Massachusetts has the 4th-highest electricity prices in the U.S., at $0.22/kWh. This is an increase of about 15% in the past 5 years.
This is partly because the state does not burn coal for power, and oil is less than 2% of the state’s power generation. In 2018, Massachusetts generated 67% of its electricity from natural gas, and almost all of the rest from nuclear power and renewables.
Ironically this means you can save the most by switching to solar in Massachusetts! In 2018 the new RPS law protected homeowners with solar from utility companies who wanted to charge those homeowners just for maintaining a grid connection. This essentially means that if you invest in solar for your home, your investment is safe.
Some other ways to frame the cost: the median cost per watt of a solar install in the state is $3.85, and the median power output of a MA residential system is 8.1 kW. The Massachusetts Clean Energy Center counts nearly 12,000 residential solar installs in the state.
The average cost of a grid-tied, 6kW solar system starts around $21,000. (This is equivalent to saving roughly 100 trees a year!) Without any incentives, in the first year you’d save about $1,700, compared to if you had been paying the normal rates for the energy you used.
With a federal tax credit, a state tax credit capped at $1,000, and SMART incentives at roughly $0.15/kWh, in a best-case scenario you could offset about half the cost of your system in the first year, bringing the net cost down to roughly $10,100. From there, with only continued SMART incentives (for the first 10 years) and savings from lower power bills, you could expect for the system to pay for itself in as few as 6 years.
This depends on may factors such as your system size, power output, and financing. Here are the three main ways you can finance your home solar power system, and the kinds of returns you may expect to see:
From our example above, the homeowner purchased a 6.2kW grid-tied system to offset their energy bill. Overhead cost was $21,080, with roughly half of that returned in the first year through incentives, rebates, and savings, then paying itself in full over 6 years.
Most solar power systems have a warranty lifetime of 25 years. In that time, between incentives and paying lower rates you could make a profit of around $47,000 - more than twice the up-front cost of the system! Even with occasional maintenance or part replacement, that is a massive savings. Solar panel power output falls on average 0.8% per year, so with a little TLC and load management you can extend the life of your system well beyond the warranty’s expiration date, continuing to save indefinitely.
Keep in mind that in this scenario the system is paid for, in full, out-of-pocket. If, like most of us, you don’t have $21,000 to spend on home improvement, a variety of financing options are available.
Whether or not you can afford the up-front cost of the install, you may want to consider a Home Equity Line of Credit (HELOC). With equity in your home, or good credit, you may qualify for a 15-year solar HELOC with fixed rate of 4% or lower.
Starting with that same 6.2kW system costing $21,080, with energy savings of around $1,700, a federal tax credit of 26%, a state tax credit of $1,000, SMART incentives at roughly $0.15/kWh, and no cost up front, you will have a revenue surplus of about $7,000 at the end of the first year.
Over time your profit will be less as some of the energy savings is used to pay off the loan. Over 25 years you could expect to make nearly $37,000.
With a Power-Purchase Agreement (PPA) the homeowner leases their roof to an outside party, usually a power company. Generally PPAs feature a fixed price per kWh, with either a fixed term or an annual escalator.
With a PPA, the cost of installation, repair, and maintenance to the homeowner is usually $0.00. For that 6.2kW system, with a PPA you could expect to save about $63/month on energy. Over 25 years, you could see over $19,000 in revenue before accounting for inflation. That’s technically an infinite return!
PPA’s can be complicated, as you are effectively ceding at least some control of your home to the third party, but they are an excellent way to get into solar because they have no overhead.
The The Massachusetts Department of Public Utilities (DPU) regulates interconnection, the process by which homes are connected to the grid. For homes which will be supplying power to the grid instead of only drawing from it, there are a few extra steps to go through.
Before connecting a solar power system to the grid, residents must get written approval from the utility in two documents: the “Interconnection Service Agreement” and “Authorization to Connect.”
All solar photovoltaic (PV) installations must comply with the Massachusetts Electric Code. If an installation results in a structural change of a building, the system must also comply with the Massachusetts Building Code.
Make sure you are familiar with the Electric, and if necessary the Building Codes, before installing a PV system. If you hire licensed installers, they should be aware of the Codes as well. The installation contractor will secure all necessary approvals from the necessary parties. You can also make sure your payment schedule allows payment to be withheld unless the installed system passes local code inspections.
Here is a guide from the Massachusetts Clean Energy Center that gives a great bird’s-eye view of the resources available to you.
Data from DSIRE. For more info visit: https://www.dsireusa.org/
|Name||Implementing Sector||Program Type||Administrator||DSIRE ID|
|Residential Renewable Energy Income Tax Credit||State||Personal Tax Credit||Massachusetts Department of Energy Resources (DOER)||144|
|Alternative Energy and Energy Conservation Patent Income Tax Deduction (Corporate)||State||Industry Recruitment/Support||Massachusetts Department of Revenue||149|
|Alternative Energy and Energy Conservation Patent Income Tax Deduction (Personal)||State||Industry Recruitment/Support||Massachusetts Department of Revenue||229|
|Solar Easements & Rights Laws||State||Solar/Wind Access Policy||301|
|Cape Cod & Martha's Vineyard - Green Power Purchasing||Local||Green Power Purchasing||307|
|Medford Solar Program||Utility||Grant Program||349|
|Fuel Mix and Emissions Disclosure||State||Generation Disclosure||480|
|Green Power Purchasing||State||Green Power Purchasing||930|
|Appliance Efficiency Standards||State||Appliance/Equipment Efficiency Standards||1567|
|Local Option - Energy Revolving Loan Fund||State||PACE Financing||Programs administered locally||4283|
|City of Lowell - BLEU Projects Program||Local||Rebate Program||5289|
|Taunton Municipal Lighting Plant - Residential and Non-Profit Weatherization Program||Utility||Rebate Program||Taunton Municipal Light Plant||5319|
|Solar Renewable Energy Certificates (SREC-II)||State||Performance-Based Incentive||Massachusetts Department of Energy Resources||5515|
|Residential & Small-Scale Air-Source Heat Pump Program||State||Rebate Program||Massachusetts Clean Energy Center||5635|
|Residential & Small-Scale Ground-Source Heat Pump Program||State||Rebate Program||Massachusetts Clean Energy Center||5636|
|Residential & Small-Scale Biomass Heating Program||State||Rebate Program||Massachusetts Clean Energy Center||5644|
|Solar Renewable Energy Certificates (SREC-I)||State||Solar Renewable Energy Credit Program||5678|
|Solar Renewable Energy Certificates (SREC-II)||State||Solar Renewable Energy Credit Program||5679|
|Mass Save - Small Business Direct Install Program||Utility||Rebate Program||5828|
|Mass Solar Loan Program||State||Loan Program||5850|
|City of Boston - Green Building Standard||Local||Energy Standards for Public Buildings||Environment, Energy, and Open Space Cabinet||5919|
|Columbia Gas of Massachusetts - Medium and Large Business Energy Efficiency Programs||Utility||Energy Analysis||13947|
|National Grid - Existing Facility Incentives||Utility||Energy Analysis||National Grid||13957|
|National Grid - Energy Profiler Online||Utility||Energy Analysis||National Grid||14078|
|Holyoke Gas & Electric - Commercial Energy Audits||Utility||Energy Analysis||16193|
|Massachusetts Executive Office of Energy and Environmental Affairs - Energy Efficiency Assistance for Business||State||Energy Analysis||16282|
|Massachusetts Office of Technical Assistance and Technology - OTA Software Programs||State||Energy Analysis||16286|
|Massachusetts Office of Technical Assistance and Technology - OTA Energy Publications||State||Energy Analysis||16287|
|National Grid - Power Quality Enhancements Program||Utility||Other||National Grid||17458|
|Massachusetts Division of Energy Resources - Green Business Development||State||Energy Analysis||17470|
|Berkshire Gas - GasNetworks Commercial & Industrial High Efficiency Heating Rebate Program||Other||Energy Analysis||17478|
|National Grid - Demand Response||Utility||Energy Analysis||National Grid||17480|
|National Grid - Enhanced Metering||Utility||Energy Analysis||National Grid||17481|
|Massachusetts Division of Energy Resources - Education and Outreach Programs for Businesses||State||Energy Analysis||17573|
|Massachusetts Division of Energy Resources - Municipal Energy Efficiency||State||Energy Analysis||17574|
|Massachusetts Office of Technical Assistance and Technology - Energy Efficiency for Businesses & Institutions||State||Energy Analysis||17727|
|Massachusetts Division of Energy Resources - Assessments and Audits||State||Energy Analysis||20099|
|Columbia Gas of Massachusetts - Small Business Energy Efficiency Program||Utility||Energy Analysis||20123|
|Taunton Municipal Lighting Plant - Net Metering||Other||Other||20625|
|National Grid - Massachusetts Energy Efficiency Services||Utility||Energy Analysis||21157|
|National Grid - Rhode Island Energy Efficiency Services||Utility||Energy Analysis||21171|
|National Grid - Construction Program||Utility||Energy Analysis||21187|
|Unitil - Energy Saving Tips||Utility||Training and Information||Unitil||21571|
|ISO New England - Demand Resources||Other||Energy Analysis||ISO New England||21671|
|Northeast Energy Efficiency Council - Building Operator Certification (BOC)||Other||Training and Information||Northeast Energy Efficiency Council||21674|
|Northeast Energy Efficiency Partnerships - EM&V Forum||Non-Profit||Training and Information||Northeast Energy Efficiency Partnerships||22020|
|Commercial Biomass Heating Grant Program||State||Grant Program||Massachusetts Clean Energy Center||22036|
|Local Option - Commercial PACE Financing||State||PACE Financing||Massachusetts Development Finance Agency||22037|
|Residential and Small-Scale Ground-Source Heat Pump Rebate Program||State||Rebate Program||Massachusetts Clean Energy Center||22052|
|Commercial-Scale Ground-Source Heat Pump Rebate Program||State||Rebate Program||Massachusetts Clean Energy Center||22053|
|Commercial-Scale Ground-Source Heat Pump Grant Program||State||Grant Program||Massachusetts Clean Energy Center||22054|
|Solar Massachusetts Renewable Target (SMART) Program||State||Performance-Based Incentive||Department of Energy Resources / CLEAResult||22111|
|Energy Storage Target||State||Energy Storage Target||22113|