Rhode Island maybe the smallest of the 50 states, occupying only 1,214 square miles, however, it has played a much more significant role in U.S. history. Most noteably, Rhode Island was the first (of thirteen original colonies) to break away from British Rule and declare independence and was the last to ratify the Declaration of Independence, demanding that the Bill of Rights be added to guarantee individual freedoms.
Rhode Island has also been a leader in the clean energy revolution and in April 2007, Governor Donald L. Carcieri submitted Senate bill 943 to the General Assembly to form the Rhode Island Power Authority (RIPA), a quasi-public agency to facilitate the development of renewable energy projects and ensure that Rhode Island residents directly benefit from the electricity the projects produce.
In 2004, the state adopted a Renewable Portfolio Standard (RPS) that requires 20% of Rhode Island’s electricity needs be generated by clean energy sources. While this is an aggressive goal, the state has offered a solid set of individual incentive programs that will help drive the adoption of home solar power systems.
Personal Tax Credit
Rhode Island home solar systems must have a minimum module size of 24 square feet, and must either be connected to the grid or to a battery-storage system. PV systems up to $15,000 are eligible for the full 25% credit. (A resident or business that pays for a PV system that exceeds $15,000 in cost will receive a credit based on a $15,000 system cost.)
The Energy Consumers Alliance of New England (ECANE) offers to purchase RECs from PV systems and small wind-energy systems installed in Rhode Island after 1998 at $30 per megawatt-hour ($0.03 per kilowatt-hour) for a period of three years. After the three-year contract, owners can consider other opportunities for selling RECs in the green power market; these options include extending the purchase agreement with ECANE. PV system owners and small wind-energy system owners may also choose to donate their RECs as a contribution to green power market development. Income from the sale of RECs will not reduce the benefits of net metering.
Sales Tax Incentive
Certain renewable energy systems and equipment sold in Rhode Island are exempt from the state’s sales and use tax. Eligible products include solar electric systems, inverters for solar electric systems, solar thermal systems, manufactured mounting racks and ballast pans for solar collectors, geothermal heat pumps, and wind turbines and towers.
Time for an example, let’s visit Providence, and look at a home with an average monthly electricity bill of $110. A 3 kW (3,000 watt DC) system will meet 40% of the current electricity consumption (Why so small you ask? Well since the state rebate was discontinued in 2009 the cost to you the homeowner has gone up and therefore if you want to match what you are currently paying for electricity we have to size the system smaller. You can still reduce your risk from future electricity price spikes by installing some solar and in the future you can always add more panels to boost your solar energy generation). If we assume an installed cost of $7.50/Watt this is what the financials look like:
|Av. Monthly Electricity Bill||$110|
|System Size||3.0 kW|
|% Reduction in Electricity Bill||40|
|Cost / Watt (installed)||$7.50|
|State Tax Credit||$3,750|
|Less income tax on tax credit^||$1,238|
|Federal Tax Incentive||$6,750|
|New Av. Monthly Electric Bill||$74|
|Effective Monthly Loan Payment#||$88 (30 yr, 7%, 0 down)|
|NEW MONTHLY NET COST||$126Yes you are paying slightly more per month ($16) but you have reduced your risk (somewhat) to future electricity increases.|
|CO2 Emissions Saved||3,828 lbs|
^You might have to add $1400, as the IRS may treat the $5000 tax credit as income. Please check with your tax prepare
* Tax savings will decrease as the principal is paid down. Please consult your tax preparer.
# You will have to finance the tax credits for the first year until you receive your tax refund. Therefore this loan payment will be higher for the first year.
So if you are ready to take the next step, fill out our free evaluation form and a Rhode Island solar expert will contact you to dicuss how to best size and finance your home solar power system.