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A major solar incentive program is running out of money. Here's how it could affect homeowners

Seagulls sit on solar panels on a roof of a building near the marina on Tuesday, April 4, 2023, in New Bedford, Mass.
Raquel C. Zaldívar/New England News Collaborative
New England News Collaborative
Seagulls sit on solar panels on a roof of a building near the marina on Tuesday, April 4, 2023, in New Bedford, Mass.

Patrick Flanary: A report finds the business of solar has skyrocketed over the last decade or so in Massachusetts. But now a familiar perk associated with solar panels is fading out. CAI's climate and environment reporter Eve Zuckoff has been looking into what this means. Hi, Eve.

Eve Zuckoff: Hi Patrick.

Patrick Flanary: Eve, if you would, walk us through the journey of these government incentives for many years now, and why they've more or less run out for people on the Cape.

Eve Zuckoff: Sure. Well, the Massachusetts SMART program has allowed homeowners to access funds to put solar panels on their roofs that help generate energy and bring down electric bills for the last couple of years. And folks have been able to benefit from a couple thousand dollars worth of payments through SMART. And at the program's inception, there were really strong incentives. Every year, the amount of money available to individual homeowners has gone down. That's by the program's design. In fact, compared to the rest of the state, the Cape has been able to hold on to the money for a while longer. But now the region has reached this point where the state is no longer offering incentives basically at all. So homeowners were maybe getting thousands of dollars for solar through SMART. Now they're getting virtually zero.

Patrick Flanary: Virtually zero. So much has changed, Eve. So the SMART program, as it's called, is expiring. How is this affecting homeowners right now?

Eve Zuckoff: Well, I talked with a solar installer who said that with the best state incentives, the payback period for a solar installation would be, say, five years. At that point, solar customers were completely offsetting the high cost of installation with how much money they make each month to cover their energy bills. Now, the payback period is going to be longer, which could be a difference maker for some homeowners. But state officials said that they have, "no evidence that the pace of installations has slowed as SMART compensation levels have reached zero." Ultimately, though, when it comes to SMART expiring, we don't totally know the full scope of its impact yet. In the first months of 2024, we will have a better sense.

Patrick Flanary: So is it fair to say, Eve, that the state helped get solar off the ground with these incentives and now the industry and homeowners need to kind of stand on their own?

Eve Zuckoff: Well, it's complicated. The state's goal is to zero out greenhouse gas emissions by 2050. And more renewable energy is a huge part of that. Plus, lots of homeowners have come to expect a state incentive when it comes to solar. And now that's disappearing. Now, on the other hand, installing solar is just becoming more economical even without SMART. That's because, in the last few years, the cost of electricity has gone way up, partially because Russia invading Ukraine sent energy markets into a frenzy. So energy consultant Liz Argo says it would still be nice to have the SMART incentive, but it maybe as isn't needed anymore.

Liz Argo: "There is less of a need to incentivize falsely because the reality is you need to go solar just because it helps offset your bills even without an incentive. It's reached its parity with the cost of electricity."

Patrick Flanary: Okay, fair enough. But are there no other incentives homeowners can tap into?

Eve Zuckoff: No, there are! Solar installers are working with homeowners to figure out the right incentive picture for them kind of individually. But there are two big incentives outside of SMART that have made solar a lot more accessible for the middle class. So first of all, when President Biden signed the Inflation Reduction Act that lots of folks have heard about, he extended a federal tax credit for solar at a 30% rate for a number of years. Before the IRA, the federal tax credit was set to decline and eventually expire, exactly like SMART. Now, that could translate to as much as $8,000 in savings in your tax returns if you buy a solar system outright. Second, the state of Massachusetts allows you to sell excess electricity that you generate from your solar system back on to the grid. This is called net metering.

Patrick Flanary: But there could, of course, still be even greater incentives for solar if the state chooses to revitalize the SMART program. Is that something that could even happen?

Eve Zuckoff: Well, the state's Department of Energy Resources has contracted with a consultant to evaluate the cost to build solar today. And they're "conducting a review of the SMART program as a first step towards potential updates to SMART incentive levels and program design elements to renewable energy policy wonks and advocates." To renewable energy policy wonks and advocates, this is a really good thing Massachusetts. Massachusetts, over the last couple of years, has outpaced a lot of states in terms of residential solar adoption, thanks in part to SMART. But we also still have some of the highest electricity bills in the country. So continued incentives, maybe including a new iteration of SMART, are probably needed, these folks say, especially to help low and moderate income folks get away from oil and gas.

Patrick Flanary: Fascinating stuff. These solar panels and the rebates and the lack thereof. That's CAI's climate and environment reporter Eve Zuckoff joining us. Eve, thanks so much.

Eve Zuckoff: Thanks, Patrick.

Eve Zuckoff covers the environment and human impacts of climate change for CAI.