When you think of solar panels, New England states like Massachusetts might not spring to mind, but there are some big motivations for residents to install solar panels, particularly the high price of electricity in the state. The Bay State ranks fifth highest in the US, according to Statista, at 28 cents per kilowatt-hour, and some residents saw their electricity bills triple in December 2022.
Read more: Best Solar Panel Installation Companies in Massachusetts
Even though Massachusetts doesn’t make CNET’s list of states with the best incentives for solar panels, the state encourages solar investment through several different programs including a tax credit, rebates and net metering — the practice of paying customers for excess solar energy.
Some Massachusetts solar panel incentives are simple, while others are remarkably complex. We’ll break them down in simple language so you can understand all the financial incentives for solar investment in the state.
Note: The solar incentives listed below are for residential electric customers in Massachusetts. There are different solar incentives for utilities, businesses, schools and other organizations. The incentives for solar panels are current as of March 22, 2024.
Comparing Massachusetts incentives for solar panels
Massachusetts solar incentives
| Massachusetts incentive | Description | Eligibility | Estimated value* |
|---|---|---|---|
| Residential energy tax credit | 15% tax credit back for solar panels up to $1,000 | All Massachusetts residents | $1,000 |
| Solar sales tax exemption | Solar panels and eligible installation equipment are exempt from state’s 6.25% sale tax | All Massachusetts residents | $1,500 |
| Solar property tax exemption | Value of solar installations are exempt from home assessments for property taxes | All Massachusetts residents | $274 per year, depending on local property taxes and increased value of home |
| Solar Massachusetts Renewable Target (SMART) | Monthly incentive payments for solar panels | Customers of Eversource, National Grid and Unitil | Varies widely |
| Municipal Light Plant Solar Program | Rebate for installing solar panels | Local electric customers in Braintree, Georgetown, Middleborough, Norwood, Rowley and Reading | $4,800 to $9,600 |
| ConnectedSolutions Battery Program | Connected inverters use battery power at peak use times in summer | National Grid customers | $2,200 each summer |
| Concord Municipal Light Plant rebate | Local rebate for installing solar panels | Concord utility customers | $3,125 |
| Net metering | Money back for excess solar energy generated | Most Massachusettsans | Variable rates |
| Federal solar tax credit | 30% back on solar panel installations | All Americans | $7,200 |
* Estimated value calculated by using a national average of $24,000 for installing solar panels and 1.14% for average Massachusetts property tax.
Massachusetts state solar tax credits, exemptions, rebates and loan programs
Massachusetts has a state tax credit for solar panel investment and two major statewide solar-panel incentives for customers of the big investor-owned utilities and certain publicly owned local utilities. It also offers both sales tax and property tax exemptions for solar panel installations to all residents.
Massachusetts residential energy tax credit
The Massachusetts residential energy tax credit gives a percentage of the cost of a solar panel installation back to residents at tax time. The credit is worth 15% of the cost of the solar panels up to a maximum of $1,000.
The credit includes both passive and active solar energy systems. Taxpayers can only claim the credit for solar panels installed at their primary residence. To claim the Massachusetts residential energy tax credit, file Schedule EC with your state tax return.
Massachusetts state property tax exemption for solar panels
Solar panels in Massachusetts are exempt from property taxes, which means you won’t pay more even if solar panels increase the value of your home.
Massachusetts average property tax is 1.14%, according to the Tax Foundation. While the value of adding solar panels to a house will vary, the tax break could save Massachusettsans about $274 per year, using an average solar panel installation value of $24,000.
Massachusetts sales tax exemption for solar panels
Massachusetts is one of the 16 states that give sales and property tax exemptions for solar panels. The sales tax exemption for solar panels also applies to wind turbines and heat pumps.
Massachusetts state sales tax is 6.25%, so you’d save $1,500 on an average $24,000 solar panel installation.
Solar Massachusetts Renewable Target (SMART)
One of the broadest incentives for solar panels in Massachusetts is the Solar Massachusetts Renewable Target (SMART), a statewide tariff program that delivers cash incentives directly to customers who install solar panels. It replaced the state’s former solar renewable energy credit (SREC) program in 2018.
The SMART program is available to all customers of Massachusetts’ investor-owned utilities — Eversource, Unitil and National Grid, which encompasses Massachusetts Electric and Nantucket Electric. The original goal of the program was to install 1,600 megawatts of solar, but in 2020 it expanded to target 3,200 megawatts. SMART is a declining incentive, meaning that its value decreases as more participants join the program.
The amount of money customers can receive from the SMART program is calculated by a complicated formula that factors in the size of your solar panel installation, your utility company and your “capacity block.” SMART compensation also includes “adders,” or additional money for low-income customers or for system characteristics like battery storage or panels that move to track the sun.
Massachusetts provides two Excel files that can help calculate your potential SMART payments — a general SMART calculator (XSLX file) and an adder calculator (XLSX file). University of Massachusetts Amherst’s guide to using the SMART calculators is very helpful.
Incentive payments from the SMART program are currently scheduled to last for 10 years after installation of solar panels.
Massachusetts Municipal Light Plant Solar Program
For certain customers of publicly owned local utilities in Massachusetts, the Municipal Light Plant Solar Program can provide a big incentive for installing solar panels.
Customers of eight Massachusetts local utilities — Braintree Electric Light Department, Danvers Georgetown Municipal Light Department, Middleborough Gas & Electric Department, Norwood Municipal Light Department, Reading Municipal Light Plant and Rowley Municipal Lighting Plant — are eligible to receive rebates for installing solar panels.
Rebates range from $0.60 to $1.20 per watt for solar panel installations, up to a specific maximum capacity for each MLP. Applications for the MLP rebate are handled through Energy New England.
Here are the rebates for each of the participating MLPs, with links to the programs.
Participating municipal light plants
National Grid ConnectedSolutions Battery Program
Massachusetts customers of National Grid are eligible for a program that rewards solar customers with battery storage during afternoons in summer months.
ConnectedSolutions contacts inverters of enrolled customers via the internet and shifts them to using stored electricity from batteries at specific peak times of energy use that may arise from 3 p.m. to 8 p.m., June to September.
In return, participants get $275 per kW of electricity performed during those events. ConnectedSolutions says that the events will occur no more than 60 times per year for three hours each time at the longest.
You’ll need to have a qualifying inverter for your solar panel installation to work with ConnectedSolutions. Here are the brands of currently compatible inverters:
- Enphase
- Fortress Power
- Franklin WH
- Generac
- Outback Connected to Sonnen
- Sol-Ark
- SolarEdge
- SunPower
- Tesla
Local solar panel rebates in Massachusetts
Aside from the six local utilities participating in the MLP Solar Rebate, many other municipal utilities in Massachusetts provide rebates for solar panels on their own.
Concord Municipal Light Plant solar panel rebate
Customers of Concord Municipal Light Plant are eligible for a significant rebate for installing solar panels — $625 per kilowatt up to a maximum rebate of $3,125. Residential solar panel installations up to 167 kW are eligible, as are all commercial installations of any size. There is no expiration planned for the Concord solar panel rebate.
Hingham Municipal Light Plant solar panel rebate
South of Boston, the customers of Hingham Municipal Light Plant are also eligible for money back on solar panels. The municipal utility gives $0.60 per watt for solar panel installations up to a maximum of $6,000.
Hudson Light and Power solar panel rebate
For residential solar panel installations up to 25 kW, Hudson Light and Power gives a $1.20-per-watt rebate up to 50% of the total installation cost, at a maximum of $7,500.
Ipswich Municipal Light Department solar panel rebate
Customers of Ipswitch Municipal Light Department with solar panel installations up to 25 kW are also eligible for a rebate — $0.30 per watt up to a maximum of $3,000. To be eligible, solar panels must have an azimuth of 90 to 270 degrees and a maximum 20% reduction in output due to shading.
Littleton Electric Light and Water Department solar panel rebate
The Littleton Electric Light and Water Department provides a considerable rebate for solar panels — $1 per watt up to 50% of the total installation cost. To be eligible, the solar panel installation must be approved for net metering.
North Attleborough Electric Department solar panel rebate
For residential and commercial customers with solar panel installations up to 25 kW, the North Attleborough Electric Department gives $0.60 per watt for the first 5 kW for a maximum $3,000 rebate. The department has pledged a total of $60,000 to fund solar panel rebates in 2023.
Taunton Municipal Lighting Plant solar panel and battery rebates
The Taunton Municipal Lighting Plant offers two different rebates for solar panels and battery storage. Eligible solar panels get $1.50 per watt installed up to a maximum of $4,500. Batteries with capacities of 5 kW or higher get an additional $300.
Wakefield Municipal Gas & Light Department solar panel rebates
Wakefield Municipal Gas & Light Department is another municipal utility that continues to provide customers with a rebate for installing solar panels. The utility gives $0.80 per watt up to 50% of the total installation cost.
Federal solar tax credits and incentives for Massachusetts
The federal tax credit for investment in renewable energy — technically called the residential clean energy credit — is one of the biggest incentives for installing solar panels in Massachusetts or any other state. You can get 30% of your solar panel installation costs back as a tax credit when you file your federal return — a $7,200 value for an average installation costing $24,000.
The solar investment tax credit is nonrefundable, meaning you can’t get more money than you owe in taxes, but there’s no maximum, and you can carry over any extra credit to the next tax year and get it back then. The residential clean energy credit can be claimed by filing IRS Form 5695, which is included in all of the best tax software.
Massachusetts net metering rules for solar energy
Net metering — the practice of compensating owners of solar panels for generating more electricity than they use — is required by law in Massachusetts for the three investor-owned utilities. Section 18.03 of the Code of Massachusetts Regulations for the Department of Public Utilities says, “Each Distribution Company shall provide services to Customers and Host Customers necessary to permit Net Metering, including those related to interconnection, metering, calculation, and billing of Net Metering Credits.”
Many of the municipal utilities also provide some sort of net metering for their customers, but not all. Net metering in Massachusetts is compensated with billing credits that carry over from month to month. There’s no process for paying out credits in cash at the end of the year, as in Florida.
Community solar programs in Massachusetts
Massachusetts is one of the first states to allow community solar projects, starting with its Green Communities Act of 2008, which enabled “neighborhood net metering.” Community solar projects provide solar energy to multiple customers who can’t or don’t want to install solar panels on their own property by letting them purchase or invest in larger, shared solar installations. Whereas rooftop solar is available only to homeowners, both homeowners and renters can participate in community solar.
As of early 2023, Massachusetts has 452 community solar projects producing 725 megawatts of electricity, per Perch Energy. That’s about 17% of the state’s total solar output. Community solar programs in Massachusetts may be administered by a municipal utility, such as Braintree Electric Light Department, or by commercial community solar providers.
Power purchase agreements in Massachusetts
Massachusetts allows solar power purchase agreements (PPAs), which are contracts that let third parties install solar panels on property at no cost to homeowners, for fixed rates of electricity generated. The state’s official guide to solar says that “residential solar PPAs are generally widely available.”
Since you don’t own the solar panels that are installed, you won’t get many of the incentives that go along with installing solar panels, including the Massachusetts and federal tax credits or any potential rebates, but PPAs can be a way to get solar panels on your house without paying for them or maintaining them. You’ll also get a fixed rate for electricity that won’t go up through the years. However, PPAs are tied to property for the length of their contracts — often 20 years — which can make selling a home more difficult.
FAQs
Is going solar worth it in Massachusetts?
Whether solar panels will be a good investment in Massachusetts depends on many factors, including the size of your solar panel installation, the amount of shade on your house, your electrical rates and the amount of electricity you use. It takes about six to 12 years for solar panels to pay for themselves on average.
Do solar panels work in Massachusetts?
Most experts agree that solar panels should work in every US state, and Massachusetts is no exception, despite its cooler New England weather and relatively low number of sunny days. Solar panels are actually more efficient in colder weather and aren’t negatively affected by snow.
A report from the Massachusetts Executive Office of Energy and Environmental Affairs and the Massachusetts Clean Energy Center found that Massachusetts’ level of insolation (available solar radiation) is greater than that of Germany, one of the world’s biggest markets for solar panels.
How do solar tax incentives work?
Incentives for solar panels are designed to encourage homeowners to shift to renewable energy and cushion the financial investment required to do so. These incentives can take the form of tax credits, rebates, tax exemptions, grants, special loans and net metering policies that compensate owners of solar panels for generated excess energy that can be put back into the larger electrical grid.
Some incentives like tax credits and rebates occur once, while others like tax exemptions and net metering can last for many years.
How does the federal solar tax credit work?
The residential clean energy credit — often called the solar investment credit — is a federal tax credit that gives homeowners who install solar panels 30% back of the cost of installation. There’s no limit to the credit, but it is non-refundable — you can’t get more money than you owe in taxes. File IRS Form 5695 with your federal tax return to claim the solar investment credit, or let the best tax software take care of it for you.
What is net metering for solar energy?
Net metering is the term for the process by which utility companies calculate the amount of energy consumed and generated by customers with solar panels and give billing credits or money when the “net” energy used in a month is negative.
Utilities may pay for excess solar energy at their regular retail rate or a percentage of it. They may also compensate for surplus energy at an “avoided cost” rate, or the wholesale price at which the utility purchases electricity itself. Net metering is required by law for all in Massachusetts.
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