Massachusetts Commercial Solar Incentives
Federal Business Energy Investment Tax Credit
This is a corporate federal tax credit for business property where a taxpayer may claim a credit of 30% on qualified solar electric expenditures through December 31, 2016. There is no cap on this tax credit through the end of 2016. If the federal tax credit exceeds the tax liability, the excess amount may be carried forward to the next taxable year. The excess credit can be carried forward until 2016, but it is undetermined if the unused tax credit can be carried forward after then.
Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation
Under the Modified Accelerated Cost-Recovery System, the federal government allows a 5-year accelerated depreciation for a variety of photovoltaic equipment and systems. Tax legislation, enacted in December 2010, included 100% first-year bonus depreciation for eligible photovoltaic projects placed in service between September 9, 2010 (retroactively) through December 31, 2011.
Renewable Energy Grant
Taxpayers who are eligible for the federal business Investment Tax Credit (ITC) may instead receive a grant from the US Treasury Department in lieu of taking the business ITC. The tax credit or the grant would both be 30% of the qualified solar electric expenditure. Grants are available for eligible solar equipment and systems placed in service in 2009, 2010 or 2011, or placed in service by January 1, 2017 if construction began in 2009, 2010, or 2011.
Commonwealth Solar Rebate
The Commonwealth Solar Rebate is for grid-tied photovoltaic systems for customers participating with specific municipal lighting plant facilities and the following Massachusetts utility companies: Fitchburg Gas and Electric Light (Unitil), National Grid, NSTAR Electric and Western Massachusetts Electric. The base incentive rebate is $0.75 per watt. There is a $.10 per watt adder if the system includes components from a Massachusetts company. The maximum rebate is $0.85 per watt. Only PV projects less than or equal to 10 kilowatts (kW) in capacity are eligible for this incentive, although the rebate amount will be based on the first 5 kW only. Brightstar Solar will take care of the entire rebate process on behalf of our customers.
Property Tax Exemption
Massachusetts provides a 100% property tax exemption for a duration of 20 years on photovoltaic energy systems used to generate electricity.
Solar Renewable Energy Certificate (SREC)
An SREC is a tradeable certificate that represents all the positive environmental attributes of electricity generated from a solar electric system. Each time a solar system generates 1,000 kilowatt hours (1 megawatt hour) of electricity, an SREC is issued which can then be sold or traded separately. In order to qualify for SRECs, projects must be in Massachusetts and must be grid-tied systems under 2 megawatts (DC).
The price of SRECs is established mainly by market availability, although the Department of Energy Resources (DOER) has created some market stability by creating a state Solar Credit Clearinghouse Auction (where prices are fixed at $300/MWh minus a 5% administrative fee), as well as the Solar Alternative Compliance Payment (SACP) for the state RPS (set at $600/MWh for 2010). The Solar Credit Clearinghouse will only be used if or when SREC generators cannot sell their SRECs on the open market; the fixed price of $285/MWh will act as the price floor or the lowest price you will receive for an SREC. The SACP will be the ceiling on the value of SRECs since it will be the per-MWh payment that electricity suppliers must make if they fall short of the SRECs they need to meet their RPS obligation. Solar generators will participate in this program via an “opt-in” agreement, which guarantees participation for a set number of years. In 2010, the “opt-in” arrangement is for 10 years and can be adjusted downward by 2 years annually. There is not a definitive ruling if SREC income is taxable. We recommend you speak to your tax accountant or lawyer for more information on tax implications.
Utility-sponsored Loan and Solar Rebate Programs
There are a few other utility loan and rebate programs that are available for the state of Massachusetts, provided by municipal and utility companies, for photovoltaic systems. Please check the DSIRE website for more information on these programs.
Net metering is open to customers of investor-owned utilities in Massachusetts. Municipal utilities are not mandated to offer net metering, but can do so voluntarily. Net metering allows customers to get credit for the full retail value of the electricity their solar electric system generates. Under this agreement, the customer’s electric meter tracks the surplus electricity generated by the solar electric system and the electricity that the customer consumes. The customer is only billed for the net amount of electricity they use.
OTHER COMMUNITY PROGRAMS
New Generation Energy – Community Solar Lending Program
New Generation Energy is a New England non-profit that offers low-interest loans for the installation of solar electric systems through its Community Solar Lending program. The solar loans are available to small businesses and non-profits in New England with a preference given to those in low and middle income communities. The interest rate is currently 5%, although better terms may be given to those who are awarded grants. Interest rates are subject to change at any time.