Incentives, Ownership Options, and Financing

Incentives

Solar Massachusetts Renewable Target (SMART):

Since its launch in November 2018, SMART has been the primary incentive program for solar electric projects in areas served by National Grid, Eversource, and Unitil. When your system is approved for participation, you can receive incentive payments for 10 years, based on both energy value and the program funding block that’s open when you apply.

You can use the Value of Energy workbook on the SMART administrator’s website to estimate your annual incentive payment. One of the inputs for the workbook is the capacity block that your solar electric system will be assigned to. Consult the table titled “SMART Solar Block Status Update – Expanded Capacity” on this page of updates about the SMART program to find the current block number for your utility. As shown in the Value of Energy workbook, you may also receive extra incentives for including battery storage or for qualifying with a low-income utility rate code.

It’s important to note that SMART incentive rates have been decreasing in certain utility territories. For customers receiving low incentive payments due to higher electricity rates and the changing SMART program structure, the Department of Energy Resources (DOER) suggests considering participation in the Renewable Energy Portfolio (RPS) market.

Residents of towns with a Municipal Light Plant (MLP) are unable to participate in SMART. Check if your utility offers a separate incentive.

Massachusetts Personal Income Tax Credit

For most homeowners installing new residential solar electric systems at their primary residence in Massachusetts, a state personal income tax credit is available. This credit covers 15% of the total solar electric system cost, up to a maximum of $1,000 (830 CMR 62.6.1: Residential Energy Credit).

Massachusetts Sales Tax Exemption

Usually, equipment purchased for a residential solar electric system in Massachusetts is exempt from state sales tax (M.G.L. c. 64H, sec. 6(dd)).

Massachusetts Property Tax Exemption

You might qualify for a property tax exemption based on the value added by your solar energy system. To explore this, discuss with your installer and the local tax assessor’s office (M.G.L. ch. 59 § 5 (45, 45A)).

Federal Tax Credit

Most homeowners with new residential solar electric systems can benefit from the Federal Residential Renewable Energy Tax Credit, covering 30% of total system costs.

When considering installing a solar electric system, talk to your installer and tax advisor regarding your eligibility for rebates, incentives, and tax credits.

Ownership and Financing Options

	Direct ownership	Third party ownership
Description	You own the system	A third-party company owns and operates the solar electric system, offering you benefits with little or no upfront costs. You could opt for a solar lease or a power purchase agreement (PPA)
Are there any upfront costs to the homeowner?	Yes. May pay with cash or use a home equity loan, or other loan	Low or no upfront cost
Ways to finance?	Loans: home equity loans, personal loans, and solar-specific financing products When reviewing loan options, consider factors like: – Interest rates – Fees, including dealer fees and closing costs – Early repayment options – Consequences for missed payments – Whether interest paid is tax deductible – Whether the lender takes a security interest in your home or in the solar installation	Solar Lease: You pay a fixed monthly fee to the solar company that installs and operates the system. You receive generated electricity at no extra cost, often with a guaranteed amount of electricity provided per year. Solar PPA: You buy the electricity your system generates at an agreed kilowatt-per-hour price from the solar company that owns and operates the system. This price is usually lower than standard utility rates. Both leases and PPAs can provide immediate savings with minimal upfront costs. When considering a lease or PPA, carefully review the contract to understand details like contract length, incentives, option to buy, electricity pricing, contract end terms, and implications if you move.
Homeowner’s ongoing financing costs	Loan payments if applicable	Lease: Monthly lease payment PPA: Fixed or escalating rate for purchasing generated power
Who takes advantage of state and federal tax benefits?	Homeowner	Installer or third-party owner
Who receives ongoing production-based incentives (SREC’s or SMART)?	Homeowner	Third-party owner
Impact of solar electric system on property value	Can contribute to the appraised property value	Cannot be part of appraised value of property (according to Fannie Mae guidance)
Responsibility for system electricity production	Homeowner (Installer may provide optional production guarantees)	Third-party owner
Who is responsible for any maintenance and insurance?	Homeowner	Installer or third-party owner
Homeowner’s use of the system	Lifetime of system (20–30 years)	PPA or lease term (15–25 years)