Massachusetts Announces Solar Rebate Program

December 17, 2007

Massachusetts Secretary of Energy and Environmental Affairs Ian Bowles has announced a new program to encourage the use of photovoltaic (PV) power by offering rebates that reduce the cost of solar panels and installation. The new program, Commonwealth Solar, is expected to prompt the installation of more than 27 megawatts (MW) of solar power capacity during the next four years. Existing funds, including some from the Massachusetts Division of Energy Resources, will pay for the program.

The program is the first step toward fulfilling Governor Deval Patrick's pledge to increase installed solar power in Massachusetts from the current 4 MW to 250 MW by 2017.

"Putting state government behind solar energy is a key element in growing the clean energy sector of the Massachusetts economy," Patrick said. "Before the world becomes our customer for clean energy technology, we need to become customers ourselves."

Commonwealth Solar will begin taking applications January 23 and will provide cash rebates to owners of commercial, industrial, municipal, and residential property who install solar PV systems. The rebates will defray the cost of solar modules and installation and shorten the payback period of the investment.

Under the plan, those who install solar power over the next four years will be eligible for rebates averaging $3 per watt (W), reducing their costs from roughly $8/W for commercial installations and $9/W for residential installations. Some details of the rebate are still being developed, but commercial customers installing a typical 50-kilowatt (kW) solar power system can expect to reduce their costs by at least 40 percent, achieving payback from reduced electricity costs in six years. With federal tax credits, those customers would receive a return on investment of at least 8.5 percent. Rebates will be higher for installation of Massachusetts-manufactured solar panels.

Residential customers will be eligible for rebates on installation of solar arrays of up to 5 kW, with higher rebates for low-income households and for installing solar products manufactured by Massachusetts companies.

The program also reserves $2 million per year for the first two years for installing solar power on the roofs of school buildings.

The rebates will be financed by existing ratepayer funds for renewable energy, at a cost of $68 million over the next four years. The Massachusetts Technology Collaborative (MTC) will dedicate $10 million per year from the Renewable Energy Trust, representing 40 percent of annual spending. The remaining $28 million will come from the Division of Energy Resources' Alternative Compliance Payment fund, consisting of payments from electricity suppliers that are unable to meet their obligations under the Commonwealth's Renewable Portfolio Standard. That standard requires such suppliers to obtain a minimum percentage of electricity supplies from renewable sources. Currently, that requirement is 1 percent, but it will increase to 4 percent in 2009 and will further increase 1 percent each year thereafter.

Based on experience in California, Japan, and Germany, which shows declining need for public subsidies as the market for solar power grows and costs fall, Commonwealth Solar rebates will decline slightly each year. At the end of the four years, the commonwealth will determine whether a subsidy is still needed to achieve the 2017 goal of 250 MW of installed solar power, and how that need will be met.

For more information, see the governor's December 14 press release. (PDF 171 KB). Download Adobe Reader.

To read more about renewable energy and energy efficiency projects in Massachusetts, see: