Rhode Island Home Solar Incentives. If you own your home solar system, you may be eligible for a federal tax credit. 2 You may also qualify for property tax exceptions and other state and local incentives. 1 We recommend you speak with a qualified tax professional before going solar.Reading Time: 3minutes
If you’ve been shopping around for a solar panel system, you’ve probably heard at least one company advertise ‘free solar panels’ – that they will install a solar energy system on your roof for free. But, much as with anything, remember that there is no such thing as a free lunch (or a free solar panel).
What do companies mean when they say free solar panels?
- Solar Panel Installations in Rhode Island The utility sector saw the first major solar panel installations in the state of Rhode Island starting in 2013. However, it wasn’t until 2017 that the state saw significant commercial and residential solar capacity being installed.
- The cost to install solar panels will depend on multiple factors, including your location, the type of equipment you choose, the size of the system, how you finance the system, and your installer. Fortunately, there are $0-down options available for installing solar.
Decoding the sales pitch: The term ‘free solar panels’ is sometimes used to advertise solar lease or solar power purchase agreements (PPAs). Under both types of arrangements, a company will put solar panels on your roof for no money up-front but will charge you for the electricity that they produce. Most offers will save you money but not all of them, so make sure you’ve thoroughly compared all your options. Also consider buying the solar panels or financing them with a zero-down solar loan.
So what do a company’s marketers and salespeople mean when they say ‘free solar panels’? Usually, they are referring to solar leases and power purchase agreements (PPA’s). Under these solar financing arrangements, a solar company will put a solar system on your roof at no up-front cost to you. This sounds great – you get to say that your home is powered by clean energy, and can even point to the solar panels on your roof to prove it.
But the reality is that you do not technically own the system, and the solar energy the panels produce is not free. Under solar lease agreements, ownership is retained by the solar company, and you pay for the electricity it produces. In essence, the company has built a small power plant on your roof and is selling you the electricity.
Will free solar panels save you money?
You may have various reasons for going solar. If you’re like most people, saving money, eliminating your utility bills and/or reducing your carbon footprint are probably at the top. The environmental benefits of going solar are more or less the same regardless of who installs your system, so it’s key to focus on the financial benefits.
Regardless of its ‘do-good’ image, the solar industry is an industry like any other: the companies offering products are looking to turn a profit. Providers of solar leases make their money by selling you electricity, usually at a lower rate than what you pay your utility.
Although companies like SolarCity once dominated the market for solar leases, countless other players have since entered the space and begun competing with each other. Some solar leases will save you more money than others. You as a solar shopper can now take your pick of company based on the attractiveness of their offering. So even if financial gain is secondary to environmental considerations for you, you should still shop around to make sure you’re getting the best deal.
Interested in learning about your local solar options? By shopping on the EnergySage Solar Marketplace you can compare not only solar lease options, but also purchase and solar loan options. Sign up today to get quotes from solar installers in your area.
Looking for free solar panels? Try financing your system with a solar loan instead
The revolutionary thing about solar leases was that they made it possible for virtually anyone with a roof to go solar, regardless of whether they had cash in the bank to purchase a system. Solar leases were crucial in removing barriers to entry back when solar system prices were prohibitively high.
But times have changed substantially since solar leases were introduced. Solar systems are now more affordable than ever, and that financing options other than solar leases have become viable. The most important of these is the solar loan, which combines the ‘zero-down’ aspect of the solar lease with the benefits of system ownership (‘the best of both worlds‘).
The falling cost of solar
So before you sign up for the first ‘free solar panel’ deal that comes your way, make sure you understand what you’re being offered and that you’ve considered all of your other options. In other words, be a smart solar shopper.
Rhode Island’s Renewable Energy Growth (RE Growth) Program is a performance-based incentive (PBI) that offers financial benefits to National Grid customers who install solar on their home. PBIs pay owners of solar energy systems for the electricity produced by their system. PBIs help system owners recover the costs of installing a solar energy system and earn an attractive return.
Renewable Energy Growth program for residential customers
For residential customers, the PBIs take the form of a bill credit and a cash payment, and is based on the number of kilowatt-hours (kWhs) generated by the solar energy system in a given month.
The value of the PBI paid per kWh in any given month is the same, but the total PBI value varies given variability in the monthly energy production of the solar system. The PBI rate per kWh is set in the Certificate of Eligibility that a customer receives from National Grid upon approval of their application to RE Growth. This PBI rate does not change over the life of the tariff term (15 or 20 years).
How to calculate your total RE Growth PBI benefit
To calculate the total PBI benefit each month, simply multiply the PBI tier rate by the amount of solar energy produced in a given month (in kWh). This total PBI value is then divided into a bill credit and a cash payment to customers. The bill credit is determined by multiplying the solar energy produced in a given month by several of the volume-based rates that a customer is charged on their regular utility bill. The difference between the total PBI value in a month and the Bill Credit will be the amount that a customer receives as a cash payment from National Grid. Learn more about how this is calculated.
RE Growth’s dual benefit
This dual benefit of credit and payment is granted to National Grid customers every month for 15 or 20 years, depending on the term of the tariff the customer chooses. At the end of the tariff period, customers become eligible for net-metering, if applicable, where excess solar energy production (in kWh) is credited on their electricity bill against the total amount consumed each month.
How do the RE Growth PBI calculations work?
There are three calculations to consider when estimating solar earnings in the RE Growth program:
This is calculated by multiplying the total kWh of solar energy production in a given month by the customer’s PBI rate.
This is a slightly more complicated calculation. To keep it simple, it is most of the volume-based (non-fixed) generation and energy supply rates on a customer bill, multiplied by the solar energy production in kWh for that period. It does not include the energy efficiency program charge or the renewable energy distribution charge.
Are There Free Solar System Installations I Right
Customers are given a cash incentive if there is a excess PBI credit after the bill credit has already been applied. The cash payment that comes in the mail each month can be calculated by subtracting the Bill Credit from the Total PBI amount. The remaining cash payment is considered taxable income – customers should consult a tax advisor for assistance in better understanding the tax requirements associated with receiving this payment.