Options for Solar Installation
By Marin Goldstein, Outreach and Education Manager
Now is a great time to purchase solar. For the basics on this technology and more, check out this Massachusetts Clean Energy Center website or this online home owner resource. Prices hit their low point in summer of 2014, but are still very reasonably priced. Financing was always a problem for some homeowners who were expected to either pay in full upfront or seek a home equity line from their bank. Today, most solar installers offer financing from various sources, charging 3-7% interest rates on loans that range from 10-20 years. In addition, Mass Clean Energy Center is in the process of offering statewide financing which should be available at sometime this summer. Always, always get several bids (at least three are recommended) on your system so you feel comfortable with the specifics of your installer, their panel system and its warranties, and the financial costs. Our website offers a partial list of local installers.
Of course putting up a solar PV system on your roof has many green and carbon reducing factors, but we all know that the financial aspects of the project are critical to making it viable for most homeowners. While the state project rebate has gone away, there is still federal and state tax credits and the option to sell SRECs on the market for revenue for at least the first 10 years of the system.
The Federal Solar Tax Credit, available until 2016, reduces the project cost by 30% for residential systems. In addition, there is currently up to $1,000 Massachusetts state tax credit as well. However, it is important to note that both of these tax credit only help reduce the cost of the project if the homeowner has a tax liability (meaning you currently pay taxes either through payroll reductions and don’t get it back or at the end of the year) enough to take advantage of these tax credits. While the federal tax credit can be take in parts over 3-5 years, if it can’t be utilized the cost of the system rises drastically.
I offer this generic estimation of a project as an example. On a standard system (~5kW), a homeowner can expect to see the initial price of about $20,000 be reduced by tax credits to about $13,000. Using a loan option of no money down, you can expect a loan payment of about $100 over a 20 year loan. If you factor that you were paying about $60 per month in an electricity bill, this loan simply adds $40 to your month electricity cost. By selling your SRECs, which we’ll cover in a future post as there are several ways to do this with varying revenue, you can expect to make about $750 annually. If you use this revenue to pay for the monthly loan payment, you actually end the year with more money in the bank, with which you can pay down your loan or save for a rainy day. Therefore, currently you may pay $720 annually for electricity, but with solar you could pay as little as $550 and you’d own your own sun powered generating system.
Only in cases where little or none of the tax credit can be used, then we recommend looking at PPA or third-party ownership models to reduce the cost of your electricity. Otherwise, we encourage people to keep it local through ownership and power generation.