Why solar works for Massachusetts homeowners

Let’s face it, every year during winter, electricity rates in Massachusetts go up. Although the general trend fluctuates throughout the year, the fact remains that the annual overall rate year on year has the tendency to rise.

The cause of these fluctuations is well known as being a direct correlation with the price of gas. Because over 50% of the electricity in New England is fueled by natural gas, when the price of natural gas as a commodity rises, so does the cost of electricity in Massachusetts.

Installing a solar energy system has become very affordable and makes sense in the commonwealth. Let’s take the example of a Massachusetts household paying $100 a month for electricity. If this homeowner where to install a solar energy system, they would save an estimated $1,800 a year—and over $35,900 during the next 20 year period.

Massachusetts is a leader in solar energy and the state has some of the most ambitious solar goals in the country. Solar energy installations have been increasing rapidly, due in part to tax based incentives and power production based incentives.

The Solar Energy Industries Association ranked Massachusetts 6th with respect to the amount of solar capacity installed in 2015.

Homeowners or business can qualify for these incentive depending on the method or option they choose to finance or pay for their system. The options which allow for ownership or financing include direct ownership, solar leases, or power purchase agreement (PPA) contracts, in which a homeowner purchases solar energy from a system located on their property.

Owners who choose to pay for their system directly, will qualify for tax-based incentives. This includes a 30 percent federal investment tax credit (ITC), a Massachusetts personal income tax credit—which is the lesser of 15% of the total cost of the solar electric system or $1,000, for qualified clean energy projects, and a five-year modified accelerated cost recovery system (MACRS) which business owners can use to depreciate solar energy systems over a five-year schedule.

Owners who choose to lease the system through arrangements such as a PPA can qualify for long-term production-based Incentives and Benefits based on the production of their systems. The first program is called net metering.

Through this program, system owners can utilize the electricity produced by their system to directly offset their electricity drawn from the grid. These same system owners may also export power onto the grid when their systems produce much more electricity than they consume.

In simple terms, net metering makes it possible for system owners to benefit directly from the unused electricity generated from their systems by applying bill credits from any excess electricity generated in one month to a future month’s bill.

Net metering has no aggregate limit for systems less than 10 kW, or three phase connected systems less than 25 kW. Larger systems are limited to 3% of total peak load.

The second program is called solar renewable energy certificates or SREC. Simply put, an SREC is a solar renewable energy credit—created for every megawatt-hour (MWh) of electricity produced by a solar energy system. SRECs are sold to electric utilities who need it to meet their state-required renewable energy targets or renewable portfolio standards (RPS).

We will dig deeper into what SRECs are and how pricing is determined, but it’s important to note here that SRECs are very different from net metering.

Needless to say that the numerous policies and programs available in the state of Massachusetts are a little overwhelming. Although the state still continues to work towards updating its incentive programs to make solar energy adoption more affordable and reliable to the home and business owner, the incentives active today already make solar much more attractive and rewarding.

Sometimes navigating through these options to determine which is best can become a daunting task. Reading through to make the difference between loan options and leases or power-purchase agreements, can be a stretch.

That is why we are here to help guide you through the journey and ensure you choose the correct option that best suits your needs.