Rhode Island has the third highest cost of electricity in the U.S. (after Hawaii and Connecticut), so it makes a lot of sense for homeowners here to go solar. With a standard rooftop array in the Ocean State, homeowners could save a staggering $26,000 on utility charges in just 10 years. That’s more than enough to pay for a solar energy system, even without claiming the federal tax credit and Rhode Island’s solar grants.
Other incentives make going solar in Rhode Island a clear winner. A state sales tax exemption reduces upfront costs, a property tax exemption helps avoid added costs, and net metering or performance-based incentives from utilities can see homeowners lowering or even entirely offsetting their utility bills.
Rhode Island State Solar Incentives
| Incentive | Description |
|---|---|
| Solar grants in Rhode Island | Residents installing home solar may qualify for a grant up to $5,000 plus $2,000 for storage, but only if not signing up for net metering or PBIs; solar loans are also available for eligible residents installing solar plus storage. |
| Rhode Island solar sales tax exemption | Rhode Island exempts solar energy systems from sales and use tax. |
| Rhode Island solar property tax exemption | Rhode Island offers a property tax exemption for value added by solar. |
| Net metering in Rhode Island | Net metering is mandated by law but rules depend on where you live in Rhode Island. |
| Performance-based incentives (PBIs) for solar | The National Grid offers a Renewable Energy Growth (REG) program where customers can earn PBIs linked to how much energy their solar array produces each month; another PBI program rewards customers for connecting battery storage that can be used by the utility. |
Commerce Rhode Island provides grants for residential and other small-scale solar photovoltaic systems and domestic solar water heating systems. Funding for the program is provided by the Rhode Island Renewable Energy Fund (REF) and alternative compliance payments (ACPs) from the state’s renewable portfolios standard (RPS).
For solar PV, grants amount to $0.65/W for direct ownership, to a maximum of $5,000 per project. The fund offers an additional $2,000 for each project with an energy storage component that meets the eligibility requirements.
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Note that the grants are only available to applicants who haven’t signed up for net metering or performance-based incentives.
The program reached its Round 2 cap in July but applications re-open at 9 a.m. on October 17, 2022.
Solar loans in Rhode Island
Customers served by the National Grid in Rhode Island can take part in its Connected Solutions program and access zero-interest HEAT Loans for the equipment and labor costs associated with installing a battery storage system.
The maximum solar loan amount per customer is $25,000.
State sales tax exemptions in Rhode Island
Rhode Island offers an exemption from sales and use tax for solar energy systems. This exemption covers both the solar photovoltaic modules or panels or other solar energy generating equipment and things like inverters, mounting, racking, and other integral parts of a home solar energy system.
Homeowners in Rhode Island who install a solar domestic hot water system or a solar space heating system can also enjoy no sales tax on these items. This includes a sales tax exemption on an external heat exchanger if it comes with the solar heating system.
State sales tax in Rhode Island is 7%, meaning homeowners who go solar here get a substantial discount on equipment costs upfront.
State property tax exemptions in Rhode Island
Rhode Island provides an exemption for property taxes associated with value added to a home by installing solar or other renewable energy resources. This includes systems installed after December 31, 2015.
Net metering in Rhode Island
Net metering is mandated by law in Rhode Island and allows customers to receive bill credits for all power generated up to 125% of on-site consumption during a billing period. Net metering policies differ in Rhode Island depending on if you’re a Pascoag Utility District or Block Island customer, however.
In Block Island, the net metering policy awards credits for excess energy at avoided cost rate with credits carried forward to offset future bills indefinitely.
In the Pascoag Utility District, customers are given credits at the utility’s wholesale rate, with credits carried forward for two years, at which point the customer may request a check for any unused credit.
Utility PBIs in Rhode Island
The National Grid offers a Renewable Energy Growth (REG) program, administered by Rhode Island Energy. This program offers a performance-based incentive to commercial and residential solar customers who meet certain conditions. Applications open on April 1st each year and the program is available on a first-come, first-serve basis until fully subscribed. Homeowners need to submit an application via RI Energy’s Interconnection Process Webpage.
National Grid will pay from $0.2755-$0.3105 per kWh for solar generation, including the value of bill credits, which is higher than the rates typically provided by net metering. Applications for the program remain open until the 6.95 MW capacity for 2022 is fulfilled, or until March 31, 2023, the end of the program year. The program is set to expire in 2029. Customers who sign up for this program cannot also apply for net metering or the REF grants.
Customers served by the National Grid in Rhode Island can also take part in its Connected Solutions battery program and receive an incentive every summer based on the performance of their battery system. Through this program, customers agree to install a battery storage system and smart inverter that can be controlled remotely by the utility. At set, pre-arranged times during the year, the utility can then send signals to inverters to ‘call’ on stored power. This helps to reduce stress on the energy grid during peak times, which helps reduce air pollution and lowers electricity costs for everyone.
Under the current program rules, batteries can be called June to September, 2-7 p.m., for a maximum of 3 hours each time and no more than 60 times. The following inverters work for this program:
- Enphase
- Generac
- Outback connected to Sonnen
- Sol-Ark
- SolarEdge
- SunPower
- Tesla.
Customers signed up to the program receive an incentive of $275 per kW of energy called on by the grid during summer. This rate is locked in for the first 5 summers the customer stays enrolled with the program. Some homeowners may be able to receive an upfront discount on battery installation in exchange for signing away the rights to seasonal incentives to the installer.
Final thoughts on state solar incentives in Rhode Island
Rhode Island may get a little less sun than average in the U.S., but the payoff for solar in the state is huge. This is largely because of the incredibly high cost of electricity here (more than 25 cents per kWh in 2022).
With the average rooftop solar installation costing between $14,000 and $20,000 in Rhode Island, most homeowners will easily pay off their system in savings in less than 10 years. If you can claim the full 30% federal solar tax credit ($4,200 to $6,000) and benefit from net metering, chances are your solar payback period may be closer to just five years. After that, you’re essentially enjoying free energy for the next two decades!