Rhode Island offers great solar incentives, from rebates and tax credits to performance-based incentives like net metering. With nearly $2 billion invested in solar energy, it’s no wonder that more than two-thirds of the state’s renewable energy now comes from solar power.
We’ve researched the best solar companies and incentives to see how much Rhode Islanders could save. Read on to discover what programs are available in your state and see if solar is the right choice for you.
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Rhode Island Solar Rebates and Tax Credits
Rhode Island residents benefit from local, state, and federal solar incentives. Here are its top solar programs:
Rhode Island Energy Renewable Energy Growth (REG) Program
One of the state’s most lucrative incentives is Rhode Island Energy’s Renewable Energy Growth (REG) program. Residential homeowners in this program receive 28.75 cents for each kilowatt-hour (kWh) of energy their solar panel system produces for the first 15 years. That’s far better than the state retail rate of 19 cents per kWh.
Rhode Island Energy will pay participating customers by crediting your electric bill. The company pays any remaining earnings in cash. Participating in this feed-in tariff program disqualifies you from other net metering programs.
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Small-Scale Solar Grants
CommerceRI’s Renewable Energy Fund provides grants to those interested in going solar for the first time. New solar owners can get a per-watt grant through their installation company. Funds are awarded annually but are limited, so you’ll need to enroll as early as possible. You can confirm when a grant program begins accepting applications for the year on the CommerceRI website.
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Tax Exemptions
Going solar is a big investment, and taxes only increase that burden. Fortunately, Rhode Island waives taxes associated with solar equipment and installation. That means you won’t have to pay the 7% state sales tax on your solar energy system.
You’ll also be exempt from paying any extra property tax, even though solar panels increase your home value.
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What Is the Federal Solar Tax Credit?
The federal solar tax credit is available to all homeowners in Rhode Island and can significantly reduce your installation costs. You can claim this credit when you file your federal taxes, and it allows you to deduct 30% of the cost of installing a solar energy system from your federal tax bill. So, for a $20,000 solar installation, you’d receive a $6,000 tax credit.
The tax credit is nonrefundable, meaning you can use the credit to reduce your tax liability to $0, but you won’t get any excess back as a refund after that. If you can’t use the entire credit amount in a given year, you can apply the balance to your federal taxes in future years. You’re eligible for the tax credit only if you own your solar system. Leased solar systems or power purchase agreements don’t qualify.
The federal solar tax credit was initially set to expire at the end of 2024, but recent legislation has extended it through 2034. It will phase down to 26% in 2033 and 22% in 2034. Keep this timeline in mind when planning your solar installation.
Does Rhode Island Offer Net Metering?
Net metering enables solar users to send the surplus energy their systems generate back to the electrical grid. In return, they receive credits from their utility company that they can use to pay future electricity bills. Check with your local utility company to see if it offers a net metering program.
How Much Do Solar Panels Cost in Rhode Island?
The average cost of a 5 kW solar panel system in Rhode Island is $16,161, according to EnergySage. This figure is before factoring in any solar incentives. The federal tax credit can cut nearly a third of this cost for those who qualify.
Your solar financing choice determines a lot about your long-term cost savings. Here’s a breakdown of typical payment methods:
- Cash purchase: Pay for the system upfront to maximize long-term savings, typically costing between $15,000 and $20,000 depending on the size and type of panels.
- Solar loan: Finance your system through a bank or solar company. Monthly payments are often equal to or less than your current electric bill. We recommend comparing offers, as lenders are competitive.
- Leasing: Pay a monthly fee to use a solar system owned by a company. While it doesn’t offer the same long-term savings, it requires no upfront cost.
- Power Purchase Agreement (PPA): A solar company installs a system on your property, and you purchase the energy it generates at a reduced rate compared to your utility provider.
Is Going Solar in Rhode Island Worth It?
Yes, going solar is worth it in Rhode Island because of its many solar incentive programs. Electricity rates are rising nationally, so it’s an ideal time to switch to clean energy and lower your electric bills. EnergySage estimates that Rhode Islanders can save an average of $129,000 in electricity costs over 25 years with a solar system when you pay in cash. Going solar also decreases your power grid dependency and helps the environment.
The Process of Going Solar in Rhode Island
Before diving into Rhode Island’s solar incentives and financing options, let’s take a quick look at the solar installation process. Here’s what the steps look like:
- Consultation: Start by consulting a few solar companies to assess your home’s sunlight exposure. They’ll use tools to estimate solar potential and how many solar panels you need, often sending an expert to survey your property. This usually takes a few days.
- Design: After the survey, your installer will custom-design a system based on your roof space, energy needs, and budget. You’ll receive design options that balance cost and performance. This takes roughly one to two weeks and includes finalizing hardware choices, like different types of solar panels, inverters, and batteries.
- Permitting and approvals: The company handles local zoning rules, HOA guidelines, and utility policies, filing necessary applications on your behalf. It takes one to two months for local and utility approval, but timing varies based on your location.
- Installation: Once approved, installation is usually completed in one day, typically within one to three months of your initial consultation.
- Final inspection: A final inspection ensures everything’s working as planned. You’ll learn how to operate and monitor your system, whether through an app or a manual check. If you’ve installed solar batteries, your installer will explain how to switch from the grid to stored power off-grid in case of an outage.
Our Conclusion
Rhode Island’s solar incentives can make your solar project more affordable and help you save on energy costs long-term. You can read our guide to the best solar companies in Rhode Island for more information.
FAQs About Solar Tax Incentives in Rhode Island
Does Rhode Island have a solar tax credit?
Yes, property owners in Rhode Island who own their solar power system qualify for the federal solar tax credit. This credit allows you to claim 30% of your system cost on your federal income taxes the year you install.
Are solar panels free in Rhode Island?
No, solar panels aren’t free in Rhode Island. However, you can lower your investment by taking advantage of the state’s solar incentives.
How much do solar panels cost in Rhode Island?
The average cost of a home solar panel system in Rhode Island ranges from $13,737 to $18,585, with the typical cost of a 5-kilowatt system being around $16,000.
What are the best solar incentives in Rhode Island?
The most lucrative state-level Rhode Island solar incentives are its tax exemptions. Rhode Islanders don’t have to pay sales or property tax on solar panels. At the federal level, the solar investment tax credit allows you to claim 30% of your system cost on your federal income taxes the year you install.
Our Rating Methodology
We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:
- Solar equipment, installation, and services (25%)
- Warranty and performance guarantees (25%)
- Brand reputation and certifications (15%)
- Financing options (15%)
- Experience (10%)
- Availability (10%)
Total scores are divided by 20 for a final 5-point rating scale.
