Written by Sarah Hancock | Last Updated September 19th, 2019Sarah Hancock is passionate about green living and sustainability. She frequently writes about renewable energy and manages the Solar blog at BestCompany.com.
Massachusetts Solar Overview
Massachusetts may not be the sunniest state in the nation, but thanks to incredibly favorable policies, solar power is shining bright in the Bay State. In fact, Massachusetts lawmakers have passed some of the most solar-friendly legislation in the country, making solar energy attractive, affordable, and financially beneficial for the state’s residents.
Here’s an at-a-glance description of the current benefits and drawbacks of switching to solar in Massachusetts:
Benefits of going solar in Massachusetts:
- Relatively high electricity prices = more savings with solar
- 30% federal tax credit
- 15% state tax credit (up to $1,000)
- 100% property tax exemption for 20 years
- 100% sales tax exemption
- Performance payments of approximately $0.15 per kWh for 10 years
- RPS of 35% by 2030 with solar carve out
- Statewide net metering with infinite credit rollover
- Multiple financing options available
- Easy to connect to the grid
- Good for the environment
Drawbacks of going solar in Massachusetts:
- Fewer natural solar resources than some other states
- Rebates only available from small local utilities
We break down and explain each of these items in the article below.
Cost of Solar in Massachusetts
Prices of solar in Massachusetts have fallen 47 percent over the last 5 years, and as of 2019, the average price per watt for a solar energy system purchased outright in the Bay State is approximately $3.29. For an average-sized 7 kilowatt system, this comes out to be about $23,000 before tax credits and other local incentives are applied. After incentives are applied, the cost drops to about $15,000.
In terms of price per kilowatt-hour of energy used, those with solar panels in Massachusetts will pay only about $0.08 per kilowatt-hour. This is low compared to the average price of electricity from the utility, which is currently about $0.23 per kilowatt-hour. Utility prices are expected to go up over the next several years, which means that Bay Staters who switch to solar now will see their savings increase over time.
Considering this, as well as inflation and financial benefits from available incentives, the average home or business owner in Massachusetts who purchases a solar energy system could expect to recoup their solar investment in about five years. After that, they will essentially be able to use the energy production from their solar panels to power their house or office building for free or for a very low rate.
In fact, over the life of the solar energy system, the average Massachusetts resident could reasonably expect to save upwards of $45,000.
Massachusetts Solar Financing Options
When it comes to paying for a solar system, Massachusetts residents have several options to choose from, including outright purchases, loans, leases, and power purchase agreements.
In Massachusetts, purchasing a solar panel system outright will provide you with the biggest dollar-for-dollar savings in the long run, but it does require that you pay for your system in full upfront. However, since you’ll be the owner of the system, you’ll get to take advantage of the 30 percent federal tax credit and any local incentives that are available (more on these below), which will help you to recoup a good portion of those costs in the first year. In addition, you’ll own the solar equipment and the energy it produces. In about five years after it pays itself off, all the electricity produced by the system will be pure profit.
Although this option is not feasible for everyone, you may want to consider it if you can swing it. Some solar companies will even offer a discount if the system is paid for in full upfront.
Getting a loan to finance a solar system in Massachusetts is a great way to go solar if you are interested in solar ownership but are unable to purchase the system outright. With a solar loan, you’ll be paying for the system over time but taking advantage of the incentives, perks, and savings from the beginning.
Many solar companies partner with banks or companies that specialize in providing loans for solar projects. These loan companies typically offer loans contracts ranging from 5 to 20 years and interest rates between 1.99 and 4.99 percent, depending on your credit score and the length of the loan. Common benefits that come along with getting a solar loan include the ability to take advantage of federal tax credits and available local incentives, as well as the option to pay off the loan early with no prepayment penalties.
When you choose to go solar with a loan in Massachusetts, you’ll actually start making money in the first year thanks to high electricity prices and performance payments. Your savings will then increase each year as electricity prices go up. Essentially, the money you save on your utility bill as a result of having solar combined with the cash you receive from the electric distribution companies for performance payments will be higher than your loan payment. Once the loan is paid off, you’ll be able to power your home or business for free or for a very low cost for the remainder of the system’s life.
Leasing a solar panel system for your home basically means that you will be renting the system from a solar company or a third-party financier for the duration of a contract, which is generally 20 years, at a locked-in monthly rate. Leases typically do not require the homeowner to put any money down upfront, but because the solar company owns the system, the customer does not get to take advantage of tax credits, net metering, performance payments, or long-term financial benefits.
Since electricity prices in Massachusetts are some of the highest in the nation, home and business owners can take advantage of solid savings by leasing solar panels because the lease payment will be lower than their electricity bill without solar. As electricity prices go up over time, so will solar savings. Plus, let’s not forget the positive impact on the environment.
Power Purchase Agreements
PPAs are similar to leases in that the homeowner typically does not have to put any money down and a third party owns the system. However, instead of renting the system at a locked-in rate, the homeowner buys the electricity produced by the system at a set rate.
Due to Massachusetts’ high electricity prices, Bay Staters can absolutely save money with a PPA, and those savings should increase each year as the cost of electricity goes up.
Massachusetts Solar Incentives
Residents of Massachusetts who choose to purchase their solar system outright or with a loan get to take advantage of some awesome solar incentives, including tax credits, tax exemptions, and performance payments. Customers of some local utilities in Massachusetts also have access to solar rebates.
There are two tax credits to be aware of when getting solar. The first is the 30 percent federal tax credit that anyone in the United States who owns their solar panel system can qualify for. Because these credits are given on a 1-to-1 basis according to your tax liability, you will want to have an idea about what your federal tax liability is to know how many years it will take for you to take full advantage of this tax credit.
The second is the state tax credit. This will differ depending on which state you live in. On top of the 30 percent federal tax credit, the state of Massachusetts provides a 15 percent tax credit (up to $1,000) for residents who make the switch to solar that can be applied to their state income tax bill.
Residents of Massachusetts who install solar panels on their home have two dollar-saving tax exemptions available to them. The first is a 20-year property tax exemption, so while the value of your home will likely go up due to the addition of solar panels, your property taxes won’t for 20 years. The second is a 100 percent sales tax exemption, which will save you hundreds of dollars right off the bat because you won’t have to pay sales tax on your solar energy system.
Many utility companies offer rebates to homeowners that own a solar panel system. These rebates are similar to those that you’d receive on an electronic or appliance purchase and result in money back in your pocket after the solar installation.
Unfortunately, Massachusetts’ statewide rebate program has been exhausted and is now closed. However, there are still solar rebates available from a few municipal utilities in the state:
- Chicopee Electric Light: $0.50 per watt up to $2,500
- Concord Municipal Light Plant: $0.625 per watt up to $3,125
- Hudson Light & Power: $1 to $1.25 per watt up to $6,000
- Ipswich Municipal Light Department: $0.80 per watt up to $4,250
- Reading Municipal Light Department: $1 per watt up to $2,000
- Taunton Municipal Lighting Plant: $1.50 per watt up to $4,500
Performance payments reward solar owners for the electricity their panels produce on an ongoing basis. Utility companies will typically either offer a per-kWh bonus or pay you a fixed amount for credits earned.
Massachusetts offers some of the best solar performance payments in the country through its Solar Massachusetts Renewable Target, or SMART, program, which was rolled out in 2018. SMART requires Massachusetts’ three primary electric distribution companies, Eversource, National Grid, and Unitil, to make performance payments to solar owners within their territories. Payments are approximately $0.15 per kWh generated and are paid out for 10 years. For an average-sized 7 kW solar energy system, this will result in performance payments of about $1,100 per year for solar owners.
Massachusetts Solar Policy Information
Legislators in Massachusetts have done a nice job of enacting favorable net metering, Renewable Portfolio Standard, and interconnection policies, making it easy and attractive to go solar in the Bay State.
Net metering refers to utility companies crediting solar owners for the excess power that they feed back into the grid from their solar energy system. During the day while solar panels are generating power, the meter typically runs backwards and sends surplus energy to the grid, as many homes aren’t consuming as much energy as their system is producing. At night, when the system is no longer producing energy, most homes pull energy back from the grid to cover their electricity needs. Through net metering, solar owners are able to generate credits to help offset any bills they receive from their utility company for tapping into the grid.
People who live in Massachusetts get to take advantage of one of the most favorable net metering policies in the country. In order to make sure that you get credit for the surplus energy that your solar system generates, the utility companies are required to monitor your system’s output and credit your bill for any energy that you do not use. In most states, these credits cannot be carried over or will only be rolled over for a limited amount of time, but in Massachusetts, net metering credits do not expire and can be rolled over indefinitely.
Renewable Portfolio Standard
Utility companies are required by their state legislature to make sure that a certain percentage of their energy production comes from renewable energy sources, such as solar, by a specific
date. If the utility companies in the state do not comply with RPS law, they will be heavily fined. Therefore, states that have a large RPS requirement usually have great incentives up for grabs from the utility companies in that state.
Massachusetts’ RPS, which is currently set at 35 percent by 2030, is one of the more aggressive goals in the country. In addition to this, the state’s RPS includes a lofty solar carve out that aims to have 3,200 megawatts of installed solar. In other words, as part of its RPS, Massachusetts’ goal is to have approximately 18 percent of the state’s total energy generation come from solar power. Currently, about 10 percent of the state’s total energy generation comes from solar.
Interconnection standards have to do with the requirements involved when it comes to connecting a solar system to the grid. It’s important to know if your state has any additional requirements that must be met in order to get your home solar system plugged into the grid.
The state of Massachusetts has created a standard, statewide guideline for connecting to the grid that all utility companies must comply with, making it simple and straightforward for solar customers to plug in.
Massachusetts Solar Statistics
To date, Massachusetts has installed nearly 2,500 megawatts of solar, enough to power more than 416,000 homes in the state with solar energy. Over 1,600 additional megawatts of solar are expected to be installed in the Bay State over the next five years. Currently, there are over 540 solar companies and more than 10,000 solar jobs in Massachusetts.
Interested in a solar quote? Check out the top-rated solar companies in Massachusetts and read reviews from verified solar customers.