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.
Cost of a Solar Install
A graph of falling prices for a typical 6kW PV install in Massachusetts from 2004 to 2018. Figures include design costs. Data from MassCEC.
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.
Just How Much Can I Save With Solar in Massachusetts?
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:
Out-of-Pocket
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.
Solar Loan
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.
Power Purchase Agreement
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.
Other Considerations
Interconnection
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.”
ELECTRICAL CODE
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.
