Massachusetts Solar Cost: Tax Credits & Rebates Guide 2023
Key takeaways
- The cost of solar panels in Massachusetts averages between $16,240 and $32,480.
- Many factors determine the total cost of solar for your home, such as energy usage, hardware and soft costs.
- Federal and state incentives help to offset the overall price of solar.
- Powering your home with solar could save you over $31,000 on electricity costs in Massachusetts over time.
Massachusetts solar power
While Massachusetts is not known as one of the sunniest states in the US, it has earned a reputation as one of the top 10 states with the highest monthly energy bills. Increasing electricity rates drives interest in alternative power sources like solar energy.
While electricity rates have increased nearly 15% in the last year, solar prices have decreased 43% in the past decade. The decreasing cost of renewable energy makes solar panels in Massachusetts an attractive, cost-effective and sustainable solution for residents searching to combat rising energy expenses.
Can solar panels save you money?
Cost of solar panels in Massachusetts
Favorable state policies and low electricity usage benefit Massachusetts homeowners when it comes to saving money on solar panels. On average, a 6 kilowatt (kW) solar panel system is sufficient to meet most of your energy needs. The cost of solar in Massachusetts averages $4.06 per watt, translating to a total cost of $24,360 before incentives, according to data from Find Energy.
Comparing these figures to the national average provided by the Lawrence Berkeley National Laboratory can help you understand how costs and sizes vary based on location. The national average total cost of solar is $31,558 for an 8.6 kW solar panel system. Though the price per watt may be more expensive in Massachusetts, you may install a smaller array which will cost less money. The following table breaks down solar panel costs in Massachusetts for various system sizes before incorporating incentives. When deciding on the right solar panel system size, it’s important to consider your energy needs. If your goal is to power your entire home with solar energy, you may need a larger array. However, a smaller size will suffice if your goal is to only cover a portion of your energy needs. You can add more panels in the future.
| System size | Total cost |
|---|---|
| 4 kW | $16,240 |
| 6 kW | $24,360 |
| 8 kW | $32,480 |
How much do solar panels save?
How you pay or finance your solar panels in Massachusetts will impact your overall savings. Buying your solar system outright with cash offers greater long-term savings than financing through a solar loan. Interest and other fees associated with loans increase the overall cost, reducing total solar savings. However, both a cash purchase and a solar loan are incentive-eligible financing options.
Over time, your solar panels will pay for themselves through energy bill savings (the payback period). After the payback period, you can enjoy savings for many years to come. Use the following equation to calculate your payback period.
(Total cost – 30 percent tax credit) ÷ (Average monthly bill x 12 months) = payback period
The average electric bill in Massachusetts is $160.58, making the payback period nearly nine years. Solar panel warranties typically extend 25 years, meaning you could have at least 16 years of pure energy savings. Over the system’s warranted lifetime, you could save more than $31,000 on your energy bills. Though the upfront costs of solar are expensive, these savings prove a worthwhile investment in the long run.
Here’s how we determined the average energy bill savings:
- (160.58 x 12 months x 25 years) – (24,360 – (24,360 x .30)) = 31,122
Breakdown of solar costs
Determining the cost of solar panels is a unique process that varies for each home. Your price will be unique to your location, chosen solar company and equipment. Regardless of these variables, the quote you receive comprises two main components: hardware and soft costs. Hardware costs are the physical components like solar panels, inverters, battery storage and racking equipment. Soft costs include installation labor, permits, inspections and company profits.
The National Renewable Energy Laboratory (NREL) breaks down the component costs for solar panel installation. Each component is factored into your total cost.
- Equipment: Includes hardware components like solar panels, inverters and racking. The cost depends on your chosen solar equipment brands and your solar system size. If you pair your solar panels with battery storage, there will be an additional cost for the battery.
- Labor: Includes any fieldwork such as installation labor, electric work and inspections.
- Overhead: The solar company’s marketing, sales and other organizational costs.
Obtaining quotes from multiple solar companies will help you make an informed decision and find the best company that fits your budget.
The best Massachusetts solar incentives or rebates
Installing solar panels in Massachusetts is an investment. Thanks to tax credits and other incentives, you can significantly offset the total cost of solar. The most substantial savings come from the 30 percent federal tax credit, which could save over $7,300 on the average Massachusetts solar system size. Furthermore, the state provides tax exemptions and an additional tax credit to encourage residents to transition to clean energy sources. The following describes solar incentives in Massachusetts in more detail.
| Program | Description |
|---|---|
| Net Metering | If you are a customer of Eversource, National Grid or Unitil you can receive bill credits by selling excess electricity generated by your solar system to the utility. |
| Residential Clean Energy Credit | From 2022 to 2032, a 30 percent federal tax credit applies to the purchase of solar equipment. This credit will reduce to 26 percent in 2033, 22 percent in 2034 and expire in 2035. |
| Property Tax Exemption | Residential solar panel systems installed to supply heat or other energy are exempt from property taxes. |
| Sales Tax Exemption | Solar energy systems are exempt from sales taxes. Receive the solar and wind energy credit on your next income tax return. |
| Massachusetts Tax Credit | The state provides residents a 15 percent tax credit of up to $1,000 to offset the cost of renewable energy systems. |
Solar Massachusetts Renewable Target (SMART)
SMART is a long-term sustainable solar program in Massachusetts that encourages solar developments throughout the state. The program pays customers of Eversource, National Grid and Unitil a fixed rate per kilowatt-hour (kWh) for their solar generation. Solar projects under 25 kW are eligible for compensation rates between 0.21 cents and 0.31 cents per kWh for 10 years. This stability ensures solar owners can confidently plan their finances while contributing to a wider goal of promoting renewable energy. Check with your utility to determine specific rates and other necessary details to kickstart your participation through the SMART program.
Solar panel financing options
Purchasing your solar panel system outright is the best way to maximize your return on investment. If you do not have the financial means to cover the upfront costs, many alternative payment options are available to make solar power more affordable.
- Personal loans: With options for either fixed or variable payments, personal loans are best for those searching for flexible and streamlined financing.
- FHA, Fannie Mae and Freddie Mac loans: Mortgage loans are easy to qualify for and can be used to finance your home purchase (or renovation) and solar panels at once. Each type has its specific purpose. The FHA 203(k) loan combines financing for home purchases, remodels and repairs, while the Fannie Mae HomeStyle Loan combines mortgages and refinances. The CHOICERenovation mortgage loan by Freddie Mac’s specifically designed for renovations.
- Home equity loan and home equity line of credit (HELOC): These loans offer the advantage of potential tax deductions on interest payments, reducing your overall tax burden. HELOC loans are best for those with a lot of equity in your home.
- Solar lease or power purchase agreement (PPA): If you do not want to purchase solar panels, consider a solar lease or PPA. In both agreements, a solar company owns the panels and you pay a monthly fee to use the generated power — the monthly payment is typically lower than traditional electricity. However, you are not eligible for incentives and the contracts typically extend a lengthy 25 years.
With the availability of various financing options, solar panels in Massachusetts have become an attractive choice for any budget. Loans offer flexibility to pay over time and solar leases or PPAs offer little or no upfront costs. Before committing to any contracts, carefully review interest rates and other terms to ensure they align with your budget and long-term goals. Assessing contracts is worthwhile to reduce the chance of surprises and helps you maximize your solar savings.
Community solar in Massachusetts
If solar panel installation is not viable due to financial constraints or incompatible home conditions, community solar serves as an alternative to reap the benefits of renewable energy. Community solar operates on a subscription-based model where you contribute to developing solar farms and receive credits reducing your monthly energy bills. These programs expand the accessibility of solar savings to individuals like renters, condo owners and homeowners with unsuitable roofs. As community solar projects gain popularity in the US, you can search for available projects in your area.
Solar panels in Massachusetts are more affordable and accessible thanks to a range of financial incentives and payment options. By taking advantage of these opportunities, you can enjoy the benefits of solar in Massachusetts while contributing to a more sustainable future.
