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Get a Free Quote41+ energy policy terms explained in plain language. From tax credits and SRECs to net metering and MACRS depreciation — the definitive reference for homeowners and businesses navigating clean energy incentives.
A fixed per-MWh incentive payment for solar systems in New Jersey that replaced the volatile SREC market. ADI rates are set administratively by the BPU for 15-year terms, providing predictable income.
NJ ADI rates for residential systems are $85.90/MWh (EY2025-26), rising to $95.23/MWh (EY2026-27). ADI provides more financial certainty than market-traded SRECs because the rate is locked in at enrollment.
An accelerated tax deduction that allows businesses to deduct a large percentage of an asset's cost in the first year of service, rather than depreciating it over the full MACRS schedule.
Bonus depreciation for solar was 100% through 2022, dropped to 80% (2023), 60% (2024), 40% (2025), and 20% (2026). It falls to 0% in 2027. Combined with MACRS 5-year depreciation, this can recover 25-30%+ of a commercial solar system's cost through tax savings.
Minimum energy efficiency standards that new construction and major renovations must meet. Building energy codes set requirements for insulation, windows, HVAC, lighting, and sometimes solar-readiness.
Massachusetts adopted the Stretch Code (requiring higher efficiency than base code) and the Specialized Opt-In Code (near net-zero for new construction). Building energy codes directly impact solar and heat pump market demand.
A shared solar installation that allows multiple subscribers to receive credit on their utility bills for their portion of the electricity generated — without installing panels on their own property.
Community solar is ideal for renters, homeowners with shaded roofs, or those who cannot afford upfront installation costs. Subscribers typically save 5-15% on electricity bills. Programs vary by state: MA, NJ, NY, and RI all have active community solar markets.
A demand response program run by Eversource and National Grid in the Northeast that pays battery owners to discharge stored energy during grid peak events. Participants earn annual incentive payments.
Eversource pays $275/kW for summer dispatch + $50/kW winter. National Grid pays $225/kW summer + $50/kW winter. A typical 13.5 kWh battery earns $1,200-$1,500/year. Unitil does NOT participate. The program reduces grid strain during expensive peak hours.
A charge on a commercial electric bill based on the highest rate of electricity usage (peak kW demand) during a billing period — not total consumption. Even a brief spike in demand sets the charge for the entire month.
Demand charges can represent 30-70% of a commercial electric bill. Solar alone does not eliminate demand charges because peak demand often occurs when solar is not producing. Battery storage paired with solar is the most effective strategy to shave demand peaks.
A program where utilities pay customers to reduce or shift electricity usage during periods of high grid demand. Demand response reduces the need for expensive peaker power plants.
Demand response can involve battery dispatch (ConnectedSolutions), thermostat setback, EV charging delays, or water heater scheduling. Participants are typically notified hours in advance of an event and earn payments per kW of load reduced.
A 10 percentage-point increase to the federal commercial ITC (Section 48/48E) for projects that use a threshold percentage of American-made components. Steel/iron must be 100% US-manufactured; manufactured products must meet 40% US cost thresholds.
The domestic content bonus raises the commercial ITC from 30% to 40%. Qualifying requires detailed cost accounting and certification. FEOC (Foreign Entity of Concern) rules may further restrict component sourcing. The bonus applies to projects beginning construction before July 4, 2026.
A 10 percentage-point increase to the federal commercial ITC for solar projects located in "energy communities" — areas with closed coal mines/plants, brownfield sites, or high fossil fuel employment.
The IRS publishes an interactive map of qualifying energy communities. The bonus raises the commercial ITC from 30% to 40% (or 50% combined with domestic content). Census tracts are updated annually. Many rural and industrial areas in TX, PA, OH, and WV qualify.
A contract where a third-party provider installs, owns, and maintains an energy system (typically solar) and sells the energy output to the property owner at a pre-negotiated rate. Similar to a PPA but structured differently for tax and accounting purposes.
In NuWatt's Propel financing, the ESA is a prepaid energy service agreement combined with a Concert Loan. The financing company owns the system and claims the commercial ITC (Section 48/48E), passing savings through to the homeowner via lower total cost.
A policy mechanism where utilities are required to purchase renewable energy from generators at a fixed, above-market rate for a guaranteed period (typically 15-25 years). FiTs provide revenue certainty for project developers.
Feed-in tariffs were instrumental in building solar markets in Germany and Ontario. In the US, Rhode Island's Renewable Energy Growth (REG) program ($0.27/kWh for 15-20 years) functions similarly to a feed-in tariff, guaranteeing above-market payments.
A designation under US law identifying entities owned, controlled by, or subject to the jurisdiction of certain foreign governments (primarily China, Russia, Iran, North Korea). Solar components from FEOC entities may be ineligible for domestic content bonuses.
FEOC rules affect which solar panels and batteries qualify for the full commercial ITC. Panels manufactured by companies with FEOC ties may not qualify for the domestic content bonus. NuWatt's Propel financing requires FEOC-compliant panels (Silfab 440W) to maximize incentives. The FEOC deadline is July 4, 2026.
A public or quasi-public financial institution that uses public funds to attract private investment in clean energy projects. Green banks reduce financing costs through loan loss reserves, interest rate buydowns, and credit enhancements.
The Connecticut Green Bank was the first state green bank (2011). CT's Smart-E Loan offers 0.99% APR through the Green Bank. Other states with green banks include NY (NY Green Bank), RI (RI Infrastructure Bank), and NJ (NJ Infrastructure Bank).
A federal tax credit that reduces the tax liability of whoever owns a qualifying energy system by a percentage of the installed cost. The ITC has been the primary federal incentive for solar energy since 2006.
The residential ITC (Section 25D) expired December 31, 2025 under OBBBA. Homeowners who purchase solar with cash or a loan receive $0 in federal tax credits. The commercial ITC (Section 48/48E) remains available for projects beginning construction before July 4, 2026 — claimed by the system owner (financing company), not the installer.
A federally funded program that helps low-income households pay heating and cooling bills, weatherize homes, and address energy-related emergencies. Administered by states through community action agencies.
LIHEAP serves approximately 6 million households annually. Eligibility is typically 150% of the federal poverty level or 60% of state median income, whichever is higher. LIHEAP does not directly fund solar installations but is a gateway to other energy assistance programs.
A 10-20 percentage-point increase to the federal commercial ITC for solar projects that serve low-income communities or are built on qualified low-income residential housing. The 10% adder is for projects in low-income census tracts; the 20% adder is for federally subsidized housing.
Combined with the base 30% ITC, domestic content (10%), and energy community (10%) bonuses, a qualifying project can reach a 70% total ITC. The low-income bonus has an annual capacity allocation managed by the DOE and is competitive.
The federal tax depreciation system that allows businesses to recover the cost of solar and other energy assets over a 5-year schedule, even though the equipment lasts 25+ years. MACRS deductions reduce taxable income.
For a commercial solar system claiming the 30% ITC, the depreciable basis is reduced by half the ITC amount (85% of cost is depreciable). With 20% bonus depreciation in 2026, a business can deduct approximately 57% of system cost in Year 1. MACRS drops to 0% bonus in 2027.
The second generation of net energy metering rules, typically offering reduced compensation for exported solar electricity compared to the original 1:1 retail rate net metering.
New Hampshire's NEM 2.0 credits exports at 100% supply + 100% transmission + 25% distribution (approximately 85% of retail rate), locked through 2041. California's NEM 3.0 (NEM-3/Net Billing) reduced export values by 75%, dramatically altering solar economics. The trend nationally is toward lower export compensation.
A billing mechanism that credits solar owners for excess electricity they export to the grid. A bidirectional meter tracks both consumption and generation, and the customer is billed only for the "net" usage.
Net metering policies vary widely by state. Massachusetts credits excess at retail rate. Rhode Island credits at ~80% of retail (post-April 2023). New Hampshire credits at ~85% retail under NEM 2.0. Some states cap system size at 100-125% of annual usage. Net metering is the single most important policy for residential solar economics.
A building or community that produces as much energy as it consumes over the course of a year. Net zero is achieved through a combination of energy efficiency, on-site renewable generation, and sometimes purchased offsets.
True net-zero buildings typically require aggressive efficiency measures (heat pumps, insulation, LED lighting) plus a solar array sized to cover 100% of annual usage. Massachusetts' Specialized Opt-In Code targets near-net-zero performance for new construction.
Federal legislation signed July 4, 2025 that repealed or modified several clean energy tax credits. OBBBA eliminated the residential solar ITC (Section 25D) and the energy efficiency credit (Section 25C) effective December 31, 2025.
OBBBA set a hard deadline: residential homeowners who did not place solar systems in service by December 31, 2025 receive $0 in federal tax credits. The commercial ITC (Section 48/48E) remains available for projects beginning construction before July 4, 2026. Section 30C (EV chargers) expires June 30, 2026.
A financing mechanism where the cost of an energy improvement (solar, heat pump, insulation) is repaid through a line item on the customer's monthly utility bill. The utility collects payments alongside normal charges.
On-bill financing reduces default risk because disconnection consequences motivate repayment. Some programs are structured as on-bill repayment (loan), while others use tariffed on-bill programs (attached to the meter, not the customer). Several utilities in MA and CT offer on-bill options.
A financing mechanism where clean energy improvements are funded through a voluntary property tax assessment. PACE loans are repaid through the property tax bill and transfer with the property upon sale.
Commercial PACE (C-PACE) is available in 30+ states and can finance solar, battery storage, HVAC, and building envelope improvements. Residential PACE has been restricted in many states due to consumer protection concerns. C-PACE typically offers 20-25 year terms at competitive rates.
A contract where a third-party developer installs, owns, and maintains a solar system on your property, and you agree to purchase the electricity it produces at a pre-negotiated rate (typically lower than the utility rate) for 15-25 years.
PPAs require no upfront cost. The developer claims the ITC and depreciation benefits. The homeowner or business pays only for the electricity generated. Annual escalators of 1-3% are common. PPAs are most attractive in states with high electricity rates and strong solar resources. Note: NuWatt's Propel financing is NOT a PPA — it is a Concert Loan + Prepaid ESA.
A state or local policy that exempts the added value of a solar or renewable energy system from property tax assessments. Without this exemption, installing solar could increase your property tax bill.
Most Northeast states offer solar property tax exemptions: MA (20-year exemption), NH (RSA 72:62, local option adopted by ~66% of towns), RI (20-year exemption), NJ (full exemption), CT (full exemption for residential). This is "free money" — you get the property value increase without the tax hit.
A federal tax credit paid per kilowatt-hour of electricity generated by a qualifying renewable energy facility over the first 10 years of operation. The PTC is an alternative to the ITC — project owners choose one or the other.
The PTC is typically used for large wind and utility-scale solar projects where the per-kWh credit exceeds the value of the percentage-based ITC. The 2026 PTC rate is approximately $0.028/kWh (adjusted for inflation). Residential systems are not eligible for the PTC.
A tradeable certificate representing 1 MWh of electricity generated from a renewable source. RECs are the "green attribute" of renewable energy, separate from the physical electricity. Owning a REC means you can claim the environmental benefit of that megawatt-hour.
RECs are bought and sold in compliance markets (utilities must meet RPS targets) and voluntary markets (corporations meeting sustainability goals). Prices vary dramatically: $0.50-$5 for voluntary RECs vs $200+ for SRECs in constrained markets.
A state policy that exempts solar equipment and installation labor from state and/or local sales tax. This can save homeowners 5-8% on the total installed cost depending on the state tax rate.
States with solar sales tax exemptions include: RI (7% exemption on equipment + labor + batteries), NJ (6.625% exemption), CT (6.35% exemption), NY (8% exemption). Massachusetts has no sales tax on solar. NH has no sales tax at all. This is an immediate, guaranteed savings at the point of purchase.
EXPIRED. A federal tax credit that covered 30% of the cost of qualifying energy efficiency improvements including heat pumps, insulation, windows, and doors, up to $3,200/year. Section 25C expired December 31, 2025 under OBBBA.
Section 25C provided up to $2,000 for heat pumps and $1,200 for insulation/windows/doors annually. The credit was non-refundable (required tax liability). It is now $0 — homeowners installing heat pumps or insulation in 2026 and beyond receive no federal credit. State-level programs (Mass Save, Efficiency Maine, Energize CT) remain available.
EXPIRED. The federal residential solar investment tax credit that covered 30% of the cost of a solar, battery, or geothermal system. Section 25D expired December 31, 2025 under OBBBA.
Section 25D was the cornerstone federal incentive for residential solar from 2006-2025. The credit applied to solar panels, battery storage, geothermal, and small wind. Systems had to be placed in service by December 31, 2025 to qualify. Homeowners who purchase solar in 2026 and beyond receive $0 in federal tax credits. Third-party owned systems (PPAs, leases, Propel) can still benefit from the commercial ITC (Section 48/48E), which is why they now offer a significant cost advantage.
A federal tax credit for EV charging equipment installation. Covers 30% of cost up to $1,000 for residential and $100,000 per unit for commercial. Section 30C expires June 30, 2026 — NOT December 31, 2025.
Section 30C was extended through June 30, 2026 under OBBBA (not the same expiration as 25D/25C). The credit requires installation in a qualifying census tract (low-income or non-urban). The residential credit is non-refundable. This is the last active residential clean energy tax credit.
The federal investment tax credit for commercial, industrial, and third-party-owned clean energy systems. The base credit is 30% of installed cost, with bonus adders for domestic content (+10%), energy community (+10%), and low-income (+10-20%).
Section 48/48E remains available for projects that begin construction before July 4, 2026. The ITC is claimed by the SYSTEM OWNER — which in third-party financing is the financing company, not the installer and not the homeowner. This is why Propel-style financing now has a major advantage: the financing company claims the commercial ITC and passes savings to the homeowner through lower pricing.
Massachusetts' primary solar incentive program, which provides fixed per-kWh payments to solar system owners for 10-20 years based on system size and type. SMART replaced the previous SREC-II program in 2018.
SMART 3.0 (current) pays residential systems (under 25 kW) a flat $0.03/kWh for 20 years. Low-income adder increases this to $0.06/kWh. SMART payments are on top of net metering credits. The program has a PY2026 cap of 600 MW. SMART is one of the most valuable state solar incentives in the country.
A contract where a third-party company installs and owns a solar system on your roof, and you make fixed monthly payments to use it — regardless of how much electricity it produces. Similar to leasing a car.
Unlike a PPA (which charges per kWh), a solar lease has a fixed monthly payment. The leasing company owns the system and claims the ITC. Leases typically run 20-25 years with 1-3% annual escalators. Lease terms can complicate home sales because the buyer must assume the lease or the seller must buy it out.
A type of REC specifically generated by solar energy systems. One SREC represents 1 MWh of solar electricity. SRECs are traded in state-specific compliance markets where utilities must procure them to meet solar carve-out requirements.
SREC prices have historically been volatile: NJ SRECs traded above $600 before crashing to $150 as supply increased. NJ replaced SRECs with the ADI program for new systems. MA replaced SRECs with the SMART program. DC, PA, and OH still have active SREC markets. Existing SREC contracts are typically grandfathered.
An optional, more stringent building energy code that municipalities can adopt beyond the state's base code. The stretch code requires higher energy efficiency in new construction and major renovations.
Over 300 Massachusetts municipalities have adopted the Stretch Code, which requires approximately 20% better energy performance than the base code. MA also offers a Specialized Opt-In Code that approaches net-zero performance. Stretch codes drive demand for heat pumps and high-performance building envelopes.
An electricity pricing structure where the per-kWh rate increases as usage rises through defined tiers. The first tier (baseline) is cheapest, encouraging conservation by making heavy usage progressively more expensive.
Tiered rates are common in California and some other states. In New England, flat rates and time-of-use rates are more common than tiered structures. Solar is especially valuable under tiered rates because it eliminates the most expensive top-tier usage first.
An electricity rate structure where the price per kWh varies based on the time of day and sometimes the season. Peak hours (typically afternoon/evening) cost more; off-peak hours cost less.
TOU rates reward shifting consumption to off-peak hours and storing solar energy (via batteries) for peak discharge. In ERCOT (Texas), real-time pricing can swing from $0.03/kWh at night to $0.50+/kWh during summer peaks. Battery storage paired with TOU rates can dramatically reduce electricity costs.
An interim renewable energy certificate used in New Jersey during the transition from the SREC program to the ADI program. TRECs provided a fixed-price incentive ($91.20/MWh) for a limited period before ADI enrollment opened.
TRECs were a bridge mechanism — new NJ solar systems registered between 2020-2022 received TRECs rather than SRECs. The TREC program has been fully replaced by ADI for new systems. Existing TREC holders continue to receive payments through their contract terms.
A billing arrangement that allows the output of a single solar installation to be credited across multiple electric accounts. Used in community solar, municipal solar, and multi-unit residential buildings.
VNM enables a town to build a solar array on a capped landfill and credit the output to municipal buildings across town. In MA, VNM is available for community solar subscribers. In RI, VNM is used for the REG program. VNM credit values depend on the utility and net metering rules.
A federally funded program that provides free energy efficiency improvements (insulation, air sealing, heating system repairs) to low-income households. WAP is administered by the DOE and delivered through state-level agencies and community action programs.
WAP serves approximately 35,000 households per year nationally. Average investment is $7,669 per home. Eligible improvements include insulation, air sealing, heating system repair/replacement, and base-load measures. WAP can be combined with utility rebate programs for deeper retrofits. Income eligibility is typically 200% of the federal poverty level.
| Credit | Section | Status | Value | Deadline |
|---|---|---|---|---|
| Residential Solar ITC | 25D | EXPIRED | $0 | Dec 31, 2025 |
| Energy Efficiency (HP, insulation) | 25C | EXPIRED | $0 | Dec 31, 2025 |
| EV Charger | 30C | EXPIRING | 30% (up to $1K res.) | Jun 30, 2026 |
| Commercial ITC | 48/48E | ACTIVE | 30% base (up to 70%) | Jul 4, 2026 |
No. Section 25D expired on December 31, 2025 under OBBBA (signed July 4, 2025). Homeowners who purchase solar with cash or a loan in 2026 receive $0 in federal tax credits. However, third-party financing arrangements (like PPAs, leases, and Propel) can still access the commercial ITC (Section 48/48E) through the system owner, offering homeowners significant cost savings.
SRECs (Solar Renewable Energy Certificates) are market-traded certificates with volatile prices — they go up and down based on supply and demand. ADIs (Administratively Determined Incentives) are fixed-rate payments set by a state regulatory board for a guaranteed term (typically 15 years). New Jersey transitioned from SRECs to ADIs to give solar owners more predictable income. ADIs are locked in at enrollment, so you know exactly what you will earn.
A PPA (Power Purchase Agreement) charges you per kWh of electricity the solar system produces — you pay only for what it generates. A solar lease charges a fixed monthly payment regardless of production. In both cases, a third-party company owns the system and claims the tax benefits. PPAs pass production risk to the owner; leases give you predictable payments. Both typically run 20-25 years.
As of 2026, the residential ITC (Section 25D) and energy efficiency credit (Section 25C) are expired. Two credits remain: Section 30C for EV charger installations (expires June 30, 2026, up to $1,000 residential), and Section 48/48E (the commercial ITC, 30% base + bonuses up to 70%) for projects beginning construction before July 4, 2026. The commercial ITC is claimed by the system owner — in third-party financing, that is the financing company, not the homeowner.
MACRS (Modified Accelerated Cost Recovery System) allows businesses to depreciate the cost of a solar system over 5 years for tax purposes, even though the system lasts 25+ years. Combined with bonus depreciation (20% in 2026), a business can deduct a significant portion of the system cost in Year 1. For a commercial system with a 30% ITC, approximately 57% of system cost is deductible in the first year. MACRS does not apply to residential homeowner purchases.
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