Welcome to the Boston solar power information page – Details Section
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Holy Boston solar incentives Batman! We’ve seen some great states in the past, but solar policy here is just off the charts! State solar power rebate? Check. State tax credit? Check. Additional city rebate? Check. Property tax exemption, sales tax exemption, strong RPs? Check, check, check!
Need we say more? Ok. ok. There’s a lot more to say on the specifics, but we think you get the general gist, ya? Legislators here have done a job that is second to none in encouraging solar power. Nice work, ladies and gentleman.
Massachusetts Renewables Portfolio Standard
A renewables portfolio standard (“RPS”) is essential a mandate from Boston that utilities here to source (at minimum) a certain amount of their power from renewable sources – like from the solar panels on your rooftop.
Massachusetts’ RPS sets a target of 15% renewable energy by 2020, with a 1% increase every year thereafter. No expiration date is given. What’s more, the state legislator has set a specific target of 400 MW of solar electricity generated by 2020!
Right now there’s about 22 MW of solar power installed, and only 9 more years to go until that due date. So, with a limited budget to encourage solar power how in the world are they gonna get to that level of solar energy adoption in 9 years?
Boston Solar Power Performance Payments / Solar Renewable Energy Credits
The answer is a creative solar incentive funding mechanism called a “solar renewable energy credit” (“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.
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. Alternatively, the utility companies can simply buy enough SRECS from homeowners like you with solar panels. Since the utilities companies can acquire SRECs from homeowners for less than $600, they’re buying them up, rather than paying the fees to Boston.
To ensure the stability of the SREC market, the Massachusetts Department of Energy Resources (“DOER”) has also set a floor price at which utilities may purchase SRECs from you. The floor is currently set $285, including a 5% handling fee. Because of those yearly state-mandated goals, the utility companies are super-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 payments are guaranteed for at least 10 years. So, if you’re pumping out 5 SRECs a year and selling them for an average of $400 a pop over that timeframe, that’s about $2000 a year for 10 years – or $20,000! That’s some serious cash!
To get more information about how this all works, we strongly recommend connecting with our our expert partners. They help get you get a customized quote, get you a group discount, and also even arrange financing of your system. 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.
Massachusetts Solar Power Rebates
The Commonwealth Solar Rebate Program (“CSRP”) is a statewide solar rebate program for Massachusetts. That’s good news! We love statewide rebate programs. The bad news is that the CSRP is a little complicated. How much of a solar rebate you’ll get will depend on:
Your home value
Whether or not the solar panels are manufactured in Massachusetts.
It’s also important to note that while your system size is not technically limited, the state won’t pay anything above the 5kW calculation, and in all circumstances the the maximum rebate available is $4,250.
Now, having said all that, let’s look at how much money the state is offering you to switch to solar power. The solar rebate levels have recently come down a bit, but they’re still pretty strong:
$400/kW regardless of your income or home value. (Base Incentive);
An additional $400/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), and;
An additional $50/kW if your solar panels or inverter are produced in Massachusetts.
Not too shabby. Not too shabby at all. All told you’re looking at a solar power rebate from the state of between $2,000 and $4,250 for a standard 5kw system.
Boston Solar Power Rebate
It gets even better! On top of that great commonwealth rebate program, the City of Boston offers additional cash to switch to solar power. When you install a solar power system in Boston, the city will cut you a check to the tune of 1/3 of the amount of the commonwealth solar rebate, up to $2,800.
Massachusetts Solar Power Tax Credits
Usually states have either a solar power rebate program, or a tax credit, but not both. But not here! That’s right. Massachusetts is offering Bostonians free cash to instal solar power systems both up front and on tax day. When tax day comes you can get a 15% state tax credit off your solar system, up to a maximum of $1000. That’s not a very high cap, but it is another grand off the price! Think of it as the
Christmas April bonus on top of the rebate.
Massachusetts has a 100% 20-year property tax exemption on solar power systems. See, when you save money on electricity with a solar power system, your home value goes up. Normally that means more property taxes, but with the exemption in place, when 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 ever increase your property taxes, despite all those electric bill savings!
As if that weren’t sweet enough you also won’t pay sales tax on the purchase of your system. Yep! The state legislature crafted an exemption here too! With a little help from our legislator friends, you’re saving money short-term and long-term.
The Boston metro area pays 15.2 cents per kilowatt-hour (kwh) of electricity. That’s higher than the national average of 11.43 cents/kwh, but it’s still a good bit lower than some other nearby cities. The New York City metro area, for instance, pays 18.6 cents/kwh. And even that is pretty cheap!
Electricity rates have stayed low for one reason: fossil fuels. Dirty, nonrenewable, earth-killing fossil fuels. There are so many reasons to get off of fossil fuels, and the future of our environment is certain among the most important. Don’t let all that environmental benefit fool you though, switching to solar power now is good for the green in your wallet as well. Fossil fuels costs are already on their way up, and electricity won’t remain cheap forever. When those rates keep rising and rising (and rising) you’ll be real glad you’re generating all that clean, (still) cheap solar power.
Net Metering and Interconnection
Net metering requires your utility will keep track of how much energy your solar power system produces, and how much energy consume. If you run a surplus in any month, you will receive a credit for that surplus on your next bill.
Massachusetts has a tiered net metering system that differentiates between sizes of power generating systems. Unless you’re planning a big solar farm on your acres of land (and we really don’t know where you’d find the land for that here in the city!) your residential system will be Class I. That means that any surplus you produces is simply credited to your bill.
However, different utilities have different net metering 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 big issue here is that the net metering program is limited to 1% of the utility’s capacity. Right now, solar isn’t generating anywhere near that number, but as more and more people start to snatch up all of that rebate, tax credit and SREC money, the grid is going to start to fill up unless that 1% figure is raised.
Example 5kW (5000 Watt DC STC) Solar System Return on Investment in Boston
By now you just want to know what this all adds up to for you, right? OK!
- Installing a typical 5kW solar system in Boston is likely to run you about $25,000 (Don’t worry; that’s going to drop fast).
- The commonwealth solar power rebate gives you back a minimum of $400/kw. Subtract $2,000, for a new price of $23,000.
- Next we take off that additional city solar rebate – 1/3 of the commonwealth rebate, or another $667. That brings our initial cost down to $22,333.
- On top of the rebates you also get to sell those SRECs. An average of 5 SRECs for a 5kw system at a standard price of $400/SREC subtracts another $2,000, for a new price of $20,333.
- Next we calculate the federal solar tax credit. That’s 30% of costs after state solar power rebates. Subtract another $6,700 for a price of $13,633.
- Finally we calculate your yearly electricity savings. In the first year we estimate those savings to be about $889, bringing your final cost after year 1 of $12,744 – a discount of almost 50%!
- With that low starting cost and the escalating electricity prices, your system should pay for itself in just 7 brief years.
- Meanwhile, you’ve done a good service for the rest of the planet! The fossil fuel generated electricity you’re not using is like planting 103 trees every year.
Remember that these figures are estimates. We try to be conservative in calculating future energy savings and payback timeframes, but your savings could be a bit higher or lower. In short, every home is unique, and the best way to find out how much you can save with a solar power system is to get a free quote from one of our expert installers in your area. Heck, get five quotes. They’re free! Our partners on the grounds will help you plan a system to the specifics of your home that will save you the maximum amount of cash.
The consensus on Boston solar power rebates and incentives
We normally have quite a bit to say about solar power here at SPR. Not the least of which is usually recommendations for improvement. But really, there isn’t a lot of room to nitpick here. We would love to see that solar-specific RPS carve out come up a tad more, but that would just be the cherry on top of the already loaded sundae. Solar policy is pretty exceptional here, and we don’t really have a lot to add. All the right solar rebates, credits, exemptions, performance payments, and policies are firmly in place.
Our older archived Boston Solar Power costs and savings breakdown images for reference: