It’s no secret that Massachusetts has one of the highest electricity rates in the country. When it comes to lowering your electric bill or even eliminating it completely, one of the best ways to do so also allows you to use clean energy: going solar.
Besides saving money on your electric bill, solar panels provide a number of benefits to Massachusetts homeowners. There are three major incentives for going solar that everyone should know about: the SMART program, the REC program, federal and state tax credits, and Net Metering. With these combined incentives, you can earn money for every kilowatt-hour of energy that your system produces for ten years, collect refunds from the state and federal government to offset the cost of your system, and earn credits on your electric bill for any excess energy your solar system produces.
Solar incentives are one of the biggest factors that motivate people to go solar. For starters, electrical bills in Massachusetts increase at an average of 5% each year – but your electrical bill is on a monthly basis. You can input the cost of your average monthly electric bill into the energy calculator on our website. and it will show you how much money you’ll spend over a 25-year period, as well as your environmental impact shown in pounds of carbon emissions.
Utility-run Performance Incentives
The SMART Program
The Solar Massachusetts Renewable Target (SMART) Program is a performance-based incentive that compensates you for the electricity you generate. Over a ten-year time period, you’ll receive a monthly check based on your solar electricity production.
With SMART, the longer you wait to go solar, the less financial incentive you receive because it’s structured as a declining block model. In order to be eligible for this program, solar projects have to be interconnected by one of three utility companies in Massachusetts: Eversource, National Grid, or Unitil. This is because each utility company has established blocks that decline in incentive rates between each block. When you sign up for solar, you’re assigned to a block that dictates the rate you’ll be compensated. However, these blocks have a fixed solar energy capacity (in megawatts), and once the blocks fill up, new solar owners go to the next block where they receive a lower incentive rate.
If you choose to participate in the SMART Program, you cannot also participate in the REC Program.
The REC Program
The Renewable Energy Certificate (REC) program is another incentive-based program that encourages Massachusetts residents to go solar. For every megawatt-hour of electricity a solar system produces, solar users earn one REC. These can be sold to utility companies in an open marketplace called the Class 1 REC Open Market through intermediaries called REC aggregators.
If you choose to participate in the REC Program, you cannot also participate in the SMART Program.
Town-specific Solar Rebates
If a town does not offer net metering, many towns will still offer rebates to entice you to go solar. A common incentive is the Municipal Light Plant Solar Program, which offers a rebate for purchasing, installing, or using solar panels. If you go solar and want to apply for a rebate, you must first contact the MMLD and then submit an application through the MMWEC.
Federal Solar Tax Credits
The Federal Investment Tax Credit (ITC) refunds you a tax return for 30% of the total cost of your solar installation. This means that if you go solar in 2023, you can claim 30% of the total cost it takes to install your system in 2024. So for example, if your solar system costs $30,000, you could end up getting $9,000 back on your taxes. This incentive exists to encourage people to switch to solar because it uses clean power. This includes roof work or a new roof, tree removal, electrical upgrades, and anything else needed for you to go solar.
Massachusetts State Tax Credit
Massachusetts offers solar customers a rebate of up to $1,000 (15% state tax credit) for the cost of their solar system. This means that this tax credit is worth up to 15% of the cost of a solar system, or $1,000 – whichever is less. This credit can also be combined with the federal solar tax credit. This tax credit covers many types of clean energy technologies, such as solar photovoltaic systems, wind turbines, solar water heaters, and solar space heaters.
Property Tax Exemption
Another major incentive Massachusetts offers for solar energy is the property tax exemption. Because solar panels cause an increase in a home’s value, Massachusetts law ensures that for 20 years, renewable energy equipment is not subject to local property taxes. This is in regard to both solar and wind energy systems, as well as systems that also have an energy storage system. However, the systems must be used as a primary or auxiliary power system to heat or supply energy for taxable property, and be able to produce 125% (at most) of the property’s annual electrical needs. This property tax exemption is 100% of the value added for 20 years and applies to the value of the property when assessed.
This property exemption has been in place since 1975, making Massachusetts one of the first states to implement such a law. However, the exemption does not apply to components that serve a dual purpose, such as greenhouses.
Sales Tax Exemption
Not only does Massachusetts offer Residential Renewable Energy Income Tax Credit and property tax exemption, but solar purchases are also exempt from sales tax. In Massachusetts, renewable energy equipment is completely exempt from sales and use tax. The exemption applies to equipment used as primary or auxiliary power for a property’s needs, and can save you 65% on most transactions. This includes equipment related to solar, wind-powered, or heat pump systems.
Most grid-tied solar owners also earn money through a billing process called net metering. When your system produces more energy than you need, that extra electricity is sent to the grid and you earn credits for it. You can then use those credits to pay your electric bills during months when your solar production is lower than usual. In New England, you generally overproduce electricity in the spring and summer; in the winter months, because production is lower, you can use the credits you have collected and apply them to your electric bill.
For example, if your home produces 20 kilowatts of power in one month, but your home only requires 15 kilowatts, the extra 5 kW gets sent to the grid and you receive money back in the form of credits on your electric bill. You can then apply those credits to any bills you receive during less sunny months.
Start Taking Advantage of Solar Incentives Today
Overall, Massachusetts offers several incentives for solar energy and is a great state to go solar in. The SMART program, net metering, the Residential Renewable Energy Income Tax Credit, property tax exemption, and sales tax exemption combined provide great benefits that make going solar affordable for Massachusetts homeowners. Although you may think the upfront cost of solar energy is too high, take these incentives into consideration and all the money you will actually end up saving in the long-term if you go solar. Not only is it financially beneficial, but you will also be switching to clean energy and reducing your carbon footprint.
Go Solar With Solaris Renewables
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