As solar energy has gained momentum across the country, New England has proved itself to be among the most favorable regions for its deployment. For the last five years, Massachusetts has led the charge, ranking on the Solar Energy Industry Association’s (SEIA) top 10 solar states list every year. The Bay State’s neighbors to the south have also been gaining ground over the last couple of years, with Connecticut and Rhode Island earning high marks for their clean energy goals and incentive programs which both boast attractive payback periods. In this month’s article, we take a look at the key solar programs in each state.
Massachusetts: Powered by the Solar Carve Out Program and its Solar Renewable Energy Certificates (SRECs) Mass. has been among the most favorable states for solar energy for some time. SRECs are earned for every 1,000 kilowatt hours (kWh) produced by a solar array, and then purchased by the state’s utilities as a means to meet their mandated renewable energy targets. The program has outdone itself every step of the way, with the SREC-I program meeting its 400 MW cap in 2013, only a third of the way through the envisioned lifespan of 2020. The new program (SREC-II) was then introduced to support installations up to a 1600 MW cap, targeting 2020, but similar to SREC-I, the cap was met before expected in 2016.
It has been challenging for the state’s legislators to develop a long-term and sustainable solar program, which has led to numerous extensions of the SREC program over the last year (the most recent of which was announced at the end of last month). The final SREC-II extension is slated to be the last, with a program end date of March 31, 2018, with its successor program, the Solar Massachusetts Renewable Target (SMART) Program planned to take effect in early 2018. The SMART program will retire SRECs and move to a more stable feed-in tariff model that will allow system owners to better project their earnings over the life of their system. While the SMART program will offer attractive incentives and stability for potential solar owners, the final extension for SREC-II currently offers the strongest return on investment.
Connecticut: The Constitution State offers a similar incentive for those looking to install solar on their property with their Zero/Low Emission Renewable Energy Credits (ZREC/LREC) programs. Much like Mass., these credits are awarded based on every 1,000 kWh produced by an array, and then sold to utilities looking to meet state mandated renewable energy goals. However, the ZREC program is administered through an annual Request For Proposal (RFP) where each bidder submits a price for which they agree to sell RECs for a 15-year term. Annual RFPs are organized based on system size, with commercial-scale system bids due twice a year – once in mid-June, and again in the fall.
Connecticut also has a net metering policy, issuing credits for excess energy sent back to the grid. In addition, potential solar owners in Conn. can take advantage of sales and property tax exemptions for their solar projects, making the installation of the system more affordable.
Rhode Island: Rhode Island has two distinct solar incentive programs: the Renewable Energy Growth (REG) program, and the Renewable Energy Fund (REF) program.
The REG program places installations in front of the meter, meaning all the energy produced by the array goes straight into the grid. Under REG, solar owners apply into a 20-year feed in tariff (FIT) agreement with their utility and they are compensated for the solar energy produced at a fixed rate. The size of the project determines the rate paid to the owner. Systems built under this program are not eligible for REC’s or net metering.
The REF program is quite different, providing loans and grants to owners to help lessen the initial costs of installing a system. Applications to this program are approved based on the technical and financial feasibility of a project, cost per kWh of energy produced, anticipated amount of renewable energy related benefits (job creation, environmental benefits, etc.), and the experience of the solar provider’s project team. Unlike the REG, this program also allows owners to take full advantage of the state’s net metering policies and RECs.
Similar to Conn. and Mass., R.I. offers Renewable Energy Credits (RECs), and also has a net metering program in place with varying rates and restrictions based on the entity’s eligibility and chosen solar program.
Regional Programs: All three states offer a financing option for renewable energy installations called Commercial Property Assessed Clean Energy (C-PACE) loans. The C-PACE program, administered in partnership with local lenders, helps property owners access affordable financing for renewable energy systems and repay the investment through an additional charge (assessment) along with their property tax bill. C-PACE offers no upfront costs to upgrade a building, 20-year funding, no payoff upon sale, and the ability to share costs and benefits with any tenants a business may have. Mass. passed a bill to allow PACE financing in 2016, but is not yet available as the Department of Energy Resources (DOER) is currently in the process of developing program guidelines.
Federal Incentives: In addition to the various state incentives and financing options available to those looking to go solar in New England, solar array owners are also eligible for the Federal Investment Tax Credit (ITC) - a 30% tax credit for the cost of the solar installation – and are also able to take advantage of accelerated depreciation of the array (85% over 5-years and 50% in the first year).
With the combination of both state and federal incentives, investing in a solar energy solution in Mass., Conn. or R.I. is a bright idea.
An experienced solar developer can walk you through all the incentive programs in each state to help you determine if an investment in solar is right for your business.
Craig Huntley is founder and chief development officer at Solect Energy of Hopkinton, Mass.