This year, the United States hit a big milestone: one million solar installations country-wide, enough to power 5.5 million homes. According to the Solar Energies Industries Association (SEIA), it will only take two more years to double the number of installed solar panels to 2 million annually.
Massachusetts ranks sixth in the country for installed solar capacity, with 1243 megawatts of solar energy installed, according to SEIA. Of this capacity, about 30 percent is residential. According to the Massachusetts Department of Energy Resources, as of October 2016, there have been over 61,000 solar energy projects in the state.
Massachusetts isn’t the type of state many people would expect to rank so highly: the sprawling space and intense sunlight of the southwestern U.S. usually comes to mind first. Massachusetts, however, has several programs in place to incentivize individuals to install personal panels and companies to construct larger-scale plants.
The state’s goal is to install 1600 megawatts by 2020. If construction stays on track, this goal will be achieved by next year. Over 300 megawatts were installed this year.
Why install solar panels?
By installing solar panels, homeowners could cut down on their monthly energy spending. An average residential 3-kilowatt system, says NerdWallet, will produce half the energy the average homeowner uses per month. This means that a $100 energy bill would be cut to $50 – saving homeowners $600 annually.
Other estimates peg savings at a much larger amount: Understand Solar puts the average savings for homeowners over 20 years nationally at $20,080 and in Massachusetts at $13,719. The Boston Globe claims Massachusetts homeowners can save almost $36,000 in energy bills over 20 years.
For those who choose to buy rather than lease, installing a solar panel system adds an average of $15,000 to the value of a home, according to a 2015 study by the U.S. Department of Energy’s Lawrence Berkley Laboratory.
In addition to saving on household energy bills, Massachusetts has a net metering program through which homeowners can export power back to the grid when they produce more electricity than they use. Any excess electricity generated in one month is deducted from the future month’s bill.
Homeowners can also register with the Massachusetts Department of Energy Resources to be able to sell solar renewable energy certificates to electricity suppliers through the Solar Carve-Out Program. Suppliers can buy certificates to meet state-mandated renewable energy targets.
Do you have the right roof?
Solar panels work by taking energy from sunlight and converting it into immediately-usable energy using photovoltaic (PV) cells. When struck by particles of light, or photons, the solar cell in the panel creates an electrical charge. Certain conditions are ideal for this process to maximize energy output.
The direction that your roof is facing is one of the most significant factors in determining the efficiency of your solar panels. South-facing roofs provide maximum efficiency, followed by roofs facing south-east and south-west. Panels are still cost efficient, however, for roofs facing west and east – they’ll produce only 15 percent less electricity than a south-facing solar panel.
Panels also need direct access to sunlight, which may mean cutting down trees that shade your roof and panels can’t be placed somewhere that may be shaded by other buildings.
A solar panel should be positioned at an angle between 30 and 60 degrees for maximum efficiency. This means that, if your roof is flat, you’ll need to buy an angled bracket to mount panels on.
Buy or lease?
If you’re interested in installing solar panels, you have two options: buying them outright, or leasing them from a company.
If you buy a system, you own it and are eligible for federal and state credits on your purchase. According to Energy Sage, installing a solar panel system can cost between $15,000 to $30,000 before rebates and incentives. According to the Boston Globe, in Massachusetts, the average out-of-pocket cost after rebates and incentives are factored in is $14,000.
When you purchase a system outright, you are responsible for maintaining it, although systems usually include warranties and don’t usually accumulate huge repair costs. By purchasing a system, you usually save between 40 and 70 percent of total electricity costs for the life of the system.
If you lease a system, a third party owns and maintains the system, benefits from federal and state tax credits, and leases the system back to the homeowners. In this way, you can install a solar energy system for little or no money down and the solar company maintains the system for you.
Solar leases are generally for 20 to 25 years, after which you can renew your lease or purchase the system at a discounted price. Homeowners pay the solar company a monthly fee and ultimately save between 10 and 30 percent off electricity prices.
The monthly leasing fee depends on multiple factors, including how much energy the household uses, what company the lease is from, location and credit score. In an example provided by HowStuffWorks, a family paying a monthly electricity bill $250 might be charged a $125 monthly leasing fee and have their monthly bill drop to $100, saving them $25 a month.
By and large, leasing is the more popular option. In 2014, 72 percent of residential solar panels were leased from a third party, rather than bought, according to a report from GTM Research. The report predicts, however, that by 2020, the falling cost of the technology will mean that 46 percent of the market will be for owned systems.
Loans and tax savings
In Massachusetts, homeowners looking to buy solar panels are eligible to receive federal and state tax credits.
Homeowners who install solar panels on their property can apply for a tax credit of 15 percent of the cost of the system, or $1,000 – whichever is less. The $1,000 credit limit applies to all renewable energy expenditures made by the owner, so it wouldn’t cover installing both a wind turbine and solar panels, for example.
The U.S. Department of Energy allows taxpayers to claim an income tax credit of 30 percent of qualified expenditures for solar-electric property placed in service before the end of 2019.
Systems placed in service during 2020 qualify for a 26 percent credit and those installed in 2021 qualify for a 22 percent credit. These tax credits can be used for any home in which the taxpayer resides and doesn’t have to be their primary residence and there is no maximum rebate for systems installed after 2008. Expenditures that qualify for the rebate include the equipment itself, labor costs, system installation and wiring to connect to the home.
These tax credits only apply if you’re buying solar panels – the company installing the panels get the tax credits if you’re leasing.
A Donald Trump presidency and Republican-controlled Congress, however, could threaten the federal investment tax credit. Although Trump hasn’t yet mentioned cutting or repealing the credit, The Buffalo News reports, if the Trump administration cut tax credits to 10 percent, the move would slash solar installation demand by 60 percent.
A part from Federal tax incentives, Massachusetts also offers a solar loan program for residents interested in directly owning their solar installations. Solar projects that have received a rebate from the state are not eligible to participate in the program, which generally offers 10-year fixed rate loans between $3,000 and $35,000 to be used for solar installations. Lenders are able to offer loans up to $60,000. For loans closed on or after Oct. 17, 2016, the maximum interest rate for a Mass Solar Loan is 4.75 percent.