Narragansett Bay and the Newport Bridge
Among the earliest Colonists to arrive in America, those who settled in the colony of Rhode Island were probably the feistiest and most independent. By 1663 they had negotiated a charter with King Charles II establishing Rhode Island as a highly autonomous self-governing colony with religious freedom and recognized territorial claims. Theirs was the most generous charter to be issued by England, but pressure was growing in the Motherland to tighten up colonial control.
The colonists were reluctant to give up what they had achieved, and on May 4, 1776, Rhode Island became the first of the thirteen original colonies to break from British Rule and declare independence. The people of Rhode Island were also the first to engage in armed hostilities with the British. True to form, they were the last to ratify the Declaration of Independence, demanding that the Bill of Rights be added to guarantee individual freedoms. Rhode Island, in spite of its diminutive size, has obviously played a large role in shaping the history of this country, as well as their own destiny.
Rhode Island used to be at the forefront of shaping renewable energy policy as well. The legislature here was an early adopter of a Renewables Portfolio Standard (“RPS”) (we’ll get to them in just a second) and paved the way for solar power conversion by offering a personal tax credit to help drive down the costs of solar for homeowners like you. Unfortunately the legislature has been less active of late, allowing the tax credit to expire and failing to replace it with any alternative incentives for small residential systems. Combined with a lack of state or utility solar power rebates, Rhode Island has seen itself fall back from the forefront of solar-friendly policy, and then some.
Thankfully the fixes are already known, and very straightforward. If we were making the decisions, in addition to bringing back the solar tax credit, we’d start by updating the state’s RPS. Since Rhode Island already has a reasonably strong RPS in place, the door is wide open for the legislature to kick-start solar again by simply raising renewable energy targets. Raising goals would put pressure on the utility companies to start offering solar power rebates and performance payments to customers who help them generate renewable energy. We’ve seen that strategy work in a lot of states, and we’re confident it would work here.
Speaking of the RPS …
Rhode Island’s Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar.
Rhode Island has an adequate RPS that requires utilities to generate 16% of their retail electricity sales from renewable resources by the end of 2019. Utilities are currently required to generate 6.5% of electricity from renewable resources. That requirement will increase 1% per year through 2014, and 1.5% per year from 2015 through 2019.
16% is a decent number, but it’s not great, and our RPS could be much stronger. California, for instance, is pushing by 33% renewable energy by 2020 – more than double the goal here. Rhode Island should get on board with a stronger RPS; the higher the RPS’s standards, the stronger the solar incentives here will be and the less fossil fuels we burn.
Solar Performance Payments in Rhode Island
Rhode Island offers a Feed-In Tariff program for renewable energy systems 10 kilowatts (“kw”) or larger. Most residential systems won’t meet that bar, so unfortunately the chances are that there are no performance payments available to you. If you do happen to install a system larger than 10 kw, the tariff rates cap at a pretty astounding 33.35 cents / kilowatt-hour (“kwh”).
Rhode Island Utility Solar Power Rebates
Wait, what? We don’t have any solar rebates available here either? Sadly not. At the moment there are no incentives available here to help offset the out of pocket cost of a solar power system.
Solar Tax Credits in Rhode Island
Uh oh! No tax credits either! Some of you may remember the personal tax credit that used to be available for residential solar power systems. That tax credit was inexplicably allowed to expire without extension or replacement. We’re not sure why, exactly, but we are sure that bringing back the solar tax credit that was already in place is an excellent opportunity for the legislature to simply and efficiently encourage renewable energy.
Solar Tax Exemptions in Rhode Island
Thankfully there are tax exemptions for solar power here. Those shiny new solar panels are 100% exempt from all sales and use taxes when you purchase and install them.
Even better, you also get a break on your property taxes. When you install a solar power system, your home goes up in value by quite a bit (we’ll get to how much in just a minute). No one should ever be penalized for converting to renewable energy, a sentiment with which the Rhode Island legislature agrees. That’s why they passed a law that ensures that your solar power system will never be assessed at any higher value than the equivalent standard, non-renewable energy production system. That means all that increase in value you get from a solar power system over a conventional system stays with you and not with the state tax collectors.
Utility Prices in Rhode Island
Rhode Island pays an average of 14.83 cents per kilowatt-hour of electricity. That’s solidly above the national average of 11.43 cents/kwh. We know you hate paying that extra (almost) 30% on your electric bill. But where you’re currently seeing 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.
Rhode Island Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus. Rhode Island has a strong net metering program that ensures you get credit for surplus energy produced, up to 125% of you monthly consumption. Surplus will be credited to the customer at the utilities avoided-cost rate, and may be either carried forward to the next bill or purchased by the utility, at the utilities discretion.
That’s a pretty solid law overall, but there are definitely some easy tweaks the legislature could implement to make net metering even stronger. For one, municipal and cooperative electric companies are currently exempt from the statewide net metering standards. The law should be expanded to cover all utilities. The maximum limit on overall enrollment should also be raised from the current 3% to at least 5% of a utilities peak production capacity. And of course, we’d like to see the option for bill roll-overs or cash payments moved from the utility to you, so you can decide how the savings help you most.
Interconnection standards are unfortunately not up to the standard set by our net metering law. The legislature did step up in June 2011 to standardize procedures across Rhode Island, but the procedures put into place are needlessly complicated.
An applicant for interconnection must submit an application to the utility for an impact study, including a request for an estimate of the cost of interconnecting the proposed system. An optional feasibility study may also be requested prior to an impact study. The feasibility study offers a shorter mandatory response time –30 days from receipt of the completed application as opposed to 90 days for the impact study–, but as you’ve probably already realized, the faster response time will only helps those for whom interconnection is not feasible. If you are a good candidate for interconnection you will still have to wait for an impact study to be conducted.
While these studies may cost you time, they thankfully will not cost you money. There are no fees for either a feasibility or impact study for residential systems under 25 kw.
5kW Example Return on Investment in Rhode Island
What do all the numbers add up to for you? Let’s check:
Installing a typical 5kW solar system should start at about $25,000. Don’t worry – even without state incentives, that’s still going to drop a lot!
- Since the feds calculate the 30% federal solar tax credit based on actual out of pocket costs, no state incentives means a bigger federal tax credit. Subtract $7,500 (30% of $25,000) for a new price of $17,500.
- After the federal solar tax credit we subtract your first year’s energy savings, which we estimate to be about $878. That brings your cost after the first year to $16,662, a discount of nearly $8,500 from the starting cost.
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in about 14 years. After that you’ll be turning a profit (yes, a profit) for the rest of the life of your solar panels, which is typically about 25 years total.
- In addition to those direct wallet-fattening savings, you also increased your home value by $17,550.
- You’ve also created a whole bunch of other green. Money green, tree green, all sorts of green! First, your expected profit over the life of your solar power system is approximately $25,000! That’s a whole bunch of cash, but don’t forget that you’ve done a service for the earth as well by not using all that fossil-fuel backed electricity. In fact, the fossil-fuel energy you’re not using is the carbon-saving equivalent of planting 103 trees a year, every year your solar power system is humming.
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
Rhode Island Solar Consensus
Solar policy was pretty strong here a few years ago. Unfortunately, because of the expiration of the tax credit and the strengthening of RPS’s and solar incentives by lots of other states, Rhode Island has slipped quite a bit behind the pack when it comes to promoting planet-friendly, cash-saving residential solar power. The 14 year payback timeframe is mediocre at best, and the timeframe is only that short because of high energy prices. Combined with a large up front cost compared to solar-friendly states, we can’t give Rhode Island anything higher than a “D” in 2012.