Here at SPR we see go over a lot of solar policy. It’s kind of our job, after all. We’ve gone through a lot of states (all of them, in fact), and a whole bunch of cities, summarizing and reviewing how bright an outlook each offers for your residential solar power system and the money that system can save you.
Overall we’ve been pleased by how many cities and states have used legislation to create a friendly environment for your conversion to renewable energy, but Boston and more generally Massachusetts have really set a bar so far as legislation goes. They’ve done so good of a job in fact, that we were inspired to blog about it.
What exactly have legislators here done so well that can be adopt by lawmakers in other states? Simple, really. They were thorough, and they made every little bit count.
Normally a city or state –even the best of them– is missing at least one piece of the puzzle. Maybe the overall RPS targets are a bit low, or the interconnection law is a bit weak … whatever the case may be, we’ve seen few, if any places that hit every single category we grade on. Until Boston and Massachusetts that is. Go check out the Boston page for instance. Go on, take a look. Take a glance at our Boston Solar Summary at the top. See all that green? Green means high scores for green energy policy, and Boston is just brimming with them.
Let’s start with the Renewables Portfolio Standard (“RPS”). A strong RPS is the core of all good renewable energy policy, because it forces utilities and legislators to offer incentives for people to convert to renewable energy sources like your residential solar power system. Massachusetts’ RPS mandates that utilities generate 15% of their energy from renewable resources by 2020. That 15% mark is OK, but it’s far from noteworthy. However, Massachusetts’ RPS also mandates that minimum renewable energy production rise by one percent a year every year after 2020. No cap or end date for that one percent increase is specified. Now that’s something we’ve never seen before. Everywhere else, once even the most ambitious RPS targets are met, it will take the future (and hence uncertain) action of legislators to raise standards. Here the standards will continue to rise, year after year, unless legislators act to stop it. We’re on board with that plan!
On top of that perpetually-growing general RPS, Massachusetts also has a specific mandate for 400 megawatts (“mw”) of solar power by 2020. To put that in perspective, the average residential solar power system comes in at around 5 kilowatts (“kw”). So 400 mw is the equivalent about 80,000 homes switching to solar power. That may not seem like much, but believe us, all of those light bulbs and computers and air conditioners add up.
A strong RPS encourages strong incentives for renewable energy, a point that is well illustrated by both Boston and Massachusetts in general. Massachusetts has had an extensive state rebate program for years. The tiered program has progressively lowered rebates as each of a series of goals for solar power production have been met, but a 5kw system will still bring back about $2,000 ($400/kw) to help cover your costs. And that’s just the money from the state house. Boston is one of the few cities that offers money on top of a state rebate. If you live here you’re eligible for a city rebate equal 1/3 of what they get from the state program. At current levels that means the city will tack on $133/kw, or an extra $665 for a 5kw system.
Let’s keep going. Most places offer either a rebate or a tax credit. Here you get both. On top of the state rebate and the city rebate, when April comes around you’re entitled to take an even thousand off of your tax bill. And while we’re on the topic, you save on taxes a couple of other ways as well. First, you saved 6.25% off the initial cost via a statewide sales tax exemption on solar power equipment. Second, you’re exempt from paying property taxes on the $17,000 increase in your home’s value, a tax break that pays dividends every year for as long as those solar panels are pumping clean power into your home.
In addition to that those property tax savings every year, you’re also going to be generating actual cash by selling Solar Renewable energy Credits (“SRECS”). The local SREC market is strong because the legislature has set both a high floor ($285 + 5% handling fee) for each SREC, as well as a high penalty ($600) for each SREC a utility is short in its SREC goals. Currently we estimate that your 5kw solar power system will generate about $2,000 worth of SRECs in the first year.
Net metering – “A”; interconnection – “A”; Residential Solar Grade – “A”. We could go on, but we do already have a page for that. The point of this blog is to talk a bit about what legislators did here to make solar policy so strong. And what exactly did they do? Well, as you’re seeing by now … a little bit here, a little bit there, a little bit in the corners … and ya know what… ? It all adds up.
Look at that Boston Solar Summary again. None of those numbers really makes you go “wow” – at least on their own. A thousand bucks here, two thousand there. No big deal by themselves. It’s only when you add it all up that it practically leaps off the page and screams “Invest In Solar Power!”.
By building out a number of small contributing pieces, the policy environment for solar policy is as stable as it is strong. We’ve seen too many states that put all of their solar policy eggs in (for instance) one big rebate basket, only to have funding for the program dry up or be removed down the road. If any one piece of solar policy here is removed, heck, if two pieces are removes, Boston is still going to be a real friendly place for solar. That provides some security against changing economic and political environments, and helps ensure that the future here will be plenty bright for solar power.
To sum up the lesson for other cities and states, and their lawmakers. One: be thorough. Don’t compromise on the small stuff, because every single piece matters to people paying the bills. Two: When you’re thorough, you can spread out the incentives into multiple smaller, stabler programs. The state budget gets more flexibility, the solar environment stays friendly, homeowners still get lots of money back. Sounds like everyone wins to us.