Ownership ROI
Solar ownership today is very affordable! Incentives at the federal, state and local level enable customers to reduce the cost of going solar by as much as 50%. Often, payback can be achieved in 5 years for an asset that can produce for 25 years. Typically, the financial analysis involves a mix of government subsidies, Solar Renewable Energy Certificates (SREC) and Net Metering.
- Government Subsidies
- Solar Renewable Energy Certificates (SRECs)
- Net Metering
- Owner Financed Benefits
Government Subsidies
The government refunds part of the cost of installation of the system (federal and state tax incentives)
With government subsidies, the financial burden is decreased as federal tax credits and accelerated depreciation methods bring down the costs of solar installation, helping to achieve grid parity in overall expenses. Current incentives at the federal level are:
- A 30% Income Tax Credit (ITC) of the system price for newly deployed systems through 2016.
- For 2010, the ITC can be converted into a cash grant upon deployment of the system.
- A five (5) year accelerated depreciation incentive (MACRS) to help further business investment.
Solar Renewable Energy Certificates (SRECs)
In Massachusetts, the Green Communities Act of 2008 created a Renewable Portfolio Standard (RPS) requiring utilities in the state to generate at least 15% of all electric generation from renewable sources by 2020. This mandate resulted in the development of a Solar Renewable Energy Credit (SREC) market launched in 2010. An SREC is a tradable commodity created for every 1000 kWh's of electricity produced. SREC's are available to be purchased by the State's utilities to satisfy their mandated Renewable Portfolio Standard (RPS). Values are determined by fundamental supply and demand dynamics in the marketplace, ranging from $300 to $600 per Certificate.
Net Metering
Another economic benefit permitted in Massachusetts is Net Metering, defined as a method of crediting customers for electricity generated via on-site solar PV systems in excess of their electricity consumption. Building owners with their own solar generation capability offset the electricity they would have purchased from the utility. When these building owners generate more than they use in a billing period, their electric meter turns backwards to indicate their net excess generation. In Massachusetts, net metered electricity is credited at the full retail generation cost.
Owner Financed Benefits
- Financial Incentives:
- Federal Income Tax Credit (30%)
- Income Tax Deductions - accelerated depreciation, interest expense
- MA Solar Renewable Energy Certificates (SREC)
- Average Payback 5-7 years
- Visibility and Predictability of Future Electricity Costs
- Net Metering Revenue
- Green Marketing Benefits
- Reduction in Greenhouse Gas Emissions
- Energy Independence
