The state of Massachusetts has some very pro-solar incentives for businesses that make the switch to clean, renewable solar energy. In this blog we take a quick look at a few of the programs available.
Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. Like most states in the United States, Massachusetts offers a net metering program for businesses that install solar energy systems up to certain size limits, and can generate excess energy which is sent back to the power grid in exchange for a utility credit. Those credits can then offset grid-supplied electricity costs during the night and other off-peak production times.
Federal tax incentives
The investment tax credit or ITC is an upfront credit that reduces your income tax liability for a portion of the cost (starting at 30 percent) of the installation of your solar system within the tax year it’s installed. The Inflation Reduction Act (IRA) passed by Congress in August of 2022 positively impacted the ITC by extending the program through 2032.
Modified Accelerated Cost-Recovery System (MACRS) – 100 percent Depreciation
The Modified Accelerated Cost Recovery System allows businesses to recover some of their commercial solar installation costs through annual tax deductions using depreciation. The MACRS can significantly increase your commercial solar systems’ ROI. The MACRS allows businesses the choice of either a 100 percent first-year depreciation or a 5-year scheduled depreciation.
Renewable energy credits
SRECS (Solar renewable energy certificates) are a solar incentive that allow owners of solar systems to monetize their solar electricity generation. They earn one SREC for every megawatt hour or 1,000 kilowatt hours of electricity their facilities generate. These exist because of state requirements called Renewable Energy Portfolio Standards (RPS) that require utility companies to produce a specific percentage of their electricity from renewable sources, and as a result, they need to purchase these SRECS to meet the requirement. One important note is SRECS are not related to Net Metering and are based only on your solar system’s generation and are measured separately.
Specifically for Massachusetts, the Massachusetts Renewable Energy Portfolio Standard (RPS) was implemented to help reach its goal of 80 percent carbon-free by 2050. Owners of a qualifying system can apply for a Class 1 REC and earn credit for the electricity production consumed on-site or delivered to the grid, as well as the positive environmental attributes associated with that production.