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Why NOW is the Time to Go Solar in Massachusetts

Posted: Thursday, 8/10/17 @ 3pm EST
Updated: Thursday 4/5/18 @ 10am EST

I’ve written several separate blog posts about solar incentives a customer receives in Massachusetts, but never a single blog post that explains them all at the same time.  With Solar Renewable Energy Credits (SRECs) ending in Massachusetts in 2018, I thought it was important to do a combined post and explain why NOW is the time to go solar.  Once SRECs go away, there’s no getting them back.  For more information on the new incentive program, read here. 

DISCLAIMER: As with other blog posts that discuss solar tax credits, you should ALWAYS consult your tax professional for your specific situation. We do not assume responsibility for your tax situation or credits.
 

The Federal Tax Credit

While we know President Trump is more of a coal guy than a renewables guy like his predecessor, luckily, he hasn’t mentioned anything to date about cutting the 30% federal tax credit.  Zip, zilch, nada, nothing (thankfully). This tax credit, if you’re eligible for it, is a dollar for dollar credit.  As an example, if you paid $30,000 for your solar system, you will receive a $9,000 tax credit.  It’s that simple, and that fantastic.  So, right off the bat, when you’re looking at solar, remember you’ll receive a 30% tax credit back.  Think of it as a “discount” off your system from the federal government. Thanks, Uncle Sam!

It’s important to note that this 30% tax credit will not last forever, especially for home owners.  In December 2015, the Solar Investment Tax Credit (ITC), which was set to expire on January 1, 2016, was extended through 2022 via a ‘step down’ program.  This is what the program looks like:

  • Now through December 31, 2019: 30% of the cost of the system for new residential & commercial customers.
  • January 1 through December 31, 2020: 26% of the cost of the system for new residential & commercial customers.
  • January 1 through December 31, 2021: 22% of the cost of the system for new residential & commercial customers.
  • 2022 onwards: 10% of the cost of the system for new commercial customers ONLY. 0% for new residential customers.

The good news is, for the federal tax credit, home owners have until December 31, 2021; but this is just 1 piece of the solar credit puzzle.  Read on to learn about the Massachusetts state tax credit and Solar Renewable Energy Credits (SRECs – expected to end in June 2018).

For the solar geek in you, if you’d like to read more about this, the Solar Energy Industries Association’s fact sheet goes over the details of the program from beginning (2005) to end (2022).

I also wrote a blog post in April that discusses this tax credit, filing taxes and provides an example of what tax credits may look like for a $25,000 solar installation.

The Massachusetts State Tax Credit

The Massachusetts state tax credit is simple. This is called the Residential Energy Credit and is applicable for any home owner that installs solar.  This tax credit is 15% of the total system cost or $1,000, whichever is less.  For most installations, the tax credit is $1,000. When a person files their taxes, they have to send in a copy of their final invoice and schedule EC (this link takes you to the 2016 form for reference; when filing your 2017 taxes, make sure you use the most up to date form).  This tax credit has been in place since 1998 and thus far, hasn’t been on the chopping block.

You can refer to the Massachusetts Department of Revenue page for more detailed info on this credit.  And remember, as we always state with any tax credit blog posts: you should ALWAYS consult your tax professional for your specific situation. We do not assume responsibility for your tax situation or credits.

Again, the blog post I wrote earlier this year on filing taxes may also provide additional information including an example of what tax credits may look like for a $25,000 solar installation.

Solar Renewable Energy Credits (SRECs)

In February, when the bright sun of the summer months wasn’t shining yet, I wrote the following in a post called “What are these SRECs I keep hearing everyone talk about?”

Solar Renewable Energy Credits (SRECs) are certificates earned by producing solar energy. These can be bought and sold on a renewable energy market, kind of like the stock market or a commodity, with values subject to the usual supply-and-demand pressures of a marketplace. The SRECs you hold are directly proportional to how much solar power you generate. Specifically, for home owners, every 1,250 kWh generated, and for businesses between 1,429 and 1,818 kWh (our chart below explains more) you will earn one SREC. This translates into about $150-$270 of income for every SREC generated. These SRECs are guaranteed to be paid out every quarter for the next 10 years once your solar system is installed. If the market drives up the price of SRECs beyond the price of non-renewable energy, then you’ll earn more money selling solar than the savings you’re getting on your electric bill!

When you decide to go solar, you don’t have to worry about setting up a SREC account like you would a 401K.  Boston Solar takes care of all the paperwork and walks you through the entire process.  It’s really simple because Boston Solar makes it simple for customers! You usually receive your first SREC payment 2 full quarters after turning on your solar system.  For example, if you have a solar system installed in December, you’ll receive your first SREC payment in July.

If you have read other Boston Solar blog posts, you’ll remember that I had solar installed in December 2016.  I just received our first SREC check for December through March.  I had 2.5 SRECs accrued and received ~$256 per SREC for 2 SRECs (~$512 total).  The additional 0.5 will carry over to my next SREC payment in October and also include the SRECs accrued during April, May and June.  My solar system is 6.5kW and I expect that I’ll receive 8-12 SRECs this year.


 

Net Metering

And last, but not least, net metering.  Net what now? (The text below is taken from our blog post in April “What is solar energy net metering and why is it important for installing solar panels?”)

The Solar Energy Industries Association (SEIA) explains net metering as:
“a billing mechanism that credits solar energy system owners for the electricity they add to the grid. For example, if a residential customer has a PV system on the home’s rooftop, it may generate more electricity than the home uses during daylight hours. If the home is net-metered, the electricity meter will run backwards to provide a credit against what electricity is consumed at night or other periods where the home’s electricity use exceeds the system’s output. Customers are only billed for their “net” energy use. On average, only 20-40% of a solar energy system’s output ever goes into the grid. Exported solar electricity serves nearby customers’ loads.”

Here’s how net metering works:

Basically, when you have a solar system installed, the electric company installs a meter that can “tick backwards” allowing you to “store” the excess energy you produce for use during non-sunlight hours.  Many solar panel system owners are at work during the day when a solar system typically produces the most energy.  While you may not be using that energy, your utility lets you use it later in the day or at night.  If you produce more energy than you use in a month, you’ll see that your total usage is negative and you’ll have a ‘negative bill’ (read more about what your electric bill can look like after solar is installed here).  Utilities determine this by taking the current reading and subtracting the previous reading for a total usage calculation.

Net metering is a very important factor to consider when going solar.  If net metering doesn’t exist (it is available in Massachusetts, except some municipalities – please check your municipal utility company to see if they allow net metering, or we can do this for you), then the excess energy isn’t accepted by the utility and you won’t be able to use the additional energy you produced.  However, this shouldn’t detract you from going solar, but it should be considered when determining how big your solar system should be.  If there is no net metering, then you wouldn’t want a system that produces more than your average monthly electric usage.
 

Go Solar NOW!

Have we convinced you to go solar yet?  Between tax credits, quarterly SREC payments (that again, will end in June 2018), net metering, and a $0 electric bill, payback is usually between 4-7 years.  You can’t get that type of ROI from your 401K.  Remember, Boston Solar is guaranteeing installations under SRECs – but it could change any day!  Not only that, but Boston Solar offers a 10-year comprehensive warranty and 25-year product warranties.

To learn more or set up your free, no-obligation solar consultation, fill out the form on this page.

If we haven’t yet convinced you to go solar, stay tuned for our next blog post that will feature customers discussing why they went solar and the financial benefits they’re seeing!
 

Questions? Contact:
Natalie Holtgrefe
Director of Marketing at Boston Solar
natalie.holtgrefe@bostonsolar.us
617-858-1645
 

DISCLAIMER: As with other blog posts that discuss solar tax credits, you should ALWAYS consult your tax professional for your specific situation. We do not assume responsibility for your tax situation or credits.