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Solar Tax Credits & Incentives

Solar Tax Credits & Incentives

At first blush, the growing success of solar power in Massachusetts seems conflicting. With the perennially harsh winter conditions the state consistently faces, it certainly would seem to have the worst environmental climate for solar power. In fact, on the surface, solar incentives in Massachusetts are quite favorable. But just below the surface, another reality is revealed. The sun's rays, even from the most efficient solar panels, do not contribute sufficiently to meet the energy needs of the entire state.


Solar Tax Credits & Incentives

At first blush, the growing success of solar power in Massachusetts seems conflicting. With the perennially harsh winter conditions the state consistently faces, it certainly would seem to have the worst environmental climate for solar power. In fact, on the surface, solar incentives in Massachusetts are quite favorable. But just below the surface, another reality is revealed. The sun's rays, even from the most efficient solar panels, do not contribute sufficiently to meet the energy needs of the entire state.


It is this disparity between perceived benefits and realities that makes net metering a critical concept in the field of solar incentives. The term net metering refers to the inclusion of a certain percentage of a solar system's electricity generation from non-solar sources. For example, if a home installs a solar hot water heating system, and then connects it to a typical electricity generating unit, that home will be eligible for a credit for its net electricity generation, even though that electricity generating unit may come from a different energy supplier. If the same home were to also connect its hot water heating system to a windmill electricity generating unit, then that home would qualify for a credit for its total energy savings, even though that electricity generating unit may come from the same energy supplier as the hot water system. Basically, when a utility receives a "net" amount of energy from a renewable energy source - such as a windmill or a solar hot water system - the utility company assesses the total number of energy credits a home has generated and attaches a specific value to that number. If the number of those energy credits exceeds the net amount of energy the utility company can buy from the renewable energy provider, then the utility company will pay the provider a certain amount of money for its excess energy consumption.


Although a number of states across the country have formalized the process of aggregating net metering credits, Massachusetts has yet to do so. At the very least, most homes that use electricity have been required to have a metering unit. But there are still many in Massachusetts who are not covered by this requirement. So what constitutes a residential electricity meter? A metering unit is an installed device that draws power from the local power grid and then provides a credit to the homeowner (usually an electric bill).


So just how does a residential electrical meter work? In essence, a meter calculates the amount of electricity a residence uses and then attaches a value to that consumption. The system actually divides the costs of a residence's electricity usage into two parts: an incentive payment and a net metering program (or KW) payment. Incentives are payments that a homeowner receives for the amount they spend on electricity. KW payments are what the homeowner pays to the utility company each month, regardless of the amount of electricity consumed. For the largest portion of homeowners, the incentives in Massachusetts are the same for both programs; for the rest of the population, however, they will all receive varying degrees of incentives depending on their usage.


Now that you know what a residential solar meter is and what incentives come with it, you can more fully understand the smart program. The smart program is one in which a solar installation company gives incentives to residents who use solar energy rather than regular energy sources. This is typically done through a program called net metering. Net metering involves a meter that is installed by a professional solar installation company at a home or business. The customer's meter is linked directly to the company's grid, and the monthly value of the electricity consumed is tracked and recorded by the meter.


When a resident of Massachusetts installs a solar PV system, he or she is given an incentive for having this new system. The incentives vary greatly. For low income families and people with significant income increases, they may receive substantial rebates on the initial installation of their new solar PV system. Even for high income and middle-income families, there are still quite a number of rebates available. Depending on the nature of the installation, you may also qualify for additional rebates from the electric company for making the bulk of your electrical purchases from your new solar PV system.


In addition to receiving rebates for net metering credits, Massachusetts residents can also get tax credit incentives. The rebates are equal to ten percent of the cost of your new solar installations over the life of the system, which is usually a few years. In addition, you will be eligible for up to five additional years of residential incentive payments based on the age of your system when it is purchased. In most cases, you must use the same or a comparable qualified solar installer to register for the rebates.


The incentives and rebates that are available help many customers make a good decision about choosing solar energy as an option for their home. For many customers, it is important to be able to count on a reliable source of renewable energy, especially during these tough economic times. It is good to know that you can count on an income while making minimal solar energy costs reductions. In addition, there are many customers who can count on additional savings on their utility bills as a result of making the switch to solar power. These customers typically benefit by over 100 percent and could potentially save enough money to pay off their installation costs in just a few months.

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