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With some significant strides in utility solar projects in recent years, Rhode Island is steadily building on some of its pro-solar policies and state-level incentives, which are surprisingly many for such a small state. And with utility rates that rank among the highest in the nation at around 21 cents per kilowatt-hour, going solar in Rhode Island has never looked better.
Read on to learn more about the ins and outs of going solar in Rhode Island.
Here's an at-a-glance description of the current benefits and drawbacks of switching to solar in Rhode Island:
Electricity rates in Rhode Island are incredibly high, but so is the savings potential by opting for solar energy. A side-by-side comparison between the levelized costs of solar power and traditional utilities reveals a stark contrast: dividing the total upfront solar PV system costs by the system’s lifetime output reveals a levelized solar cost of about 4 cents per kWh. Compare this to the public utility’s levelized cost of 39 cents per kWh, and the more preferable choice becomes obvious.
Even by actual dollars and cents standards, going solar in Rhode Island is relatively inexpensive. A typical 5 kW system in the Ocean State goes for a little more than $16,000, one of the lowest projected costs in the nation. Factor in the 30 percent federal tax credit, and that number drops to just above $11,000. While this figure is fairly reliable, it can be higher or lower depending on the solar installation company’s prices, system capacity, and energy efficiency.
Rhode Island homeowners can finance their solar power system in one of four ways: direct purchase with out-of-pocket funds, third-party financing through a solar loan or home-equity line of credit (HELOC); renting the system through a solar lease; or buying the solar energy through a power purchase agreement (PPA):
Direct purchase of a solar panel system in Rhode Island is by far the fastest and most profit-yielding method of adopting solar energy. Homeowners who possess the necessary capital can pay off their system in just a handful of years and reap decades of net-positive solar savings.
A typical 5 kW system in Little Rhody costs approximately $16,000, minus a little less than $5,000 from the federal government’s solar tax credit, and even more in power rebates from the utility company (more on this later). For that size of system, homeowners can expect the savings to offset the costs in about four years. This leaves more than 20 years for the system to produce pure profit. After 25 years of operation, homeowners will have netted more than $35,000 in solar savings.
The next option is a solar loan, which, behind direct purchase, is the best way to maximize a solar panel system’s savings potential. In Rhode Island, financing a 5 kW system would require a $16,000 loan at 15 years, zero money down, and 4 percent APR (the federal tax credit still applies in this case, so the actual upfront number will be much lower).
Because utility prices are so high in the state, savings start on day one of operation. Borrowers will have come out ahead by less than $5,000 after the first year — and the savings will only build with every year of operation after that. This is because loan payments will be lower than the monthly electric bill payments homeowners would otherwise pay.
At the end of 25 years, homeowners will have amassed just under $35,000 in total solar savings!
The solar lease is another viable option for individuals who want to go solar, but lack the funds necessary to foot the bill upfront. A solar lease operates much like a rental agreement. A solar provider will install and maintain the system free of charge while the homeowner will make low monthly payments for use of the system for the next 20 to 25 years, depending on the contract.
Some lease agreements give homeowners the option to purchase the system following the fulfillment of the contract. For a 5 kW system, lessees will have accrued a little more than $10,000 after 20 years of operation.
A power purchase agreement (PPA) works just like a solar lease, but homeowners pay for the power the system produces rather than the system itself. As electricity rates increase every year, so will the savings that comes with a PPA. After 20 years, homeowners will have netted approximately $10,000 in total savings.
Rhode Island offers residents a few solar incentives to further ease the cost of solar energy in the state:
Each year, the Rhode Island Renewable Energy Fund issues several grants to lower the financial burden of solar power. For purchased solar systems, that equates to about $1.05 per watt, and for third-part funded systems, $0.70 per watt.
Tax exemptions are another way the state is reducing solar system costs. Currently Rhode Island applies tax exempt status in two ways:
First through sales tax. All the equipment used in solar array assembly — solar panels, inverters, backup batteries, etc. — are free of any sales tax. Considering a solar panel system can cost tens of thousands of dollars, this exemption represents massive savings.
Solar energy systems are also exempt in terms of property taxes. Solar arrays are known to increase the overall value of a home, sometimes by thousands of dollars over 25 years. In Rhode Island, homeowners do not have to pay taxes on this increase, which again, could be hundreds of dollars a year.
Rhode Island boasts some useful solar policies aimed at making solar energy all the most accessible in the state:
Rhode Island as a renewable portfolio standard (RPS) of 38.5 percent by 2035 — meaning the state has a goal of attributing at least 38.5 percent of its total energy output to renewable sources like solar power, wind energy, natural gas, and other alternative, eco-friendly sources. Although Rhode Island does not have a specific percentage carved out for solar energy, the state attributes more than 4 percent to solar as of 2020, an impressive accomplishment!
Net metering is required statewide in Rhode Island. The policy requires utility providers to credit solar users for the surplus energy their systems pump into the electrical grid. Depending on the utility, solar customers could be selling their solar power for up to 125 percent its retail value!
Interconnection rules refer to the standards and requirements a solar panel system must satisfy before being added to the grid. Rhode Island has imposed a statewide interconnection policy that requires solar owners to undergo an application process. This process involves an impact study that can take up to 90 days to complete.
Fortunately, homeowners are not charged for this study, nor are they required to buy additional home insurance or install a redundant external disconnect switch prior to interconnection.
As of 2020, Rhode Island has installed a staggering 305.90 megawatts of solar energy, primarily in the form of commercial solar projects. This equates to roughly 6,600 solar installations powering more than 57,000 Rhode Island homes. The state hosts 25 solar companies employing more than 1,000 people.
Interested in a solar quote? Check out the top-ranked solar companies in Rhode Island and read reviews from verified solar customers.