Net metering is a solar incentive that allows you to send electricity to the electric grid. When your solar panels produce more electricity than you need, that energy is sent to the grid in exchange for credits. Often your home may be using more energy than you are producing (like at night). During these times when your solar panels are not producing what your house loads are consuming, you pull energy from the grid and use these credits to offset the costs of that energy. The right size solar array will produce enough electricity to match your homes electricity usage for the entire year, eliminating the cost of electricity. Net metering allows for simple interconnection and exchange of energy with the utility.
Contrary to public belief the utility will not send you a check for excess generation with net metering. The credit will continue to accrue over time until it is used or allocated to another account. Properly sizing the array to the homes current and future energy consumption is very important for the greatest financial return.
The federal government provides a solar tax credit, known as the investment tax credit (ITC), that allow homeowners and businesses to deduct a portion of their solar costs from their taxes. Both homeowners and businesses qualify for a federal tax credit equal to 26% to 30% of the cost of their solar installation.
Massachusetts has an income tax credit for installing solar renewable energy systems at the customers primary residence. This credit is 15% of the cost of the PV array, up to a maximum of $1,000.
Further the solar installation is exempt from sales tax and in most municipalities property tax increases.
The SMART program has a block structure that dictates the incentive amount you will receive. As more people install solar panels, a block will fill up towards a predetermined threshold, measured in megawatts of solar panel capacity. Once the threshold is reached, the incentive is reduced for everyone who goes solar after that. Each block is 200 megawatts (MW) of solar installations, and the value of the incentive declines by four percent between each.
Calculating your added incentive amount or how much you will earn through the SMART program will vary between the block you are eligible for, how much solar energy you produce, and the type and size of your solar panel installation.
For solar panel systems that are behind-the-meter (i.e. serving a property’s energy usage directly), this added incentive rate will remain fixed for the duration of the program. Given average production numbers in Massachusetts for an 10 kW system, John will earn approximately $16,800 in revenue from the SMART program over 10 years.
In addition to the baseline incentive amount, the SMART program offers bonuses for particular types of installations. These adders increase the per-kWh incentive for building a solar canopy, using energy storage, building a system on a landfill, and other innovative solar systems.
Unlike the net metering credit, the utility pays the MA SMART program incentive directly to the solar customer on a monthly basis.