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Massachusetts Solar

Massachusetts is the most populous state in New England and boasts over 109,000 solar system installations across the state. Massachusetts is home to the city of Boston, the tenth largest metropolitan area in the US. Massachusetts state government policies favor solar tax incentives. Its high electricity prices, great rebates and strong tax incentives make Massachusetts a favorable place for businesses and residents to install solar panels and battery systems.

Let’s learn about some of those incentives, the utility policies associated with interconnection and setup, and special solar financing plans for solar panels and battery systems in Massachusetts.

Massachusetts Solar Incentives

Massachusetts provides multiple solar energy rebates and incentives that help to reduce the overall cost of solar systems. Our EnergyPal Advisors can help you navigate all of the solar incentives available in Massachusetts and also apply them to the available solar panel offerings.

In summary:

• Massachusetts offers a 15% credit, up to $1,000, on a solar, solar-battery or battery system. It’s applied to your owed income taxes.
• The SMART program pays you back $0.07 to $0.82 per kWh of solar energy produced for 10 years and provides additional compensation for low-income customers or customers with battery systems.
• Customers in a Massachusetts Municipal Light Plant (MLP) service area can earn a $1.20 per watt rebate, up to 50% of system costs.
• ConnectedSolutions provides a $225 per kW summer incentive and a $50 per kW winter incentive for Eversource and NationalGrid customers who allow their utility company to pull stored energy from their battery during peak-use times.
• No Sales Tax on solar panels, systems and related equipment
• No property tax on any increase in property value from installing solar

Massachusetts Rebates and Tax Breaks

Here are more details about the incentives available in Massachusetts:

• The Massachusetts Residential Energy Credit is the principal solar incentive in the state of Massachusetts. Residential property owners can be reimbursed 15% of the cost of solar panels, solar systems, solar hot-water heaters, etc. The maximum rebate amount is $1,000, and the credit comes off of your income taxes for the year in which you install the equipment.
• The Solar Massachusetts Renewable Target (SMART) program pays you back $0.07 to $0.82 per kWh of solar energy produced for 10 years and provides additional compensation for low-income customers or customers with battery systems. See the chart below to determine your incentive rate.

• Customers in a Massachusetts Municipal Light Plant (MLP) service area can earn a $1.20 per watt rebate, up to 50% of system costs. The maximum system size is 25 kW, and there are some stipulations regarding minimum production requirements.
• ConnectedSolutions provides a $200 per kW summer incentive and a $50 per kW winter incentive for Eversource and NationalGrid customers who allow their utility company to pull stored energy from their battery during peak-use times of 2 p.m. and 7 p.m. The energy pull can last up to 3 hours, and notification is provided.
• The sales and use tax exemption is a tax break where you don’t pay any sales tax on solar panels, systems or related equipment in Massachusetts. 

• The Property Tax Exemption is a tax break where you won’t pay additional property taxes if your property value increases when you add a solar system (and with solar, your property value does go up!).

Other Solar Energy Incentives

The US federal government helps residents and businesses pay for their solar systems. The federal investment tax credit (ITC) allows for a tax deduction of 30% of the cost of a solar system currently. Tax credits can be rolled over if you can’t use the whole credit this year. The ITC cannot be claimed for solar leases or power purchase agreements (PPAs) where the third party financier takes the credits themselves, but that is typically baked into a reduced lease/PPA monthly for you. For the actual US government bill, see 4908 of the HR 133 (It’s a giant file, so watch out!).

If you purchased a $20,000 system, your savings from the federal tax credit would look like this:

$20,000 X 0.26 = $5,200 savings

You also would save an additional $1,000 by taking advantage of the Massachusetts tax credit. So if you spent $20,000 on that system, your cost would go down to $13,800. You can save even more by enrolling in the SMART program.

Utility Policies

Utility policy factors determine what your utility provider pays you for the excess power you produce and what you save on your power bill by reducing electricity usage. Massachusetts gets a medium score for utility policies.

Net Metering and Interconnection Policy

One important policy for solar customers is called Net Metering. Net Metering is a billing mechanism that allows solar customers to push electricity to the grid for credit that can be used later, like at night when your solar panels aren’t generating power. This incentivizes people to go solar, provides clean energy for others to use and prevents waste. Some states have poorer net metering policies than others, meaning that credits may not be able to be rolled over to the next month or year, or that you don’t earn full watt-for-watt credit for your excess energy.

Massachusetts’s Net Metering program is adequate. You are compensated between 60% and 100% of full retail rate for your excess energy, depending on your electricity provider. Credits can be carried over into the next month indefinitely. You can connect a system up to 60 kW in size. The exact details depend on your electricity provider’s policies.

Solar Setup Fees

You must have a bi-directional meter (necessary for Net Metering), which is installed at no cost. There may be a fee for NationalGrid customers who require interconnection modifications.

Electricity Prices

Electricity prices in Massachusetts are on the high end. Usually you don’t want high prices, but with solar, the higher the prices, the more you save, and the more economical a solar system becomes.

According to the US Energy Information Administration, the average total cost of electricity in Massachusetts is $0.221 per kWh for residents. The national average for all states is $0.134 per kWh, ranging from $0.967 to $0.288 per kWh.

Rate Design

Rate designs are comprised of monthly fees and either a flat or tiered rate you pay for electricity. Good rate designs, which save you money when you conserve energy, are tiered and have low fixed monthly fees. Poor rate designs have flat rates and high fixed monthly fees. 

Massachusetts is about average when it comes to the quality of its electricity bill rate design. It has flat rate programs but low fixed fees (around $7 per month).

You still pay fixed monthly fees when you go solar because you are still tied to the grid. Being tied to the grid is a good thing, because otherwise you might not have power at night or if your system stopped working suddenly. Even if you go off of the grid and rely on a battery source, the high cost of the battery would not outweigh the low monthly fee and the savings obtained from a net metering program.

PACE Programs

PACE stands for Property Assessed Clean Energy and is a financing program for solar projects that is tied to the home instead of the homeowner. The residential PACE program is not available in Massachusetts.

Other Energy Financing

Solar systems can be financed by bank loans, solar installer financing, new home mortgages, energy loans and home equity loans or lines of credit. Cash works too. 

Talk to your EnergyPal Advisor about financing solar options in Massachusetts. We regularly source the best deals and terms for our customers.