Massachusetts Solar Power Rebates, Tax Credits, and Incentives
STATE LEGISLATION
In 1997 a utility restructuring law in Massachusetts, the Renewable Energy Trust was created to promote clean energy in the state. A small charge (about 25 cents a month to an average homeowner or small businesses) creates revenues of about $25 million annually. So far, this has funded the use of solar panels, wind turbines, and other renewable sources which have produced something less than a year’s worth of power for 60,000 homes of average size. Critics claim the trust fund has been less effective than it should be, and there is currently an effort underway by Governor Deval Patrick’s administration and House Speaker Salvatore DiMasi to place the Trust’s management in the hands of a new Department of Clean Energy.
In late November, 2007, the House of Representatives approved state-wide energy initiatives and reform legislation. The Green Communities Act of 2007 provides incentives to individuals, business owners and municipalities to invest in energy-saving technologies and reduce energy consumption. The bill apparently has widespread support from government officials, the business community, and environmental groups. The aforementioned Department of Clean Energy is created under this bill, and will have oversight responsibilities to insure the success of the state’s initiatives to develop clean energy and promote energy conservation and efficiency.
While there may have been some past missteps, Massachusetts seems to be marshalling its forces and resources to more effectively use solar and other renewable energy sources to achieve a greater degree of energy independence. This, plus the sheer number of solar incentive programs which offer rebates, credits, exemptions and loans earn the state a Solar Legislator Score of “Excellent”!
STATE INCENTIVE PROGRAMS, UTILITY REBATES, UTILITY LOANS, and UTILITY INCENTIVES
The Database of State Incentives for Renewables & Efficiency (DSIRE) contains a long list of incentive programs which encourage energy efficiency and alternative energy use in Massachusetts. Listed below are brief descriptions and links to the database which provide detailed information on the each of the state incentives which are applicable to solar energy:
Corporate Deduction
Alternative Energy and Energy Conservation Patent Exemption (Corporate)
Excise Tax Deduction for Solar or Wind-Powered Systems
Corporate Exemption
Excise Tax Exemption for Solar or Wind Powered Systems
Corporate Tax Credit
Corporate Tax Credit for Solar Water Heating Systems
Industry Recruitment/Support
MTC - Business Expansion Initiative
MTC - Sustainable Energy Economic Development (SEED) Initiative
Personal Deduction
Alternative Energy and Energy Conservation Patent Exemption (Personal)
Personal Tax Credit
Renewable Energy State Income Tax Credit
Production Incentive
Mass Energy - Renewable Energy Certificate Incentive
Property Tax Exemption
Renewable Energy Property Tax Exemption
Sales Tax Exemption
Renewable Energy Equipment Sales Tax Exemption
State Grant Program
MTC - Clean Energy Pre-Development Financing Initiative (Grants)
MTC - Large Onsite Renewables Initiative (LORI) Grants
MTC - Massachusetts Green Communities™ Grant
MTC - Matching Grants for Communities
State Loan Program
Boston Community Capital - Energy Advantage Program
MTC - Clean Energy Pre-Development Financing Initiative (Loans)
MTC - Massachusetts Green Communities™ Loan
State Rebate Program
MTC - Small Renewables Initiative Rebate
EXAMPLE RESIDENTIAL SOLAR INSTALLATION
Boston is rich in history. Once home to Benjamin Franklin and Paul Revere during the time of the Revolutionary War, an earlier Colonial Boston had also become famous for its molasses-soaked baked beans. In those days, molasses was a major trade item in the young port city of Boston, being used in the making of both rum and the product that earned the city its nickname of “Bean Town”. The delicacy was actually an invention of the Native Americans in residence when the colonists arrived and, interestingly, is no longer made commercially in Boston.
Boston Edison, a subsidiary of NSTAR, is also a part of the area’s history. The company has been providing electricity since 1886, and currently serves about 1.5 million customers in and around Boston. Electrical rates in Massachusetts are a relatively high 13.44 cents/kWh and average annual usage is 7908 kWh. Since the area’s solar rating is “high”; let’s see how Bostonians fare in the planning of a rooftop photovoltaic system.
Reducing conventional electrical usage by 50% can be accomplished with solar collectors on a roof area of 350 square feet. The midrange cost of equipment and installation will be approximately $31,500 with several offsetting incentives:
- Expected state rebate: $5,670
- State tax credit/deduction: $1,000
- Less income tax on state tax credit: ($280)
- Federal tax credit: $2,000
- Estimated NET cost: $23,110
OK, not bad; but an increased property value and the area’s high electrical rates provide even greater incentives:
- Increase in Property Value: $9,880 to $18,671
- 25-year Utility Savings: $20,729 to $39,173
Plus:
- Greenhouse Gas (CO2) Saved over 25-year system life: 81.0 tons
CONSENSUS
Residents and businesses of Massachusetts and the rest of the New England states are burdened with the highest electrical rates in the country. This has obviously provided an important reason to look for effective energy alternatives. Fortunately, solar power has received a good bit of legislative attention, and Massachusetts’ leadership is encouraged to keep it in focus as they move forward with the Green Communities Act of 2007.
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