Are Solar Panels Free in Massachusetts?

If your Facebook feed is anything like mine, you will have seen countless ads scroll by claiming that solar panels are free in Massachusetts or that the government will give you free solar panels in Massachusetts, or even that the federal government will cut you a check for going solar.

These ads are all variations on the same theme that certain disreputable solar companies use to try and get your attention so that you’ll listen to their sales pitch. And if it all seems a little too good to be true, well you’re right. 

No, solar panels are not free in Massachusetts.

I could leave it there and make this one of the shortest blog posts ever, but let’s dig a little deeper and unpack why this myth persists, why these companies keep implying that it’s true, and what incentives are really out there for people who are interested in going solar in Massachusetts.

Debunking the Myth: Are Solar Panels Free in Massachusetts?

The main reason why the myth of free solar panels persists in Massachusetts is because there is just enough of a kernel of truth to it, that people can believe it. 

It is possible, after all, to get solar panels installed without paying any money upfront. It is also possible to swap a $200/month electricity bill for a $150/month bill, again without paying any money upfront. 

But translating those two statements into “free” solar panels is a bit of a leap.

Understanding Solar Incentives

Incentives are either payments, discounts or tax benefits that are designed to soften the cost of doing something that otherwise might not make financial sense. 

For decades, installing solar panels fell into that category. Although most people agreed that going solar was good for the planet, getting people to do so when solar energy was more expensive than traditional power sources was not an easy sell.

So certain solar incentives were brought in at both the federal and state level that were designed to encourage people to go solar. And Massachusetts has traditionally had some of the most generous state incentives anywhere in the country.

Let’s take a look at some of those incentives and see if they can get us anywhere close to “free” solar panels.

Federal Solar Investment Tax Credit (ITC)

The biggest solar incentive available to Massachusetts homeowners isn’t even a Massachusetts one, it’s a federal tax credit, which means it’s available to everyone, whether they live in Massachusetts or not. 

Over the years, the Solar Investment Tax Credit (ITC) has fluctuated between 22% and 30% of the total cost of the system. This fluctuation has long been a challenge for the solar industry since companies found it very difficult to plan ahead when they could not be certain what the ITC would be from one year to the next. 

The Inflation Reduction Act of 2022 set the rate at 30% at least until 2033.

But it’s important to remember that this is a tax credit and not a tax rebate. You’ll need to speak to your own tax professional to see you even qualify for it. (Never take tax advice from a solar rep!)

State-Specific Incentives in Massachusetts

There are three separate tax incentives that Massachusetts offers to homeowners who go solar.

• The Residential Renewable Energy Income Tax Credit works exactly like the federal ITC except that it is for 15% of the value of the system, rather than 30%. And unlike the federal tax credit, it maxes out at $1,000.
• Sales tax in Massachusetts is set at 6.25% but the Home Solar Project Sales Tax Exemption allows eligible purchases of “equipment related directly to any solar system” to be exempt from paying sales tax.
• Property Tax, of course, is assessed based on the value of your property. However, even if the addition of solar panels increases the value of your property, the Massachusetts Solar Property Tax Exemption means that the increase will not affect your home’s assessed value for the purposes of property tax assessment for the first 20 years after you install it.

Besides these three tax incentives, there are additional solar incentives that are not related to taxes.

Massachusetts Net Metering Program

Net metering is the process by which homeowners with solar are compensated for the excess electricity they send back into the grid on those occasions when their system is producing more energy than the house needs. 

Every state in the nation offers net metering but not all net metering programs are created equal. Massachusetts’ net metering program is one of the most generous in the nation, offering a 1-to-1 exchange for every kWh sent back into the grid. Credits can also be carried over indefinitely and even transferred to different properties under certain circumstances. 

Net metering underpins the economics of going solar and the generosity of Massachusetts’ program explains why we have some of the highest solar adoption rates in the country.

Solar Renewable Energy Credits (SRECs)

Although neither of Massachusetts’ two SREC programs are available to new participants any more, I bring them up here because a lot of Massachusetts homeowners have heard of them, often from friends and family members who went solar years ago. 

Until they were replaced by the Massachusetts SMART Program in 2018, SRECs could be earned by Massachusetts homeowners for the solar power they sent back to the grid.

Massachusetts SMART Program

Solar MA Renewable Targets (or SMART Program) is the program that replaced SRECs in November 2018. It works in much the same way, in that homeowners who send excess power back to the grid get compensated for that power with SMART credits.

Incentives Don’t Mean Free Solar Panels

As you can see, there are plenty of incentives for going solar in Massachusetts – both federal and statewide (and even some more that are highly localized). The trouble is, even if you were to combine every incentive out there, there is still no way you could cover the entire cost of going solar.

You would still have to pay something so, no, solar panels are not free in Massachusetts.

Solar With Zero Upfront Cost

All of the incentives outlined above are designed to reward the owners of the solar panels. But what if you could go solar without owning the panels at all? What would happen to those incentives then?

That’s the question Sunrun co-founders Lynn Jurich and Ed Fenster asked back in 2007, when the two Stanford University classmates founded Sunrun on the disruptive business model of “solar as a service”. In other words, allowing homeowners to go solar without having to purchase solar panels.

Enter the solar lease or power purchase agreement (PPA). And this is where the myth of free solar panels started to take hold. 

If you can go solar without having to purchase solar panels, then surely the panels must be free, right? Well, not quite.

You can lease solar panels, where you essentially rent them for a fixed monthly fee for a fixed period of time – just like leasing a car. Or you can sign a power purchase agreement where you neither purchase nor rent the panels, but you do sign a long term agreement to purchase the power they produce at a predetermined rate (usually 20-25 years).

This is what those shady solar ads are referring to when they talk about free solar. But let’s be honest, neither scenario can be accurately described as free.

The Truth About Free Solar Panels

Both the federal and state governments offer lots of incentives that are designed to encourage homeowners to go solar. Among the state incentives, the ones Massachusetts offers are some of the most generous in the country.

If you’re open to going solar and allowing the solar company to claim these incentives, instead of keeping them for yourself, then it’s possible that they (not the government) will offer to install a system on your home at no cost.

But first you would have to agree to purchase the power they produce from the solar company rather than your traditional utility provider. It’s from these monthly payments (plus the incentives that they now claim as owners of the system) that the solar company recoups its investment and makes its profit.

If that system can meet all of your power needs, it’s possible that you won’t have to pay the utility company at all and you’ll just pay the solar company a lesser amount. 

If you use more power than the system can produce in any given month, you may still have to buy some of your power from the utility company, but that will still probably be a far better deal than buying all of your power from the utility company.

Final Thoughts – Are Solar Panels Free in Massachusetts?

Solar Panels are most certainly not free in Massachusetts. In fact, given the high cost of living here, and the fact that labor costs account for a significant portion of the overall price of a solar installation, it’s likely that solar is more expensive here than in many other parts of the country.

But there are plenty of incentives out there that can soften the cost if you purchase your system, and even allow you to get a system installed with no money out of pocket if you choose a lease, loan or PPA. 

But no money out of pocket does not mean free and you should run, not walk away from any company or solar rep who tries to tell you that it is. Going solar is a big decision, and one that you should take only with the support of trusted advisors.

Any company that will try to initiate a relationship with you based on such a willfully misleading premise can not be trusted and does not deserve your business.

If you would like an honest assessment of the best way for you to go solar, feel free to contact us to set up a no pressure, highly informative chat about the various options.

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