Can You Name the Highest Solar-Subsidy States in the Nation? Would You Be Surprised …?

Printed from:

Uncle Sam heavily subsidies the solar industry; should Massachusetts be doing it too? Many states, including California, have largely discounted solar subsidies, and solar is king in the Golden State. (It’s hard to find the desert with all the panels covering it; even environmental advocates are concerned for the wildlife in Imperial County on the Arizona and Mexico borders.)

The Bay State’s solar industry is now, by some metrics, the second largest in the country, according to a national solar industry group . That means if California votes to secede from the union in 2018 (and is allowed by Congress to go) the Bay State will have more people working on solar than anywhere you don’t need a passport for. China, Germany, and other nations’ solar industries are a much bigger part of their economy than in America.

How Massachusetts got to be ahead to Texas, Arizona, Florida, and many other sun-friendly solar-power states has to do with several factors, and one of those is subsidies. 

The U.S. government gives solar customers a major incentive to install photovoltaic panels — in the form of an income tax cut of 30% off the total price of everything included (even if that means fixing your roof so you drill holes in it to mount panels). If you pay alternative minimum tax, no problem, you get the discount anyway, if you are smart enough to avoid income tax, no problem:  lease the panels, and the solar company gets the tax cut and usually will pass that subsidy on through attractive payment plans.

Could solar power, a child-going-on-teen industry, be emancipated and stand on its own without any government incentives and be positioned to thrive when the next fossil fuel crisis hits?

Two things are happening simultaneously in different departments of Massachusetts Governor Charlie Baker’s Energy and Environmental Affairs office. The energy department is launching revised solar subsidies, and the utilities department is looking at rolling back the amount solar producers earn in subsidies when their electricity is sent to the power grid.

“When competition is introduced to energy supply, prices come down. We’ve already seen that with on-shore wind and we expect to see similar results when the recent solicitations for offshore wind and large hydropower come in. There is no reason why competition in solar would not produce the same results,” said Robert Rio, senior vice president for Associated Industries of Massachusetts, which advocates for businesses in the state. 

AIM has focused on solar subsidies for a while.  On the association’s home page on the bottom right is a link to an Excel spread sheet that shows most of New England’s electricity consumers how much of their electric bill is subsiding clean energy. (Don’t forget that the largest subsidy is federal, which is largely aid through federal income tax.) 

According to AIM’s spreadsheet, a Boston-area Eversource residential customer using 800 killowatt hours a month and paying a total monthly bill of $171 is paying a little more than $10 to solar subsidies. (More than $41 goes to pay for programs mandated by the state, including about $20 to energy-efficiency programs, including programs designed to help homeowner make their homes more efficient.)

With respect to solar energy subsidies, many in the region argue that $10 a month to keep what they see as the energy source of the future thriving is a small price to pay. Elected officials, environmental experts, and even some utility stock holders have advocated for keeping robust solar incentives from the state government.

A year and a half ago the legislature authorized the governor’s energy department to rework Massachusetts’s solar subsidies, and those reduced incentives were packaged and released earlier this month as “SMART:  Solar Massachusetts Renewable Target”, which is close to finalization. “SMART” will double the amount of solar power in Massachusetts at half the subsidy cost that the current 1,600 megawatts of solar power in Massachusetts that residents spent, according to state energy resource department spokesman Kevin O’Shea.

Meanwhile, though, other states, including California, have mostly eliminated funding of significant state subsidies.

On July 10th and 11th , the Massachusetts energy department will hold three public hearings on SMART, which still calls for the state to subsidize solar construction.

“The Commonwealth continues to be a national leader in solar energy, with over 1,600 megawatts and 70,000 projects in operation to date. Massachusetts’s next solar incentive program, SMART, will double the amount of solar in the state at half the ratepayer cost compared to the existing program while ensuring the continued success of this important industry and energy resource,” O’Shea wrote in an email message to New Boston Post.

Meanwhile Baker’s utility department is reviewing rate hike requests from the major electric utilities in Massachusetts:  Those utility requests include changing how solar systems feeding the grid benefit their owners through subsidies that pay more for clean power. Public hearings are held on those rate hikes, and the Department of Public Utilities staff is reviewing the proposals, which could be implemented by the end of 2017.

“As a regulated delivery company, [Eversource] is not in competition with renewable energy companies,” Eversource spokesman Michael Durand said. “We do, however, continue to advocate on behalf of our customers for reduced subsidies that are more in-line with neighboring states.  We feel Massachusetts has taken steps in the right direction with recent laws and regulations that will decrease subsidies paid to private developers over time and allow the commonwealth’s electric utilities to further our commitment to developing and operating universal solar facilities.” 

Some of those subsidies are benefiting local taxpayers. Elected officials in several communities near Boston joined Newton Mayor Setti Warren (a Democratic candidate for governor) in signing a letter to the DPU saying that their subsidized electric rates should be grandfathered at existing plants. (In addition to Newton, those communities are Lexington, Weston, Westwood, Wayland, Arlington, and Natick.)

Business advocate Rio disagrees.

 “We can’t pay triple and heading toward quadruple for solar — it is unsustainable. We are over a billion going toward two billion [dollars] in subsidies and there is no indication that the solar industry will be decimated if it goes to competitive bidding.”


Andrew C. Nelson is a freelance reporter who has worked for several newspapers in eastern Massachusetts.