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Solar Energy Part II: Financing Your PV System Project

It may be overwhelming to think of installing a solar energy system in your home, but rest assured that Massachusetts as well as federal credits, incentives, and financing options are available to help homeowners start their projects off on the right foot. In addition, your new photovoltaic (PV) system will be able to help save you money on your electricity bill each year.

You can estimate how much money you’ll save with the new PV system before it is installed by comparing your annual electricity usage to the energy produced by your PV system. While a solar system may not be able to entirely handle your home’s energy usage, it can considerably cut down on your utility needs since you’re storing a lot of power in solar reserves.

While installers will be able to give you an exact quote for how much a PV system will cost you for both the hardware and labor, you can use tools like this Solar Calculator to get an idea how much a project will run. There are several reputable databases where homeowners can find a solar installer including the Northeast Sustainable Energy Association, Solar Energy Business Association of New England, and International Brotherhood of Electrical Workers

When it comes to financing the acquisition and installation of a solar system, there are many options available to offset the seemingly large costs.

  • Federal Investment Tax Credit (ITC): The ITC is a 30% tax credit for solar systems on residential and commercial properties, remaining in effect until December 31, 2016. After this date passes, commercial credit will drop to 10% and residential will drop to zero unless the date is changed by Congress. Under Section 25D, which stipulates guidelines for residential properties, the homeowner applies the credit to his or her income taxes when a solar system is purchased outright and installed for the home. More information on qualifications and specific eligibility can be found through the U.S. Department of Energy.

  • Massachusetts Personal Income Tax Credit: Under the Personal Income Tax Residential Credits, Massachusetts allows an energy credit for expenditures incurred for certain renewable source items to an owner or tenant of a residential property. The property in question must be located in the Commonwealth, the applicant must occupy the premises as their primary residence, and may not be dependent of another taxpayer. The credit allows the lesser of 15% of the project costs or $1,000. When reporting on a tax return, the completed Schedule EC Residential Energy Credit form should be fully completed and included with the return.

  • Net Metering: Net metering is the process that allows customers of select electric companies to generate their own electricity in order to offset their own electricity usage. Whether through solar panels on the home or a wind turbine for a school or bigger building, there are many customers who are eligible for net metering. The installations are connected to a meter that measures the net quantity of electricity that the customer uses, commonly referred to as “retail meter”. The retail meter spins forward when the customer is using electricity from their utility provider and spins backward when the customer generates excess electricity that is thereby exported to the electric grid. This can reduce the amount of electricity a customer needs to buy from the utility company, lowering the electricity bill, and in turn appropriates credits for electricity they generate but do not use. More information can be found through the Massachusetts Energy and Environmental Affairs Department.

  • Mass Solar Loan: A new program, Mass Solar Loan is a partnership between Massachusetts Clean Energy Center (MassCEC) and Massachusetts Department of Energy Resources (DOER) to connect homeowners who want to install solar electric systems with lenders to help finance the project through low interest loans. Though rates and amounts will vary based on the applicant and lender, homeowners can expect an interest rate of 3% or lower, a loan for between $3,000 - $35,000 or potentially higher, and a loan term of up to 10 years if the loan is for $15,000 or more. The program will begin accepting solar loan applications in Summer 2015. Those interested can stay apprised to the program’s progress by signing up for the MassCEC’s Solar Programs email list.

  • Solar Carve Out II: A truly innovative program, Solar Carve Out II is the second of it’s kind in the state of Massachusetts. The system in place allows those who have a solar system to sell earned energy. SRECs, or Solar Renewable Energy Certificates, are designed to hold their value as the supply of solar energy increases. Electric companies buy the SRECs at auction for between $300-500, making homeowners have an income from their solar system of typically over $1,500 a year. It is recommended that homeowners hire an aggregator to manage their SRECs since they may be able to negotiate better prices at auction to get the most money. More information can be found through the Massachusetts Department of Energy and Environmental Affairs.

Of course, there are many things available for homeowners to look into. For a full list and further information, consult DSIRE (Database of State Incentives for Renewables & Efficiency).

Dwell360 is a residential real estate firm based in Newton, Massachusetts, servicing the cities and suburbs of Greater Boston. We are focused on our customers and seek to provide information about energy efficiency and how homeowners can contribute to earth conservation efforts. Search for homes in Massachusetts and then give us a call.

SEIA (Solar Energy Industries Association). Solar Investment Tax Credit (ITC). Retrieved from
Massachusetts Department of Revenue. Residential Property Credits. Retrieved from
Massachusetts Department of Energy and Environmental Affairs. Net Metering Frequently Asked Questions and Answers. Retrieved from
Massachusetts Clean Energy Center. Financing Clean Energy Projects. Retrieved from
Massachusetts Clean Energy Center. Mass Solar Loan. Retrieved from
Massachusetts Clean Energy Center. About Solar Electricity. Retrieved from
Sentinel & Enterprise News. (February 23, 2014). What is Solar Carve Out?. Retrieved from
Massachusetts Department of Energy and Environmental Affairs. Solar Carve-Out II / SREC II. Retrieved from
Student Design and Experimental Learning Center. (July 15, 2009). 09 Solar House Construction - 16 [image]. Retrieved from