Setting The Record Straight

With the recent changes in the political climate, many customers I speak with are uncertain of what to expect from the solar industry in the coming months and years. There are plenty of rumors circulating about the end of solar or the eradication of incentives. We here at Rayah Solar want to help you set the records straight.

First, let me start by saying that the solar industry is as stable as the sun itself, and going solar may be one of the wisest investments you could make. The benefits add up: cost savings from your utility, tax credits, local incentives and rebates,  protecting your roof, added value to your home, and not to mention the undeniable benefits to the planet.

Most of all, it is the incentives that attract the lion’s share of solar seekers.  Over the past several years both the Federal government and the State of Massachusetts have made solar a priority, creating policies and incentives to promote the adoption of solar. . And just look around – it has worked!

Now, let’s take a look at some of the incentives, what they mean to you, and how they may change in the coming years.

Federal Tax Credit:

The Federal Investment Tax Credit (ITC) is an incentive that allows you to take a tax credit of 30% of the total cost of your solar system from your federal taxes. This applies to both residential and commercial systems.  Please note, this is a CREDIT, not a deduction, so this is real money back.  Some details; there is no income cap, nor a system cap on your credit; a $30,000 system get’s a 30% tax credit, a $1,000,000 system gets a 30% tax credit.  Yes, you read that correctly, a $30,000 solar system would give you $9,000 in cool hard cash.

  • What’s Changing? The ITC was originally scheduled to end at the end of 2016, and many people still believe this to be the case. However, Congress has extended this deadline for years to come. This grace period will allow home and business owners to continue to receive the ITC on their Federal Taxes. Please note, after 2018, there will be scheduled decreases in the actual tax percentages.

Solar Renewable Energy Certificate (SREC):

Created in 2010 to help reach its goal of installing 1,600 megawatts of solar by 2020, the State of Massachusetts created the Solar Renewable Energy Certificate (SREC) program. This program allows solar system owners to sell one SREC for each 1,000 kilowatt hours (kWh) that their system produces. In real dollars, that can be between $1,000 to $2,000 per year (for 10 years, as will be explained shortly). There is a lot of confusion around SREC’s but let me quickly try to sum it up:  This program is a Massachusetts program administered by the Department of Energy and Resources (DOER).  The DOER program gives each solar plant (aka your home or business) 10 years of guaranteed SREC’s.  The confusion stems from the dual methods of selling SREC’s.  The first is an annual Clearinghouse Auction administered by the DOER. This is done once a year and there is minimum SREC value published by the DOER yearly. The DOER actually has these values published all the way out to 2026, so it is very transparent. The alternative selling method is done on the open market. There are no minimums or safety nets on the open market (sometimes called the Spot Market).  However, SREC owners have the option to sell on the open market each quarter, and many times, these values are higher than the DOER Clearinghouse values. It’s probably a bit too long winded to explain the intricacies here, but we can easily do it for you and your home.  

  • What’s Changing? The Massachusetts Department of Energy Resources (DOER) sets a capacity limit for how much solar can be installed within the program. Once that cap was hit for SREC-I (the original SREC program) the program was reissued as SREC II.  However, SREC II officially ends on January 7th, 2017. So if you don’t have an installation scheduled, it pretty much too late. But all hope is not lost, the DOER has extended the SREC II program with what we are calling the “Interim SREC II” program.  The values are slightly less than the current program, but really, they are still excellent. Unfortunately, the DOER has announced it will likely retire the SREC program completely in 2017, so it’s really now or never on this one.

Net Metering:

Net metering is one of the biggest draws for solar customers.  Net metering is the one incentive that can be taken advantage of by both purchase and lease customers. Net metering allows you to bank your unused energy with your utility for later use. Think of it as a solar electric bank account.  Solar power that is produced, but not used by your home or business, reflects as a negative balance (yes, real negative dollars) on your electric bill as a credit (because you gave power to their grid instead of taking from it).  That means you can draw from your Net Metering Credit during winter months. In essence, you use your utility company to store your extra power. This is one of the main ways solar helps you save money on your electric bill even if it is not actively producing power.

  • What’s Changing? In part, utility companies like solar because it helps bolster an under supplied grid. But that is pretty much all they like about it.  As more and more of their customers go solar, they lose money (obviously). Therefore, the utilities are fighting tooth and nail to reduce Net Metering ratios. Back in the good old days (just a couple years ago), everybody got 1-to-1 net metering.  Today, there are set tiers for solar systems sizes and things called Net Metering Caps for each tier. In other words, even as a solar professional, I have a hard time keeping up with. Today, larger commercial systems and even not so large residential systems do not get full Net Metering Credits.  And sometimes, like currently in National Grid territory, larger commercial systems are put on a Net Metering waiting list before they can even get approval for installation.  Probably by the time you read this, the Net Metering caps will change again, so all I will say is that solar is like taking a Polaroid picture. What you get when you sign up, is what you get. If offer you 1-to-1 net metering today there is no guarantee it will be there even a couple weeks from now.  But once you are in, it is safe to say you will be grandfathered into that program.

 As someone that loves this industry, I have a couple viewpoints on its constant state of flux. To start, as an industry professional, I can definitely say that solar is not the industry for people that don’t like uncertainty (as you can see, I am not one of those people).  However, the trends are very good for buyers. I admit, we may have passed the precipice of panel costs versus VERY high solar incentives, but I think we are only just past it. Programs such as the Mass Solar Loan, and bank programs like Sungage from DCU, show that the industry is evolving.  Furthermore, there is an ever-growing influx of the financial sector, developing more and more attractive solar leasing and financing options. This is a big game changer from years ago, where cash was King (and Queen, and Joker).

I spoke with a customer recently who was looking to put solar on his home. After speaking briefly, he informed me he needed an appointment as soon as possible. He wanted to speak to someone immediately  Saturday was much too far away. I wondered at his urgency until he explained his profession. As a professional actuary (a person who makes decisions about the safety or risk of financial decisions), he thinks solar is a safe choice with a high return on investment and wanted to make sure he got in on the incentives before they changed. Speaking with him reaffirmed my belief that not only is solar the right decision, it is the right decision to make right now. So, if you have been riding the fence or putting off the call to get more information, STOP. Give us a call today. (617) 564-3159

Want some more information? Check out my sources:

 

Article Written By: Brad – Solar Consultant – Rayah Solar

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