For anyone on the fence about purchasing solar, the clock is ticking. Here’s why.
Massachusetts ranks sixth in the nation for the amount of solar electric capacity, with more than 163,000 home installations at the end of 2015. Residential solar has been driven by enticing economic factors including a Federal renewable energy tax credit, net metering (banking the power generated to reduce or zero-out electric bills) AND its related solar renewable energy credit (SREC) market.
But this huge appetite for solar could quickly cool, just when the cost of solar panels has decreased 5% from 2014-2015, signs of climate change are heating up, and more people are exploring impactful ways to go green.
The MA Department of Energy Resources (DOER) launched the state’s first SREC market in 2010. This SREC-I incentive program was designed to enable homeowners who purchased systems to receive payment for every 1,000 kWh of energy generated. The SRECs are then auctioned to utilities needing to meet renewable energy requirements. In recent transactions, SRECs have sold for $430 – $440.
The state launched the SREC-II program in April 2014 to bridge Massachusetts’ goal of installing 1,600 MW of solar capacity by 2020. With the second program, incentives are currently valuedat $270, decreasing at an estimated 5% per year. Homes qualified under both of these programs are granted up to 10 years of SREC production under program rules, speeding the return on investment.
BUT . . . Solar has been so popular that MA is close to hitting the 2020 capacity goal three years early.
Tom MacKenty, Manager of Business Development with SRECTrade, one of the largest SREC transaction and management firms in the industry, explains “The MA DOER is currently working out details for the next solar incentive program, which is expected to begin in the second quarter of 2017.”
So what will the next incentive program look like? The math is trending to be less attractive. Just as those who missed the first program saw lower values, those who miss the second window are almost certain to see a lower ROI.
For example, if the third program sees the same rate of decline, a homeowner with 7.85 kW system that generates an average of 9.4 SRECs each year could see about $7,500 less in incentives (estimated with a starting value of $199; declining 5%/year). That’s a whopping 34% drop in potential state subsidies.
Homeowners on the fence about going solar may opt for panels sooner than later, but what will happen to the important pace of adoption next year and beyond if incentives decline further?
National Grid is leading the fight against solar development citing profitability, yet in 2016 the company posted a net income of $2.59 Billion. Eversource posted a 2015 net profit of $886 Million.
If you are passionate about continuing the progress Massachusetts has made with clean energy production, please contact your state representative to urge renewed economic commitment to residential solar. And if you want to learn more about your home’s solar potential, contact RevoluSun.