Solar Power: Let It Shine

Solar panels have been appearing on rooftops in and around Boston, thanks to a growing interest in renewable energy and attractive incentives that make solar projects affordable for more and more people. Boston Building Resources has been generating solar power since 2008 with a rooftop solar electricity system that has paid for itself fully in utility savings in five years. With today’s attractive financial incentives in place, it’s a great time to make solar power a reality.

Solar electricity

Solar-generated electricity, or photovoltaics (PV), may come to mind first when you think of solar power. PV panels contain silicon, an element whose electrons move around when in contact with sunlight and thus can be channeled for the generation of electricity. Electricity generated by BBR’s PV system is used as it is generated, with any surplus flowing into the electrical grid. If the solar power is not enough to meet demand, power from the grid is pulled in to supplement.

Homes best suited for PV have a south-facing roof area with minimal shading from trees or neighboring structures as well as a newer, structurally sound roof. PV requires a lot of uninterrupted roof space; even a chimney can cast enough of a shadow to impair a system’s efficiency. A solar installer usually can look at online satellite photos to determine a home’s suitability.

Some PV systems are directly owned by the homeowner. In other cases, the PV system is owned by a third party, and the homeowner purchases power from the system located on their property, usually for a reduced rate. In still other cases, the homeowner leases equipment for a monthly fee and then receives all its electricity.

The total cost of a PV system can be formidable ($15,000 to $40,000), but rebates and tax credits can reduce the up-front investment by up to 50 percent—and the cost is recouped over time in electricity savings. With third-party ownership arrangements, there may be no up-front cost at all for the homeowner. The homeowner enjoys lower-cost electricity while the third party benefits from the rebates and tax credits.

Solar hot water

Lesser known than PV, solar hot water (SHW, also known as solar thermal) uses a different technology to preheat the water used for washing dishes and taking showers. Instead of containing silicon, the solar panels circulate liquid glycol, which absorbs the sun’s energy. The heated glycol then flows through a coil in a water tank in the home’s basement, preheating it. If necessary, the water is further heated by conventional means to the desired temperature for household use. (See our member story "Solar Hot Water in Arlington.")

SHW for a residence usually requires only two panels and is less affected by shading than PV. The initial system cost is also less (ranging from $7,500 to $15,000) and can be recouped more quickly. 

Financial incentives

Rebates, administered by the Massachusetts Clean Energy Center, are usually paid directly to the installer to reduce the homeowner’s out-of-pocket expenses. The maximum rebate for residential PV is $4,250 for systems of 1 to 15 kilowatts. For SHW, the base rebate is $2,000 for a 5-kilowatt system, which can be increased through “adders” (for components made in Massachusetts, moderate home value, and moderate income) to as much as $3,500 per building or 25% of total cost.

Tax credits can also reduce the cost of PV and SHW, but taxpayers need to wait until the end of the year to claim them. A federal income tax credit for 30 percent of the project cost is in place through 2016. A Massachusetts personal income tax credit of 15 percent, with a cap of $1,000, is also available.

Zero-interest financing through a HEAT loan from Mass Save can help with SHW systems as well as energy-efficiency home projects such as insulation or boiler upgrades. Homeowners can borrow up to $25,000 interest-free for seven years, subject to credit approval. Because the HEAT loan is only offered once in a lifetime to each customer, it may be worth combining more than one qualifying project in a single loan application. A recent home energy assessment is required before applying for the loan.

Nonprofits in Boston and Cambridge can acquire a PV system through a program called Race to Solar, with options to either purchase the system directly or to purchase the power from a third party with no up-front cost. Sponsored by HEET, the program was designed to increase access to solar power for organizations that are tax-exempt and therefore do not benefit from tax credits.

Ongoing income from SRECs

In addition to long-term energy cost savings, owners of PV systems can generate income by selling Solar Renewable Energy Certificates (SRECs). These are tradable certificates that put a quantifiable value on the environmental benefits of solar power. Owners of solar projects qualified by the Massachusetts Department of Energy Resources can sell their SRECs to others, providing ongoing income in addition to rebates and tax credits.

One SREC is created each time a PV system generates one megawatt hour (1,000 kilowatt hours) of electricity, based on verified meter readings. Each SREC has a unique serial number and is deposited into the owner’s account. The SRECs can be sold to entities such as utilities that need to meet regulatory compliance requirements, or the owner can “retire” the credits to voluntarily support solar power. As a point of reference, BBR’s 10-kilowatt PV system has generated 58 megawatt hours over five years.

Solar PV and SHW installers are familiar with the ins and outs of the rebates and can guide customers through the process. Solar power incentives and options have never been more abundant. Spending some time to find out whether solar is right for your home could pay big dividends over time.

Websites for more information

Mass Clean Energy Center: masscec.com

Database of State Incentives: dsireusa.org

Mass Save HEAT loan: masssave.com/financing

Solar Action Alliance: solaractionalliance.org/

Renew Boston: renewboston.org/residents/solar

Race to Solar: http://www.heetma.org/race-to-solar/overview/

How solar PV works: www.scientificamerican.com/article.cfm?id=how-does-solar-power-work

More about SRECs: srectrade.com

Costs of BBR’s PV system

BBR's solar panels

Initial Cost: $72,060

Rebate: $(34,580)

Net after rebate: $37,480

2008 Federal Tax Credit: $(21,618)

2008 Mass. Tax Credit: $(1,000)

Tax Paid on Rebate: $11,411

Federal Depreciation (2008–2012): $(15,388)

Net Cost: $10,885

Electricity costs saved to date: $10,000+

Because BBR is a business and not a household, and because our PV system was installed in 2008, under a different set of incentives, our costs will not directly mirror those of today’s homeowners.

This post has been updated from an article originally appearing in the Fall 2013 HandsOn newsletter.