By Shelley A. Sackett
If it seems that solar panels are suddenly appearing in greater numbers than ever before, it’s because they are.
“We’re definitely seeing a lot more activity,” said Tom Dowd, who has owned North Shore Solar and Wind Power in Beverly for nine years, installing commercial and residential wind systems.
These immediately recognizable rooftop systems harness the sun’s energy and produce electricity. They enhance sustainability, reduce pollution, lower the costs of mitigating global warming, and keep fossil fuel prices lower, according to the International Energy Agency.
They also have a more immediate, less altruistic purpose: they save the average homeowner money.
“What’s really helping are the renewable energy credits,” Dowd said, noting that the average system can be paid off in five to six years. “When you look to sell your house and you have a solar system already installed, the person buying your house gets a free solar system and lower electric bills. That’s a real benefit for the homeowner.”
The typical Massachusetts household paid $875 for electricity last year, according to the Office of Energy and Environmental Affairs. EnergySage, the Massachusetts-based online marketplace, estimates that homeowners whose monthly electric bill is $100 and who purchase and install a rooftop solar system would save almost $36,000 over the next 20 years. Furthermore, the cost of installing a system, after tax credits, rebates and incentives, has dropped 30 percent since 2009.
There are three routes available to consumers wanting to go solar: purchasing panels, leasing the panels and, where available, contracting with a solar farm in your area to buy solar electricity at a discounted rate.
To buy and install the panels for a 5.13-kilowatt-per-hour system, the average household need, costs between $18,000 and $25,000 according to Vikram Aggarwal, EnergySage’s founder and chief executive. After all the current tax credits and rebates, the net cost is closer to $14,000 for a system that will last from 20 to 30 years and pay for itself in fewer than ten years.
In the alternative, for a monthly fee and agreement to a long-term contract, consumers who can’t or don’t wish to make that kind of up front financial investment can lease a solar system from a solar company that will install the panels at no cost and maintain them in return for ownership of the panels and the accompanying tax credits and rebates. The homeowner gets to use the electricity the solar panels produce.
Even apartment and condo dwellers can get in on the solar action by finding a solar electric company that participates in community solar programs. Some municipalities have programs to help their residents. The City of Salem, for example, recently selected ConEdison Solutions as the electricity supplier for its Salem PowerChoice program, its municipal electricity aggregation program that will provide Salem residents and businesses with a cost-effective, transparent electricity supply alternative to National Grid. Ipswich Electric Co., a municipal power plant, has been trying to locate a piece of property where the town could build its own community solar system. The town is also considering contracting with someone to build the solar facility and make it available to the Ipswich community, according to Donald Newell, Ipswich Electric Light Manager.
Massachusetts is a shining star in the national renewable energy arena. In 2014, the state ranked fourth of the top ten solar states in the country. There are currently more than 391 solar companies at work throughout Massachusetts, employing over 9,400 people, according to Solar Energy Industries Association (SEIA). In 2014 alone, $791 million was invested on solar installations in the Commonwealth, an increase of one percent over 2013. There is currently enough solar energy installed in the state to power 140,000 homes.
So why haven’t all homeowners and all municipalities jumped on the solar bandwagon? The answer is complicated and, according to some, political.
Governmental support of solar energy started in earnest in 2005, when the United States established a 30 percent federal tax credit for residential solar-electric installation expenses. In 2008, Massachusetts enacted the Green Communities Act, a cutting-edge legislation intended to make the state a national leader in clean energy technology by boosting energy efficiency and encouraging investment in renewable energy.
Among the incentives Massachusetts mandated were solar tax credits, net metering and solar renewable energy certificates (SRECS), all meant to entice consumers and utility companies to embrace renewable energy. Net metering is the practice of selling the excess solar energy a homeowner generates back to the electric grid for credit on a future electric bill, the biggest long range financial incentive for installing residential solar panels. SRECs are certificates homeowners earn and can sell every time they generate solar energy. Because utilities are mandated to derive a percentage of their electricity from solar and other renewable sources, utilities buy SRECs to fulfill this legal requirement.
In essence, when the sun shines and your solar panels produce more electricity than you consume, you are literally able to save for a rainy (or snowy or cloudy) day.
The 2008 law set a statewide goal to generate 400MW of solar generated electricity by 2017. Massachusetts surpassed that goal four years early, in 2013 and the legislature set a new goal of 1.6GW by 2020. Because solar energy is so popular in Massachusetts, net metering caps do not align with these goals, and the legislature has had to act three more times to raise the net metering caps so that consumers can count on the utilities having to buy back their excess solar-produced electricity. In some utility areas, the 2020 caps are expected to be reached by 2015, according to SEIA.
The problem with this seemingly perfect green scenario is that the federal tax credit is set to expire December 31, 2016 and the future of the state’s net metering policy is anything but settled as the House and Senate lawmakers toil to update the state’s energy laws this session.
Last August, the House passed Governor Baker’s proposed H.B. 3724 (“An Act Relative to a Long-term, Sustainable Solar Industry”), which looks to lift and expand the cap on solar net metering and protect ratepayers, and provide long-term stability to the solar industry. The bill immediately expands the net metering cap by 40 percent for public entities and 50 percent for private entities and empowers the Department of Public Utilities to further raise the cap “when it is in the public interest to do so.”
The biggest boon for those trying to plan for long range projects is the grandfathering of all solar generators already receiving net metering credit for the next twenty years.
The bill now sits in the Joint Committee on Telecommunications, Utilities and Energy, which continues to hear testimony from scores of witnesses on all sides of the issue, from National Grid to Massachusetts Taxpayers Foundation and dozens of renewable energy proponents. Mass Power Forward, a brand-new statewide coalition dedicated to fighting for a just transition to clean energy, advocates modernizing the power grid and empowering “everyday people” to access locally generated power. Among its 90 members are HealthLink, Ipswich Watershed Association, ICARE, GASSP and other local groups.
While House leaders have said they are holding out hope of completing a more comprehensive energy bill before the end of November, most observers are skeptical that will happen.
This uncertainty impacts everyone, from energy consulting firms trying to plan large-scale projects to municipal electric utilities, to large investor-owned utilities, solar panel installers and, of course, the consumer.
According to Donald E. Bowen and Richard E. Waitt, Jr., principals of Beverly’s Meridian Associates, settling the net-metering issue will open the floodgates on large-scale, free-standing solar projects. “There are projects being permitted all over the place. We’ve probably done 900-1,000 MWs of solar projects in Massachusetts. Next year will be the biggest year of all time,” said Waitt.
That the legislature is taking so long to pass a long term energy bill is particularly irritating to Waitt. “I suspect they’re trying to work on a bill that will have some legs and last for a while. This is very disruptive to the solar industry. It is very expensive to get these projects permitted, only to find out you can’t get them built,” he added.
Waitt suspects the power companies have too much say in the matter, needlessly rendering the process political. “In my world, what’s best for the environment, the economy, the country and the world is to put up solar everywhere and stop trying to be political about it,” he said with frustration.
Meridian Associates offers civil engineering, landscape architecture and renewable and sustainability consulting services, and has worked on renewable energy projects in 213 of the 351 cities and towns in Massachusetts. The company was recognized as Greater Boston’s 2012 Small Business of the Year, in part in recognition of “the sustainable practices that we undertake internally and our advocacy for the fight against climate change and the development of large scale renewable energy,” according to Bowen.
The company’s completed renewable energy projects, along with projects currently in the feasibility, design, or construction phase, represent over 75’s of solar power throughout Massachusetts.
Although in his professional life he deals in large-scale projects, Bowen has been a small-scale consumer of solar energy for decades. “I was the first applicant under the buy-back program in Ipswich to file an application for and install a 3 kilowatt system on my home when I lived in Ipswich,” Bowen said, noting that as early as 2009, he was charging his plug-in electric Prius with solar power.
However, when he and his wife Amy wanted to build a net-zero home, they chose Hamilton, which is serviced by National Grid, rather than Ipswich, which has a municipal electric light plant. (A net-zero home produces on site all the renewable energy it consumes.] Bowen chose Hamilton despite the fact that he found dealing with National Grid far more cumbersome and painful than dealing with municipalities. “The opportunity to go net zero or even net surplus in Ipswich was not something that they looked favorably upon,” Bowen said.
The reason goes back to the 2008 Green Communities Act, which did not require that municipal lighting plants contribute to the Massachusetts Renewable Energy Trust. The Trust funds MassCEC grant programs, rebates and other incentives. Because those financial incentives have been available historically to only those communities that contribute to the Trust, residents of towns that chose not to contribute do not qualify to receive the same benefits if they install solar panels as do residents of communities that are served by investor-owned utilities (like Western Massachusetts Electric Company, National Grid or Northeast Utilities) that do contribute to the trust.
Ipswich opted out of contributing to the Trust.
Regionally, the following cities and town are serviced by municipal lighting plants according to the Massachusetts Clean Energy Center: Groveland, Georgetown, Rowley, Middleton, Danvers, Peabody, Lynnfield, Wakefield, Reading, North Reading, Wilmington, Marblehead and Merrimac.
Although Ipswich chose not to participate in the Trust, it does have its own net metering program. According to Ipswich Electric Co. Manager, Newell, the biggest challenge going forward with promoting renewable energy is making up for the lost revenue to the town when residents with solar energy reduce their kilowatt-hour sales by using net metering.
“We need to find a mechanism for making up the portion of revenue that is associated with fixed operating costs,” Newell explained. At the moment, one such possible mechanism is a “Net Metering Recovery Surcharge” which would charge a solar producer a surcharge for their share of the fixed costs involved in operating Ipswich’s network regardless of kilowatt-hour production. “We’re trying to make sure we’re not having customers that don’t have solar subsidizing those who do for some of the costs that they still bring to our system,” he added.
Many of the region’s solar panel installers say that they are busier than ever and that customers seem unaware or unbothered by the fact the state legislature is behind schedule in setting a long-term energy policy.
Nonetheless, Waitt is worried about the energy bill pending in the legislature and the influence the investor-owned utilities may have. “What will happen if we get squeezed again? There are thousands of people in Massachusetts working in the solar industry. Right now we’re one of the top states in the entire country and we just have to find a way to keep it there,” he said.
Federal Tax Credit
The federal Residential Renewable Energy Tax Credit is a personal tax credit of 30 percent of qualified expenditures for a system that serves a dwelling located anywhere in the United States. The credit expires on December 31, 2016.
There is no maximum credit for systems placed in service after 2008 and the home served by the system does not have to be the taxpayer’s principal residence.
Allowable expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year until 2016.
For more information, go to www.energystar.gov/taxcredits
Electricity in a Nutshell
Watts are a measurement of power, describing the rate at which electricity is being used at a specific moment. For example, a 15-watt LED light bulb draws 15 watts of electricity at any moment when turned on.
Watt-hours are a measurement of energy, describing the total amount of electricity used over time. Watt-hours are a combination of how fast the electricity is used (watts) and the length of time it is used (hours). For example, a 15-watt light bulb, which draws 15 watts at any one moment, uses 15 watt-hours of electricity in the course of one hour.
Kilowatts and kilowatt-hours are useful for measuring amounts of electricity used by large appliances and by households. Kilowatt-hours are what show up on your electricity bill, describing how much electricity you have used. One kilowatt (kW) equals 1,000 watts, and one kilowatt-hour (kWh) is one hour of using electricity at a rate of 1,000 watts. New, energy-efficient refrigerators use about 300-400 kilowatt-hours per year. The typical American home uses about 7,200 kilowatt-hours of electricity each year.
Megawatts are used to measure the output of a power plant or the amount of electricity required by an entire city. One megawatt (MW) = 1,000 kilowatts = 1,000,000 watts. For example, a typical coal plant is about 600 MW in size.
Gigawatts measure the capacity of large power plants or of many plants. One gigawatt (GW) = 1,000 megawatts = 1 billion watts. In 2012, the total capacity of U.S. electricity generating plants was approximately 1,100 GW.