligible for the Residential Renewable Energy Tax Credit, which helps to offset about 30% of the total costs for these systems.
In Massachusetts, there are currently three state-specific tax credits and exemptions:
- The Massachusetts Personal Income Tax Credit gives most owners of residential solar PV systems a tax credit of either 15% of the total cost of the solar PV system or $1,000;
- The Massachusetts Sales Tax Exemption is valid on any equipment purchased in-state for a residential solar PV system;
- and the Massachusetts Property Tax Exemption allows homeowners an exemption on the taxes on the value added to the home with solar panels.
Home and business owners are also eligible for MassCEC’s Commonwealth Solar II Rebate Program when they install any residential or small-scale commercial solar PV systems. The rebates are paid when the project is completed and must be approved prior to beginning the installation. The solar panels must also comply with MassCEC guidelines for warranties, equipment, site selection, and other specifications.
Other Solar Energy Programs
Through the U.S. Department of Housing and Urban Development, the Federal Housing Administration gives homeowners the chance to borrow up to $25,000 for energy-efficient home improvements through its FHA PowerSaver loan. Borrowers can receive funds throughout a 20-year period to spend on solar PV systems and other home upgrades. The U.S. Department of Agriculture and the U.S. Department of Energy also have other loans and grants in place to help residents and business owners, especially those in rural areas, install their own renewable energy systems.
In Massachusetts, several initiatives target homeowners and businesses who want to install their own solar PV systems. Solarize Massachusetts is one such program aimed at specific communities each year to help decrease the cost of installation on small-scale systems. Federal loans and grants have made the Residential Solar Loan Program and the Rooftop Solar Challenge more accessible for Massachusetts residents.
Long Term Cost Savings
Even without the tax credits and rebates available to home and business owners, there are a number of advantages to owning a solar PV installation. Solar panel installation help home and business owners decrease or even eliminate their spending on electricity. These installations can also significantly increase the value of a home and should last at least 20 years.
In addition to the savings from the Commonwealth Solar II rebate, solar PV owners can also generate income from the sale of Solar Renewable Energy Certificates (SRECS). These certificates can be traded based on a solar PV system’s production at a rate of 1 SREC per megawatt hour (or 1,000 kWh). Essentially, these certificates give property owners the opportunity to sell excess energy back to utility companies, so long as they are still grid-connected. This initiative is part of the RPS Solar Carve-Out Program.
Another way to earn credits from the state is through net metering. Because homes with solar power are already connected to a meter, the state allows customers generating their own solar power to be credited for the energy they generate but don’t use. An eligible meter reading from a utility company should show a meter running backwards if there is more power being produced than consumed. As a result, customers would receive credits at the retail rate on their utility accounts at the end of a billing period. More information is available through the Massachusetts Department of Energy Resources.
In short, Massachusetts residents have a number of ways they can save on costs and taxes thanks to a number of financial incentives. For more information on rebates, credits, and financing the cost of solar PV, give us a call and we’ll be happy to walk you through it.