Middle class families in Massachusetts are just about to say goodbye to the best solar incentives in the country.
You probably know by now that solar energy can save you money right now AND over the long term. Everyone knows that it’s far more environmentally friendly than the usual methods of electricity generation. And most people know that solar systems can make your home less vulnerable to mass power outages.
However, here are some facts about solar that you probably don’t know:
- Incentives for solar upgrades vary by state
- Massachusetts currently has the best solar incentives in the country
- Those incentives will get worse at the end of 2017
- It takes up to 90 days to install solar, so starting before Labor Day is critical
Let’s briefly tackle each of these.
Incentives Vary by State
There are several incentives that make it attractive to upgrade to solar. One is the federal tax credit, which applies nationwide. All the other incentives depend on the state in which you live. Some states are more politically inclined to support green energy than others and some are sunnier than others, making solar more attractive and incentives less necessary to get people on board.
Massachusetts is the Best
If you live here you know that already but it’s especially true when it comes to incentives to go solar. Massachusetts provides a state tax credit of 15% of the cost of installation or $1,000, whichever is less. In practice, that usually means that if you go solar you get $1,000 from the Commonwealth. This is NOT a tax deduction, but a tax credit (i.e., if you don’t owe the state money, they cut you a check). This is just the tip of the iceberg, the real reason MA has the best incentives is related to “SRECs” which we’ll explain below.
Solar Incentives Get Worse Over Time
This is because governments and companies are encouraging people to go solar but once a critical mass of families DO go solar, there’s no need to provide big incentives anymore. In Massachusetts specifically, it’s because of what are called Solar Renewable Energy Certificates or SRECs. This is a complicated subject but we’ll simplify it.
SRECs are similar to owning shares of stock on a solar stock exchange. Homeowners create them by generating solar power on their property and selling the SREC into an exchange.
However, whereas in the real stock market shares go up and down in value, SRECs generally only go down. As more and more homeowners create SRECs, the value of each one declines. This is the big reason that your solar incentives are disappearing.
SRECs effectively pay homeowners a monthly check to generate solar energy on the property. This monthly payment offsets the cost installing the solar panels. As that monthly payment declines, it gets more expensive to upgrade to solar.
The payments don’t tick down a few bucks each month though. When you install solar, you lock in the current payments for 10 years. When they change the SREC program, the payments get lower all of a sudden. This will happen at the end of 2017.
The New England Clean Energy site estimates that the average solar customer will LOSE over $8,000 in incentives by waiting beyond the end of 2017 to install a solar system.
A Solar Installation Takes Time
To qualify for the 2017 incentives, you have to have a solar system INSTALLED by the end of the year. Not all households qualify for a variety of reasons, including that if a critical mass of homes go solar in a particular town, the utility company can halt further installations until they can upgrade the grid capacity, which can take YEARS.
In this sense you are actually competing with your neighbors to install your system first. It takes about 2-3 months to install a system from start to finish, and work on your roof can’t happen if it’s snowing, so the window of opportunity is much smaller than you think.