Massachusetts Solar Power Rebates, Tax Credits, and Incentives
Quabbin Reservoir, Enfield Massachusetts
Welcome to the Massachusetts solar incentive and rebate information page!
We recommend starting here and reading up about what’s going on in the state as a whole, then exploring further into our local resources in Boston. If you’re lucky enough to live in Boston proper, you’ll be glad you dug deeper, as there are excellent local solar programs to take advantage of.
If you have any questions, our network of solar experts are on call to assist you! Simply sign up for personalized help. You can get discounted pricing as low as $5,000/kW! This is paired with the very strong Massachusetts solar incentives below.
2012 Massachusetts Solar Power Update
Thoughts of Massachusetts commonly evoke images of pilgrims, the Red Sox, some premium universities, Matt Damon and maybe some “Wicked chowda.” More recently though, thoughts of solar power in the Commonwealth are blossoming.
Thanks to the Green Communities Act of 2007, Massachusetts residents and businesses have been encouraged to invest in energy-saving technologies and reduce energy consumption through a number of generous solar power rebates. The bill has widespread support from government officials, the business community, and environmental groups.
While there may have been some past missteps, Massachusetts is truly allocating its resources well to achieve a greater degree of energy independence.
The sheer quality of solar incentive programs, tax credits, exemptions and loans earn the state a Solar Legislator Score of “Excellent”! You rock, Massachusetts!
OH YEAH? WHY DOES MASSACHUSETTS ROCK FOR SOLAR?
There are more than 2,000 solar power installations in Massachusetts comprising 22 Megawatts of electricity produced in the state. That’s a lot of power! The main reason why solar has taken off here has been the Commonwealth Solar Rebate Program.
These rebates for PV (PV is short for photovoltaics, the geeky way to talk about solar electricity panels) provided a quick and easy way to cut into the upfront cost of going solar. Many homeowners simply didn’t have tens of thousands of dollars laying around so they could install an awesome solar system.
The solar power rebate program started in 2007 with a $68 million budget with a goal of reaching 27 MW of installed solar by 2010. And boy, did that program ever work out. In just 2 years, the $68 million budget was completely exhausted, as many residents filed for free money from the state to go solar. The solar panel rebate still is out there, but the 5th block of money available has closed as of 3/25/11. Expect a 6th block to be released in April, 2011.
Legislators did not want to stop just short of their 27 MW goal, and instead aimed even higher with their state renewable portfolio standard.
A STATE RENEWABLE PORTFOLIO WHAT?!
A renewable energy portfolio standard. It’s a mandate from Boston which says utilities within the state have to source at least a certain amount of their power from renewable sources – like from the solar panels on your rooftop. What’s more, they set a specific target of 400 MW of solar electricity to be generated by 2020!
So, now there’s 22 MW installed right? 9 more years to go until that due date, a limited budget at the moment, how in the world are they gonna get to that level of solar energy adoption in 9 years?
MASSACHUSETTS SRECS – SOLAR RENEWABLE ENERGY CREDITS
The answer is a creative solar incentive funding mechanism called a “solar renewable energy credit” or SREC.
If you have a typical 5kw sized solar system on your Massachusetts roof, you’ll generate roughly 5 SRECs per year for the renewable electricity you produce. Now, if the utility companies do not hit their targets for solar electricity generation in a certain year, they now have to pay a fee of $600 per SREC for which they were short. That money goes straight to Boston.
Therefore, many utility companies would rather pay you, the homeowner with solar panels on your roof less than this fee for your SRECs.
For SREC market stability, the Massachusetts Department of Energy Resources (DOER) has also set a floor price for which utilities may purchase SRECs from you, the homeowner. That’s set at $285 (this includes a 5% handling fee).
Utility companies have yearly goals they have to meet for solar electric production, so they’re quite motivated to buy up SRECs from anywhere they can get them less than that $600 fee. In February 2011, SREC values on the open market were around $520. Check out the graph below:
SRECs are guaranteed payments from the utility companies to you for at least 10 years. So, if you’re cranking out say 5 of them each year and you are able to sell them for an average of $400 a pop over that timeframe, that’s about $2000 a year for 10 years – or $20,000! Nothing to sneeze at, and that’s why the state is confident it’s gonna hit its target of 400 MW by 2020.
To get more information about how this all works, we strongly recommend connecting with our network of experts at One Block off the Grid who can help get you a customized quote, get you a group discount, and also even arrange financing of your system for you. Just fill out the form at the bottom of this page and we’ll be in touch to get you all the information you’re curious about and we can get you hooked up with a free home evaluation as well.
NET METERING
Aside from rebates and SRECs, net metering helps makes solar affordable too.What’s net metering? Why, it’s the policy that lets you store your extra solar energy with the utility, and they then credit your bill at night when your using energy, but the sun isn’t shining any more. So, no batteries needed.
For Massachusetts residents under “Class 1” residential net metering rules for solar, any extra energy your solar panels produce is credited to your bill. However, different utilities have different programs. Some will credit you 1 for 1. That is, you store 1 kWh of solar power, and you get to use that 1 kWh later at night or later in the year, even. Others utilities are less generous and will only give you credit for less than what you put in, say .9 kWh for the 1kWh. When you get a quote from an installer at the bottom of this page, ask them to explain your local net metering program. This will factor into your payback time.
The other issue here is that the program is limited to 1% of the utility’s capacity. Right now, solar isn’t generating anywhere near that number, but as people start to take advantage of the solar power rebate money below, some residents will not be able to use net metering unless the capacity cap is raised.
MASSACHUSETTS SOLAR REBATES AND SOLAR TAX INCENTIVES
The Database of State Incentives for Renewables & Efficiency (DSIRE) contains a long list of incentive and solar power rebate programs that encourage energy efficiency and alternative energies in Massachusetts. We’re going to focus on the residential programs, but there’s plenty to offer for corporations. See DSIRE’s list of corporate tax deductions, rebate money, and other incentives for businesses.
Personal Tax Credit
You can get a 15% state tax credit off your solar system, but only up to a maximum of $1000. For most people, count on $1000 to use towards your state income tax bill.
Property and Sales Tax Exemption: Yes
This means when the property tax man or woman cometh to assess your new solar home, they can’t assess you another dime for 20 years. Even after 20 years, the assessed value of the solar panels will probably have depreciated to next to nothing; so essentially, your solar panels won’t increase your property taxes.
In addition, you don’t pay sales tax on your system, so the installed price is the installed price.
Massachusetts Solar Power Rebate Program
The Commonwealth Solar Rebate Program is a state wide solar rebate program for Massachusetts. That’s the good news. The bad news is that it’s a little complicated. How much of a solar rebate you’ll get will depend on:
- Your income
- Your home value
- Whether or not the solar panels are manufactured in Massachusetts.
- Also, it should be noted, that the maximum rebate is $20,000, no matter how poor you are.
- Also, your system size is not limited, but if you need more than a 5kW system, (which is average); the state won’t pay anything above the 5kW calculation.
As of now for going solar, you’ll receive:
- $750/kW regardless of your income or home value. (Base Incentive)
- An additional $850/kW if your household income is less than or equal to 120% of median income OR if your home value is “moderate” ($300,000 – $400,00 depending on your county).
- An additional $100/kW if your solar panels or inverter are produced in Massachusetts.
- You’ll also get the 30% Federal Solar Tax Credit, regardless of income or home size.
Now, you’re probably confused. What you really want to know is: “Bottom line, how much?” Let’s work through just the rough estimated price and payback of a 5kW system assuming you don’t qualify for the moderate home value or income requirements, and you don’t buy your panels or inverter from Massachusetts.
EXAMPLE OF A 5kW MASSACHUSETTS RESIDENTIAL SOLAR INSTALLATION, BOSTON AREA
This example is based on an installed solar system for a 5kW (5000 watt) system in the Boston, Massachusetts area with ideal home and solar conditions. That 5kW should cover about $75/mo of your electric bill.
We’re also assuming that the cost is $5.30/watt installed which we can get for you when you sign up to be part of a group purchase campaign (that’s about 15% below going market rate as of March 2011) but that may or may not include extra add-on’s for your home.
Check out the rundown in the image below, click it to enlarge:
- Net cost after year 1:
- Pre-Rebate cost: $5.30/watt *5,000 watts = $26,500 (Don’t Panic!)
- State Solar Power Rebate: $750/kw * 5kw = $3,750, so now we’re at $22,750 out of pocket.
Even if that sounds like a lot of cash, there’s financing and leasing available! (Keep in mind if you have a moderately valued home or income at or below 120% of median income you’ll be able to deduct an additional $4,250!)
- 30% Federal solar tax credit: Subtract $6,825, now we’re at $15,925 (a little better)
- SREC payments for the first year (remember you get them guaranteed for 10 years, not just this year!): Subtract $2000 for your first year of payments, now we’re at $13,925.
- Massachusetts State tax credit: Subtract $1,000, now we’re down to $12,925
- Last but certainly not least, don’t forget about your yearly electric savings! $75/mo * 12mo = $900, now we’re down to $12,025
With the electric savings and associated SREC payments, as 5kW system will pay for itself in less than 6 years! ($2,000 a year in SREC payments for 6 years is already $12,000 and doesn’t include your electricity savings!) Again, the best way to verify the numbers in your own situation is to get yourself a quote further down on this page. Our friendly experts will show you how it all works.
Also, you should know:
- Nasty CO2 Emissions Saving the planet: 9618lbs/year, or like not driving 11,500 miles a year or planting 18 square feet of trees. Thank you.
- Also, remember: If your main solar equipment is manufactured in Mass, you get a little bonus of $0.15/watt. For a 5kW system, subtract another $750.
CONSENSUS
Residents and businesses of Massachusetts and the rest of the New England states are burdened with the highest electrical rates in the country. 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.
Soooo Let me get this straight… I spend $23,000 up front to save $20,000 over the next 25 years??? Sooo, I’m still out $3,000 over time, but out $23,000 now. Where’s the sense in this??? Worse yet…. now my property value has gone up approximately $10,000 so my taxes are higher….. Not really seeing the benefit as a MASS resident. Now, CT has a much better program. I suggest our Governor, who claims to be about solar energy, have a chat with the CT Governor, who is really all about solar energy.
It’s almost like you didn’t read above. Remember, solar electricity is replacing a big chunk of your electric bill every year. Once your done paying it off, IT CONTINUES TO WORK FOR YEARS. SREC credits will give you $20,000! JUST SRECS alone are paying for nearly the entire system, and then there are the other rebates. You really should look at your financing payment and compare and you’ll see that you’ll profit. In the above example it’s well over $40,000 PROFIT over ten years. But, the following 10 years maybe greater, because that $75 worth of electricity this system is recovering may be as high as $200 by then, effectively free to you.
Cheryl — There is a MA 20-year property tax exemption for the system. Plus the federal rebate has the $2000 limit lifted starting 1/1/09, so you’ll get a full 30% rebate of your cost for systems installed after 1/1/09. So, your cost drops about $5000 more.
The numbers above in the example don’t tell all the story. First, if the size of the system is 3500 watts, the base rebate available from the state is close to $7000. But there is more money available to most mass residents. If the household annual income is less than $72,000, there is another $7000 for you, Next, if you home value is less than the medial value for your county, there is another $3500 available and if you use some components in the system that are from Massachussetts companies, there is still another $875 for you.
This is a total of $18,375 from the state rebate system (commonwealth solar)
Next there is a change in the Federal tax credit starting in Jan 2009 instead of $2000, YOU GET 30% OF INSTALLED COST MEANING another $10,000 from the Feds.
This comes to a total of about $28,375 in total rebates meaning the cost to you, the homeowner is only $3125. But it still gets better. The towns are NOT ALLOWED to tax you on solar generating technologies that are installed on your residence, so your property taxes do not increase but the resale value of your home does increase. You do the math now. Spend $3125……get back 20,000 minimum over the next 25 years….hmmmmmmm
Dont forget these panels have an expected lifespan of over 50 years. How much will your electric bill be then?
Kirk and Phil,
Phil, I find some of your numbers somewhat misleading, though I was happy to hear of the Jan 09 new federal credit that is coming up. I have to take issue with the assumption that many people with an annual income of 72K would be looking to put up solar panels, if only b/c they might have to fork over the initial 30K only to get some (or most) of it back LATER. 30K would be more than half of their take-home pay…And also, if you are taking medial home prices, at least HALF of the homes in MA wouldn’t fall under those guidelines, if I understand the concept.
I wonder if the biggest residential consumers are those who want to act responsibly toward the environment but would have enough disposable income to be able to comfortably afford the initial outlay, even if they do get some of it back in the form of tax credits and rebates.
Glad to know that the towns are not allowed to raise property taxes based on this, but wonder if they and all their local appraisers know this.
If you are using solar hot water equipment, you get gypped under the new incentives. Most of the incentives are skewed towards photovoltaics, some to wind. Try to get a turbine installed at YOUR house…permits, height restrictions, etc. are a nightmare. The SRCC said that Solar hot water is 6 times more efficient than PV. You’ll never get a 3500W PV system on a normal sized house. But I get all my hot water on my small roof. My SHW system ROCKS, -I have made 1.4 MW equiv since October, and actually have the furnace turned off. (Wood stove). The propane truck has come twice, and not had to leave any propane yet. Unfortunately, since I am not a business or corp, I can only qualify for the State $1000 and the Fed $2000; (nothing else local); I did it with my home equity line. It’s time to put your money where your mouth is and commit yourself to investing in your own energy independence. You can easily spend $20,000 on a new car…will that save you money? What’s the payback on that? (ans: there isn’t one..) This is the chance to purchase equipment that will work for YOU, on YOUR home, decreasing the amount of YOUR hard-earned money that goes somewhere else and into someone else’s pocket. It’s the chance to not burn fossil fuel, to not be at the mercy of this years speculators, and maybe to reduce my so-called carbon footprint. The only other thing I wish for is a full 30% credit on my $19,000. solar hot water investment. PV needs those incentives because the numbers just don’t run.. they are just not realistic yet, but don’t penalize us water geeks!
As the saying goes, the women are smarter…as least as far as the benefits of solar thermal vs. PV are concerned. Cheryl, Michelle and Dianne rightly question the “PV savings myth” and point out that solar thermal is a better investment than PV through their practical financial reasoning. I’d let them manage my money any day!
As someone working in the solar industry, I find that even w/ the rebates, credits, etc, the payback is too long w/ PV. By contrast, with solar thermal, a typical Northeast family that uses an oil-fired indirect or tankless heater on their oil boiler (there are lots of these) will save at least one tank of oil (approx 225 gal) a summer to heat hot water ($495 at $2.20/gal) and 20% of the winter heating average of 600 gallons (120 gal) for total savings of $759 first year. The thermal system will also keep a lot of CO, sulfur dioxide and other nasty stuff out of the environment during our best solar seasons from April-November when you can turn your boiler OFF.
In Massachusetts, taking the roughly $10K cost of that system and deducting 3K in tax credits (state & fed) leaves $7K net investment. Dividing that by the low end savings per year of $759 in fuel saved (it’s more if fuel prices spike again) your breakeven is 9.2 years or less if fuel goes to $4/gal as it did last winter).
For the record Kirk and Phil, the PV credits, rebates, and other MA state incentives are supported by the lobbyists of investor-owned utilities who are trying to offset load w/ residential PV to make up for the 50% transmission loses in a worn out 50+ year old grid system they won’t re-invest in ’cause it will hurt their shareholder dividends. Much of the MA. rebate money comes from a taxpayer-funded pool, while the rest comes from surcharges on our electric bills. We’re all paying for a few PV systems and it’s wrong. When will people (and Gov. Patrick of MA.) wake up and figure out that using taxpayer money to subsidize offsets for public corporations is basically a Bush-era gimme to National Grid, Dominion and all the rest? They’re not our friends..screw them!
The right way to do this is to do in in two steps. In the first tax year plan for Solar Thermal water heating. It is correct that this is the most efficient from a energy conversion efficiency as well as return on investment. The next year plan for the PV installation which does give you a good return over a period of time. Of course your pocketbook and roof area will dictate whether you want to go to phase 2 but that is the order you should follow. Spacing it over two years is only to maximize the tax benefit otherwise it can be done the same year.
I own a small company in MA. We were just awarded a contract to clean, repair and test components that are reused in the production of solar panels. In order to support this new contract we built a dedicated space with all new dedicated equipment. Could this dedicated expansion qualify for any tax credits under Alternative Energy Production? Manufacturesbe benefit My companysupport that we just expanded
Hello,
I’m a developer from Los Angeles, CA specializing in sustainable design through solar energy. If anyone is in search of solar panels or solar water heaters feel free to contact me @ sustainability.rocks@gmail.com
Go Green
Sean: Got to database of energy incentives at http://www.dsireusa.org. Click on your state for info on rebates (most are limited to solar PV/electric or modest utility co cashbacks for new boilers, water heaters, etc.). Most incentives are tax credits (you get the money when you file your income taxes) under current programs. I am an energy conservation/renewables installer and find there’s a lot of confusion. How that helps. Any questions email me at me1@atcsolar.com
federal: http://www.energystar.gov/index.cfm type tax credits in search box
Mass State: http://www.masstech.org/SOLAR/
The state energy policy needs some rethinking. The ISO regional markets pay capacity payments for demand reduction and energy efficiency – e.g. to aggregators that sign-up big box retailers to dim lights on peak days (active) or municipal lighting projects (passive). These capacity payments in the wholesale markets to reduce energy usage are substantial money and are paid year round to “shave the peak” usage (yes, we all pay for them as part of the energy component of the retail power bill – in other words, it’s an indirect energy reduction tax that is not well targeted – some who receive payments may never even reduce consumption, e.g. if there is no call to dim lights or reduce AC use). A direct use of tax dollars makes much more sense for MA to establish a substantial fund – say $500 million (the cost of a medium size transmission line project to serve load growth) for direct allocation to homeowners for solar and back yard wind systems that would not only reduce consumption on a per-site basis but also serve as distributed generation to feed power onto the grid at times when the homes are using little power, like during the work day. This seems like money much better spent and a much more sound energy policy.
A Head Scratcher!
The Massachusetts rebate stipulates that its rebate money is to be treated as taxable income, and they reserve the right to issue a 1099 to the owner.
Then, would reducing the cost basis of the system for the Federal ITC be double taxation? You would be failing to advantage the taxed income against the ITC.
My house was built in 1983. I thought I was ahead of the curve when my wife and I installed a solar panels to provide hot water to our home. We have a passive solar contemporary design in Acton. The system worked great for several years but for the past 5 years or so, we have been unable to find anyone in the area that can do maintenance on this system. Most local plumbers that advertise “solar” were lying. Does anyone know of anyone that can service a solar hot water system in the Acton area?
Hi — not sure if this is in the domain of the data you’re collecting, but Massachusetts residents who heat with gas from National Grid can get a 75% rebate on insulation and weather sealing, up to $2000. I did, and got a check for about $1,500.
I wrote about the details here on my blog: http://fivepercent.us/2009/05/22/75-credit-for-insulating-from-national-grid-until-july-31st/
(And despite the implication of the URL, the program has been extended)
I am looking to run a ice cream dipping freezer on solar power. Any ideas?
Solar Thermal systems can be financed at 0% through a loan sponsored by the local electric utility, NGRID, NSTAR Cape Light. The term is up to 7 years and you can borrow up to $15,000. With all the other incentives and if your house has the orientation, this is a no brainer.
What about rebates for people who install the systems themselves / with the help of an electrician and not with some kind of solar company? I am thinking of doing a 2Kw system within the next month. I have about 220 sf of southern facing roof. Any help at all would be great.
Hi Steve,
To qualify for the rebates and incentives, you are precluded from going about it on your own – even if you’re a master electrician. That’s because Boston mandates certain standards need to be met to receive state money.
The only way they can be sure of those standards is by using licensed, certified installers who are ensuring everything goes without a hitch.
Dan,
I installed a 7kw system over 2 years ago and got my 30% rebate from the State/Fed program. I was told that because I got the rebate I was not eligible for the SREC program. I know I make more than I use but am unsure on how to capitalize on this. Can you help?
Thank you!
Marc
I have a system and was selling my credits under a 3 year contract. the contract is over and i still want to sell the credits. I was told my system is old and I can not sell the credits. Is this true or if I can sell them, who do I sell them to and how much can I get.
I have a 5 kw system pv installed on my house in Barnstable County. Up until now I’ve been getting payment for my green energy credits, but as of now I’ve been shut off by Mass Energy Consumer Alliance. I’d like to establish a relationship with another buyer but don’t know how to go about that. Any assistance or pointers would be appreciated.
Paul & Alan: Try contacting an SREC aggregator like SRECtrade.
To the naysayers above, my 5kW system is almost 5 months old, and I’ll sell my first two SRECs in July for about $500 each. From then on, I’ll average six+ per year, for a simple payback of about 30 months (!!!). Zero maintenance required, no chance of water or antifreeze leaks, no wasted energy on hot days, etc. Easily my best investment ever.
I am recently graduated at Northeastern University in Electrical Engineering and I am pursuing my education in Sustainable Energy/Solar Energy at Roxbury Community College in which I am dreaming to build my career.
I am interested working for you at no cost (Free) for the time being; until I reach adequate knowledge.
Please send me a job application.
Regards
Myrrtha