At Solar Power Rocks, our dream is to turn your thoughts of solar power for your home into reality
Note: The numbers above are just estimates for a 5-kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.
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.
Massachusetts continues to update their state solar policies to make it more attractive and rewarding for their residents. The sheer quality of solar incentive programs, tax credits, exemptions, and loans earns the state a Solar Legislator Score of 'A+'. Bear in mind, we have even more localized solar information in the Bean Town metro area; check out our local solar resources in Boston.
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Massachusetts solar incentives you see below.
Your guide to going solar in Massachusetts
We've designed this page to be a complete guide to the complicated and sometimes confusing process of installing solar panels on a home in Massachusetts. Since there's a lot of important information to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
The Solar Strategy section is all about the various financial options you have in Massachusetts. We've created a tool that asks you a few questions about what you hope to get out of a solar purchase and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we give you a detailed picture of how each could work for you.
The Policy Information section contains all of our latest research on the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in Massachusetts. These policies and rules govern everything from renewable energy mandates to whether you get paid retail or wholesale rates for the extra energy your system produces, and can have a huge effect on the viability of solar.
Finally, the Solar Incentives section lists all of the available financial benefits available to homeowners who go solar. This section includes information about money-back rebates and grants, tax credits, and tax exemptions. If you're looking for what Massachusetts is doing to make solar more affordable for its citizens, you'll find it here.
We hope you find our work useful. If so, please help us keep our research and advocacy as strong as possible by sharing it with someone who might also find it interesting, contributing any amount you can, and by getting yourself personalized savings estimates from our trusted partner network.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Massachusetts Solar Strategy|
|Massachusetts Solar Policy Information|
|Massachusetts Solar Incentives|
|Your Massachusetts Solar Strategy|
|Comparing Solar Investment Options|
|Solar PPAs in Massachusetts|
|Solar Loans in Massachusetts|
|Buying Solar in Massachusetts|
|Solar Purchase Payback Time in Massachusetts|
|Massachusetts Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Massachusetts
Figuring out the best way to go solar in Massachusetts can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
Compare the Return of Different Solar Investments in Massachusetts
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, Massachusetts has the potential for extremely high returns. The purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a loan (the orange bars) and paying for the system over time means you'll never actually put down any of your own money.
That's what makes the solar loan option better. If you take a HELOC, you'll pay the system cost down monthly, but you still get a huge tax credit after the first year, and SREC sales for the first 10 years, too. Your payments over 15 years will actually be less than the savings and income your system will generate, and it'll mean that you're never putting any of your own money into the purchase. All you need is great credit—or the equity for a HELOC.
The option with the smallest savings is for a solar lease or PPA, which means you put $0 down on a rooftop solar system and pay monthly while you accumulate electricity bill savings over time. Leases and PPAs are an excellent option if you don't have any equity or cash to put down, and they still save you thousands.
Read more below about each of three very good options for solar in Massachusetts!
Net Present Value of Solar in Massachusetts
“Net Present What?!” Don’t panic, this isn’t an economics test. NPV is just a tool used to compare investments. Basically, it asks, “if you had X dollars to invest, which investment would get you the best return?” It relies on the idea that getting a return on your investment sooner is better than later, because you can reinvest your early profits and keep the gain train going.
We compare an investment in solar to a “what-if” investment in a Standard & Poor’s (S&P) 500 stock index fund, which has seen growth of about 7% per year over the past 25 years. We use the cost of solar in Massachusetts and ask “how much better or worse (in 2017 dollars) is an investment in solar than stocks?” Here's what we found for the three different ways of going solar in Massachusetts:
Look at all that green! When they tell you solar is a good deal in Massachusetts, this is what they're talking about. A solar investment in Massachusetts should provide a better return than the stock market whether you choose a PPA, a loan, or pay up front. Here's some more about how we got these numbers:
Solar PPA NPV: $5,451
Saving money without having to put anything down is always going to have a positive NPV. In Massachusetts, you’ll save $11,145 by paying for electricity under a solar PPA for 20 years, which is the basically having an extra $5,451 to invest now. Read more about PPAs in Massachusetts below.
Solar Loan NPV: $17,336
As we’re fond of saying, taking a loan for solar is a no-brainer, because it’s like agreeing to pay over time for something that is also making you money, plus you get 30% of the loan value as a federal tax credit (cash in your pocket) after making payments for only 1 year. In the case of Massachusetts, that tax credit windfall is just one part of the story. On top of it, you'll get a $1,000 state tax credit and you'll also be able to sell your SRECs for big bucks. All that helps push the NPV of a solar loan to over $17,000 better than a similar investment in the stock market. That's a mind-boggling return for any investment, and it's insane for something that requires no money down. Read more about solar loans below
Solar Purchase NPV: $13,744
The two biggest reasons a solar purchase in Massachusetts has a positive NPV are the 30% federal tax credit and SREC sales. On top of that, the money you save on electricity is also available for future investment. But you can see above what happens to NPV if you choose a solar loan instead. Unless you need to put cash into an asset, a loan is a much smarter way to pay for solar panels. Read more about solar purchases below.
Solar Power-Purchase Agreements in Massachusetts
Massachusetts residents have long enjoyed the ability to get solar from a third-party company and pay monthly, and a Power-Purchase Agreement (PPA) is still a great way to go, especially if you haven't got piles of cash or equity in your home. The state legislature and public utilities commission are really into solar, so there isn't much reason to worry that utility companies will start trying to impose monthly fees on solar homeowners like they have in other states.
For now, a 5-kW solar system can save you about $32 per month with a PPA, which might not sound like a lot, but add that up over 20 years and consider how much electric companies raise rates on that electricity you won't be paying for, and you have a end up with a small mountain of cash with very little risk or work. You can put $0 down and start saving right away, while the installation company takes care of all the maintenance and repairs.
By the time the end of your PPA rolls around, you'll have an extra $11,145 in your pocket. Must be nice to have such big pockets!
Here's more about how a solar PPA works:
Example savings in Massachusetts
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payments
Average Annual Savings
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payments
Average Annual Savings
Power-Purchase Agreements (PPAs) are the most popular form of what's called "third-party solar." A PPA just means your solar company owns the panels on your roof, and you pay for the electricity they produce. The numbers above show the savings with a solar PPA for an average home in Massachusetts. The typical electric bill before solar power is super expensive, but with a PPA, your monthly expenses will be lower. You'll be saving money and saving the planet all at the same time!
Here's an estimate of the monthly savings for a solar PPA in Massachusetts:
With a PPA, your solar company essentially becomes a second utility provider, only the solar electricity is sold to you at a lower rate than the fossil fuel electricity you've been buying from the electric company! Note: your PPA won't eliminate your power bill from your regular electric provider, because you'll still need energy from the grid when the sun isn't shining. But it will save you money!
The less-popular cousin of the third-party solar family is the solar lease. It's basically like renting your panels for a set monthly payment, and getting all the energy they produce—however much it is. Don't get spooked by that language, though. A typical solar lease comes with energy production guarantees that will make sure you're getting what you paid for. In fact, if you're not offered a production guarantee with a solar lease, walk away.
Here's the best part of third-party solar: whether you end up with a lease or a PPA, the installation company owns the panels and will do all the maintenance for you. Usually that means just a good cleaning every year, but if any part of that system fails, you're off the hook! That can be a great benefit to homeowners who are risk averse.
Keep in mind, the numbers above are based on an average home in Massachusetts. If you're ready for a custom quote for a solar lease or PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Home Solar Power: PPA vs. Purchasing
To PPA, or not to PPA? Willsolar Shakespanels would be proud we're discussing this. 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!
Additionally, if you go the PPA route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar PPA company (after all, that's how they can afford to give you such a no-brainer proposition in the first place).
Solar Loans in Massachusetts
You don't need $19,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.
That’s because, in Massachusetts, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you state AND federal tax breaks. Your tax savings will be huge in the first year—more than enough to offset the small difference between the loan payments and electric bill savings. All this means you'll never have to spend a cent on solar, and you'll still come out way ahead over 25 years.
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can qualify for a solar loan or home-equity line of credit (HELOC) for $18,750, with a fixed rate of 4% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
- You love making money without much risk.
Here’s how the numbers pencil out for a Massachusetts solar purchase with a loan:
- Installing a typical 5-kW solar system should start at about $18,750. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $1,170, but your annual loan payments will be $1,664, meaning you would spend $496 on solar this year, but...
- You'll also see a huge tax break. The Feds give you 30% of the cost of your system back as a tax credit, which in this case is $5,625, and Massachusetts adds on another $1,000. You'll be paying over time but getting all the benefits up front!
- The final bit of savings comes from the Massachusetts SREC program (discussed below). SRECs will mean an additional $1,711 in income from solar this year. All these incentives mean you'll come out $7,842 ahead after year 1.
- The electricity savings and SREC sales will always be more than the cost of your loan. You won't ever spend a penny on solar, and you'll come out $32,000 ahead after 25 years. Home solar in Massachusetts is an incredible opportunity.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 97 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Massachusetts. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Buying Solar in Massachusetts
An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true. You'll see a net return of over $50,000 in 25 years if you pay up front. But it requires a significant up-front investment.
If you have equity in your home or good credit, you can get a solar loan or HELOC with an interest rate of 4% or less. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans above.
If you've got cash and you prefer to pay up front, you'll have to plunk down $18,750. But by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced about $50,000 in income. The reason this works is that electricity in Massachusetts is EXPENSIVE. Solar offsets enough of it to save you about $1,200 in year 1, and it just goes up from there. As the electric company raises rates, you save more and more, and more...
The best thing about solar in Massachusetts might be the state's SREC market, which can make solar homeowners thousands of dollars over their systems' lifetimes. An SREC is a certificate of renewable energy generation, and you get one each time your solar panels have generated a megawatt-hour (MWh). A 5-kW system in Massachusetts will produce about 6 MWh of electricity per year, and the utility companies will pay you about $285 per SREC. That translates into over $1,700 this year and huge money over time. Read more about the Massachusetts SREC market below.
Here’s how the numbers pencil out when you pay up front for a 5-kW rooftop solar system:
- Installing a typical 5kW solar system should start at about $18,750. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
- The Feds calculate their incentive based on actual out of pocket costs, so take 30% of $18,750, for a tax credit of $5,625. And Massachusetts will throw another $1,000 tax credit on top! Your total investment is now down to just $12,125.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be $1,170. That reduces your cost after the first year to only $10,955.
- That isn't the end of the savings train! The Massachusetts SREC Market will earn you $1,711 this year, bringing the final year 1 cost to just $9,244. That's 40% off the starting price!
- Your system will pay for itself in just 4 years, and over its 25-year life, you'll see a total net profit of $38,456. The internal rate of return for this investment is a stupendous 28.5%!
- And don't forget... your home's value just increased by more than $27,000, too (your expected annual electricity savings over 20 years)!
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 97 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Massachusetts. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Massachusetts Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Massachusetts:
25% by 2030
A Renewables Portfolio Standard (RPS) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.
The current Massachusetts RPS is two-tiered, establishing standards for Class I (new resources) and Class II (existing resources) electricity production. The Class I standards are aimed at producing new (post-1997) renewable energy sources, including residential solar installations, and requires that 15% of all the power generated in the state needs to come from these renewable sources by 2020. Additionally, Massachusetts legislators have also mandated a 1% increase in Class I production each year thereafter -- with no expiration date!
Massachusetts’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.
RPS solar carve out
1600 MW (.5%) by 2020
While that RPS is outstanding, what's even more awesome for you if you're installing solar, is the legislature set a specific target of 400 MW of solar electricity to be generated by 2017!
Massachusetts electrical utilities must provide a portion of the RPS from qualified in-state, interconnected solar facilities like your roof. Each year, the minimum solar compliance standard is determined by dividing the annual solar compliance obligation in megawatt hours (MWh) by the total RPS load obligation from the previous two years. This original standard set the goal of 400 megawatts (MW) of production capacity, which Massachusetts reached!
We had previously egged on Massachusetts legislators to bump this goal up to 800 MW. Well, they did us one better, and in 2014 established a new production goal of 1600 MW! For more information on this awesome one-up, check out Massachusett’s Solar II Carve-Out page.
What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Massachusetts Electricity Prices
We've got good news and bad news... The bad new is Bay Staters pay a ton more than the national average for electricity, and those rates are rising. The good news is, the more electric prices go up, the more you save with solar!
Massachusetts’s average electricity price is 20 cents/kWh, which is about 20 PERCENT higher than it was in 2014. Those rising costs give you 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 continuing to focus on crafting strong solar policy.
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. While energy prices keep going up and up (and up), you’ll be saving more (and more) money for making the switch to solar now. Just remember to thank us later.
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
Massachusetts Net Metering
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume to make sure you get credit for the surplus. Aside from rebates and SRECs, net metering helps makes solar affordable too.
What is net metering? Why, it’s the policy that allows you to store your extra solar energy with the utility and credits your net surplus to your future bills. For Massachusetts residents under Class I residential net metering rules for solar, any extra energy your panels produce is credited to your bill and carried over indefinitely.
Thankfully, unlike other states, Massachusetts has recently reafirmed its commitment to net metering for residential systems, so you can rest easier knowing the state has your back.
When you get a quote from an installer, ask them to explain your local net metering program. This will factor into your payback time.
What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
Massachusetts Interconnection Rules
Recently, Massachusetts alleviated the headache of fragmented interconnection guidelines and required utility companies to comply with a standard agreement. The details of interconnection vary by utility -- for more information on your utility’s standards and to apply, check out the Massachusetts interconnection page.
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Solar Incentives in Massachusetts
Massachusetts Solar Power Rebates
Varies by locale
Massachusetts used to have a nice, simple statewide rebate program called "The Commonwealth Solar II Rebate Program". Sadly, the program has now closed, because it was so effective that funding ran out. Luckily, some local municipal utilities have stepped in to take the place. Unfortunately, these small companies serve only a fraction of the state's population.
Still, check out this list and see if you're one of the lucky few who still get a rebate in MA:
|Chicopee Electric Light||$.50/watt, up to $2,500||Must meet additional requirements|
|Concord Municipal Light Plant||$.625/watt, up to $3,125||Must meet warranty requirements|
|Hudson Light & Power||$1 or $1.25/watt, up to $6,000||Rebate amount subject to panel orientation. Must meet UL standards and warranty requirements|
|Ipswich Municipal Light Department||$.80/watt, up to $4,250||Additional incentive for USA-built components, subject to other requirements.|
|Reading Municipal Light Department||$1.25/watt, up to $2,000||Additional incentive available for locally-manufactured equipment|
|Taunton Municipal Lighting Plant||%1.50/watt, up to $4,500||Subject to residency requirements and other factors.|
If you’re confused, fear not. There are still plenty of ways to save with solar in Massachusetts. If you want to skip all the complex information about the potential savings of solar and get an accurate idea of what you can expect for your home, fill out our contact form for personalized assistance from local experts.
How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
Massachusetts Solar Power Tax Credits
15% up to $1,000
Massachusetts has had a state tax credit for renewable energy longer than most of the Solar Power Rocks staff have been alive. The state offers a 15% tax credit off the net costs of your solar system, but only up to a maximum of $1,000 (net costst meaning cost minus the federal 30% tax credit).
Basically, for most systems, count on $1,000 off next year's state income tax bill, on top of the big savings from the Feds.
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
Solar Power Performance Payments
Up to $285/SREC
A big reason so much solar has been installed in Massachusetts is a solar incentive funding mechanism called a "solar renewable energy credit" or SREC. Check out our blog post on SRECs if you want to learn more and watch a sweet video while you’re at it.
Basically, an SREC is proof of 1 megawatt-hour (MWh) of renewable energy generation, and utility companies want to buy them from solar producers (that's you if you've got panels), because buying an SREC is the same as saying "I generated this solar energy." If utilities don't generate enough energy from solar (see the Solar Carve-Out section above), they are subject to big fines.
Those fines are what makes SRECs valuable. The 2016 fines are set at $350, and SREC prices hover a little bit below that number. After all the moneychangers extract their pounds of flesh from transacting the business of SREC sales, solar panel owners end up with about $285 per SREC.
What does this mean for you? Well, a typical 5-kW sized solar system on your Massachusetts roof will earn close to 6 SRECs in a year, which means about $1,700 in SREC sales. Every. Year. But know this: As the SACP goes down, so does SREC value. About $12 per year in the next 10 years.
The best news of all is that SRECs contracts are written for a decade, so, your 5.85 SRECs per year will end up netting you $14,561 during your contrac. Can you say "cha-ching!?"
To get more information about how this all works, we strongly recommend connecting with our network of experts who can help get you a customized quote, free home evaluation, discounts, and even system financing. Just fill out our contact form and we’ll be in touch.
Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
If you don’t know what an SREC is, or how they work, check out this great SREC video
Property Tax Exemption
100% for 20 years
This means when the Massachusetts property tax man or woman cometh to assess your new solar home, they can’t assess you another dime for 20 years -- despite the fact that you’ll be adding roughly 20 times your annual electricity bill savings to your property value. In the case of our 5kW example, that adds up to about $19,890 (20 times your annual electricity savings of $995).
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).
For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.
Sales Tax Exemption
In addition to the property tax exemption, you don’t pay sales tax on your system either, so the installed price is the installed price.
What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
The consensus on Massachusetts solar power rebates and incentives
Massachusetts legislators have done an outstanding job of providing their 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 upping them. For that, we give Massachusetts an “A+.” Keep up the good work!
Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!