Residential Solar Hot Water Rebates and Incentives
Simplified Example Breakdown of Incentives for a 3-Panel System
There are four separate incentives that households can take advantage of:
- The Massachusetts Alternative Energy Certificate program (AEC): $580*
- The 26% federal tax credit: $3120*
- The Massachusetts state tax credit: $1000*
- A 0% interest Heat loan through the MassSave Program
Total incentives for the example 3 panel system: $4,700
*This represents average incentive dollar amounts. Please consult a professional tax adviser to ensure that you are eligible for the tax credits.
EXPLANATION OF INCENTIVE PROGRAMS
Alternative Energy Certificate (AEC) Program
Solar hot water qualifies for the Alternative Energy Certificate (AEC) program run by the Massachusetts Department of Energy Resources (DOER). Unlike rebate programs, certificate programs (like the SREC program for solar electric) are market-based incentives. Under these programs, renewable energy systems earn certificates based on their energy production. You can then earn money by selling those certificates to buyers. The buyers are most often utilities who are required by law to demonstrate that a certain fraction of the energy they generate comes from renewable resources.
Small solar hot water systems (up to 20 panels) will receive their AECs in a single lump sum upon the system's completion. The lump sum will based on 10 years of projected energy generation. For systems greater than 20 panels, monitoring equipment will be installed that will track the energy production of the system, and AECs will be issued accordingly over the course of the following 10 years. The selling of certificates is complex, so it is necessary to have an aggregator (a broker) to sell them. The customer can choose their aggregator from a list on the DOER's website. Different aggregators will have varying levels of service and fees; Spartan Solar can help you choose one. Since certificate programs are market-based solutions, the net dollar value of the incentive will vary depending on what the market will bear. Like the SREC market for solar electric, we fully expect that the AEC market will be a stable one, whereby which, the mechanisms put in place will ensure the value of one AEC stays around $20 before brokerage fees.
While the underlying processes for certificate programs can be complicated, you will not have to deal with them. Spartan Solar and the aggregator will take care of the details, you will only need to fill out one or two short forms. Payments from the program are made on a quarterly basis. The income from AECs may be subject to income tax; please consult a tax professional.
Small solar hot water systems (up to 20 panels) will receive their AECs in a single lump sum upon the system's completion. The lump sum will based on 10 years of projected energy generation. For systems greater than 20 panels, monitoring equipment will be installed that will track the energy production of the system, and AECs will be issued accordingly over the course of the following 10 years. The selling of certificates is complex, so it is necessary to have an aggregator (a broker) to sell them. The customer can choose their aggregator from a list on the DOER's website. Different aggregators will have varying levels of service and fees; Spartan Solar can help you choose one. Since certificate programs are market-based solutions, the net dollar value of the incentive will vary depending on what the market will bear. Like the SREC market for solar electric, we fully expect that the AEC market will be a stable one, whereby which, the mechanisms put in place will ensure the value of one AEC stays around $20 before brokerage fees.
While the underlying processes for certificate programs can be complicated, you will not have to deal with them. Spartan Solar and the aggregator will take care of the details, you will only need to fill out one or two short forms. Payments from the program are made on a quarterly basis. The income from AECs may be subject to income tax; please consult a tax professional.
The Tax Credits and Exemptions
Tax credits are calculated on the total cost of the system before rebates. Unlike tax deductions, tax credits reduce the amount you owe by the total credit value. While it is not required, we encourage you to speak with a tax professional to ensure you are able to capitalize on them.
The 30% federal income tax credit may be used an unlimited number of times and it has no dollar value limit.
The 30% federal income tax credit may be used an unlimited number of times and it has no dollar value limit.
The 15% state income tax credit, which is capped at $1000, is a single use credit. This means that if you already have taken this credit in the past, perhaps because you installed solar electric panels, you may not be able to use it again. See MA Dept. of Revenue form "Schedule EC".
Solar hot water systems are sales tax exempt in Massachusetts.
Massachusetts disallows towns to levy property taxes based on solar installations for 20 years after the installation date.
Massachusetts disallows towns to levy property taxes based on solar installations for 20 years after the installation date.
The MassSave 0% Interest HEAT Loan
A 0% interest loan is available through the Mass-Save HEAT Loan Program. The loan has 7 year terms and up to $25,000 may be borrowed from a participating lender.
The loan does not cover the cost of rebates. In order to gain access to the loan, one must first get a free energy audit completed through the Mass-Save Energy Assessment Program (866) 527-7283. You will request a HEAT Loan Intake Form from your auditor. To apply you need to send: 1) the intake form, 2) our signed contract, and 3) the solar hot water collector SRCC data sheet to a third party reviewing agency called Clear Result. Clear Result will then inform you and the bank that the contract(s) submitted meet the requirements of the HEAT loan program.
The loan does not cover the cost of rebates. In order to gain access to the loan, one must first get a free energy audit completed through the Mass-Save Energy Assessment Program (866) 527-7283. You will request a HEAT Loan Intake Form from your auditor. To apply you need to send: 1) the intake form, 2) our signed contract, and 3) the solar hot water collector SRCC data sheet to a third party reviewing agency called Clear Result. Clear Result will then inform you and the bank that the contract(s) submitted meet the requirements of the HEAT loan program.