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The federal residential solar tax credit (Section 25D) died on December 31, 2025. But Rhode Island still has 7 powerful state-level solar incentives that make the math work. The REG program alone pays $0.27/kWh for 15 years. This is the definitive guide to every program that still works in 2026.
The federal residential solar tax credit (Section 25D) expired December 31, 2025. Rhode Island homeowners who buy solar with cash or a loan receive $0 in federal tax credits. However, Rhode Island still has 7 active state-level programs that deliver fast payback:
Bottom line: An 8 kW system at $3.06/W costs $24,480 gross. After the REF rebate and tax exemptions, your effective cost is about $17,766. Over 25 years, total value from all programs exceeds $137,000. Payback: 5-7 years even without any federal credit.
Before we cover what still works, let's be honest about what's gone. Other solar websites still reference these programs. They are wrong.
Homeowners who purchase solar with cash or a loan receive $0 in federal tax credits. This was 30% in 2025 under the Inflation Reduction Act. The OBBBA signed July 4, 2025 ended it.
The $2,000 heat pump tax credit and $1,200 insulation/efficiency credit are both dead. These were separate from the solar ITC and also expired under the OBBBA.
The federal credit was the big loss. But every Rhode Island state program survived intact. Here is the full comparison.
| Incentive Program | 2025 | 2026 | Status |
|---|---|---|---|
| Federal Tax Credit (25D) | 30% of system cost (~$7,340) | $0 — Expired Dec 31, 2025 | Expired |
| REF Rebate | $0.65/W (max $5,000) + $2,000 battery | $0.65/W (max $5,000) + $2,000 battery | Active |
| REG Program | $0.27/kWh for 15 years | $0.27/kWh for 15 years | Active |
| Net Metering | 80% retail (post-4/2023), 1:1 grandfathered | 80% retail (post-4/2023), 1:1 grandfathered | Active |
| Sales Tax Exemption | 7% saved | 7% saved | Active |
| Property Tax Exemption | 100% for 20 years | 100% for 20 years | Active |
| ConnectedSolutions | $225/kW summer battery payments | $225/kW summer battery payments | Active |
| Section 48E (Lease/PPA) | 30%+ for third-party owner | 30%+ through July 4, 2026 | Deadline |
| 25C Energy Efficiency | $2,000 heat pump credit | $0 — Expired Dec 31, 2025 | Expired |
The federal 25D credit was worth about $7,340 on a typical 8 kW RI system. That is a real loss. But the 7 remaining Rhode Island programs generate over $137,000 in lifetime value for the same system. The REG program alone covers 2.3x the lost ITC value in its first three years.
The Rhode Island Renewable Energy Fund (REF) provides a direct cash rebate for residential solar installations. At $0.65 per watt, capped at $5,000, it is the largest upfront solar rebate in New England. Add battery storage and you get an additional $2,000 adder for a total of up to $7,000.
For a typical 8 kW system: 8,000 watts x $0.65/W = $5,200, but capped at $5,000. Systems under 7.7 kW get the full $0.65/W. Larger systems hit the cap but still get $5,000. Add a battery for the $2,000 adder.
You must apply before installation begins. Grant rounds fill up, so apply as early as possible. The spring round typically opens in March-April.
Solar rebate: $0.65/W capped at $5,000. Battery adder: +$2,000. Administered by Commerce RI.
The Renewable Energy Growth (REG) program is Rhode Island's crown jewel incentive. It pays a guaranteed $0.2723/kWh for every kilowatt-hour your system produces for 15 years. The rate is locked at enrollment and never changes. This is on top of net metering — you get both.
For a typical 8 kW system producing 9,704 kWh/year, REG pays $2,641/year or $39,615 over 15 years. For a 10 kW system: $3,301/year or $49,520 over 15 years. This is the single most valuable solar incentive in Rhode Island.
Read our complete REG program guide with enrollment strategy
Based on 1,213 kWh/kW/year RI average production. PY2026 rate $0.2723/kWh. 15-year residential term. Stacks with net metering and REF.
Net metering lets you send excess solar electricity to the grid and receive credits on your utility bill. With Rhode Island's high electric rates ($0.29/kWh for RI Energy), net metering delivers significant annual savings even at the reduced 80% credit rate.
Rhode Island offers two powerful tax exemptions that reduce your upfront cost and protect your home value. Combined, they save over $9,200 on a typical 8 kW system.
All solar equipment, installation labor, and battery storage are exempt from Rhode Island's 7% sales tax. H7506 specifically extended this to include batteries.
Applied automatically at point of sale. No paperwork required.
Solar panels typically add 3-4% to home value, but in Rhode Island, that added value is exempt from property tax for 20 years. Your home is worth more, but your property tax bill stays the same.
After 20 years the exemption expires, but the system has largely depreciated.
Read our complete guide to Rhode Island solar tax exemptions
ConnectedSolutions is a demand response program through Rhode Island Energy. Your battery discharges during peak grid events (typically 10-30 events per summer), and you earn cash payments per kW of enrolled capacity. This is separate from net metering and REG — you earn all three.
Note: Only RI Energy customers are eligible. Pascoag and Block Island Power do not participate in ConnectedSolutions.
Add a battery to get the $2,000 REF battery adder upfront, plus earn $2,750/year from ConnectedSolutions. The battery pays for itself in about 3.5 years, then generates pure profit for the remaining 6-7 years. Read our ConnectedSolutions guide
While homeowners cannot claim any federal tax credit for solar, the Section 48E commercial ITC is still available for third-party system owners. If you go with a solar lease or PPA, the financing company claims the 30%+ credit and passes savings to you through lower monthly payments.
After July 4, 2026, the Section 48E commercial ITC drops or ends entirely. Lease/PPA rates will likely increase after this deadline. If you are considering a lease or PPA, starting the process now ensures you benefit from the current 30%+ credit.
In most states, lease/PPA became more attractive after the residential ITC expired because only third-party owners can claim the credit. In Rhode Island, however, cash/loan purchases are still extremely competitive because of the REG program and REF rebate — programs that go directly to the homeowner.
See our full RI financing comparison: Cash vs. Loan vs. Lease
While not a solar incentive directly, Clean Heat RI provides massive rebates for heat pump installations that stack perfectly with a solar system. Electrify your heating with a heat pump and power it with your solar panels for the ultimate energy savings.
Covers central ducted heat pumps, mini-splits, and heat pump water heaters.
Fully covered installation for qualifying low-to-moderate income households.
See how solar + heat pump bundles work in Rhode Island | Full Clean Heat RI rebate guide
Here is the complete value of every RI solar incentive stacked together for a typical system. These are real numbers based on current program rates.
| Program | Type | 8 kW System | 10 kW System | Period |
|---|---|---|---|---|
REF Rebate | Upfront Rebate | $5,000 | $5,000 | At purchase (capped) |
REG Program | Production Payment | $39,591 | $49,489 | 15 years |
Net Metering (RI Energy) | Bill Credit | $56,500 | $70,625 | 25 years |
ConnectedSolutions | Battery Revenue | $27,500 | $27,500 | 10 yrs (10 kW battery) |
Sales Tax Exemption | Upfront Savings | $1,714 | $2,142 | At purchase |
Property Tax Exemption | Annual Savings | $7,500 | $9,370 | 20 years |
| Total Lifetime Value | $137,805 | $164,127 | Combined | |
An 8 kW system costs $24,480 gross. Subtract the $5,000 REF rebate, $1,714 sales tax savings, and your effective cost is $17,766. With $5,276 in year-1 income (REG + net metering + property tax savings), your payback is about 3.4 years with ConnectedSolutions, or about 5.5 years without a battery. After payback, you earn pure profit for 19-22 more years.
Enter your system size and utility to see exactly what each program is worth for your specific situation.
Adjust your system below to see how Rhode Island incentives stack
How will your solar be compensated?
REG opens annually in April. Enrollment is competitive with capacity limits.
First-Year Value
$4,731
REG + tax savings
25-Year Lifetime
$78,324
on a $24,480 system
Payback Period
5.9 years
then pure savings
Estimates based on RI averages. Actual values depend on system design, shading, utility rate changes, and eligibility. REG rate locked at enrollment for 15 years. REG and net metering do not run simultaneously — REG replaces net metering during its term. Federal residential ITC (Section 25D) expired Dec 31, 2025. ConnectedSolutions available only through RI Energy.
Here is exactly how the math works for a typical Rhode Island solar installation in 2026. No federal credit included — just state programs.
Each incentive has different enrollment windows and requirements. Here is the optimal order to capture everything.
Know your system size and cost before applying to any programs. NuWatt provides free RI-specific solar designs.
Get your free solar designSpring 2026 round opens March-April. You must apply BEFORE installation. Get conditional approval, then proceed.
REF application guideREG opens April 1 annually. First-come-first-served with a 40 MW cap. Apply early. Lock in $0.27/kWh for 15 years.
REG enrollment strategyComplete installation within 12 months of REG approval. RI Energy interconnection takes 2-4 weeks. Sales tax exemption applied automatically.
Find a qualified RI installerEnroll in ConnectedSolutions through RI Energy. Start earning $225/kW summer + $50/kW winter. Your battery pays for itself in ~3.5 years.
ConnectedSolutions guideRhode Island has 7 active solar incentive programs in 2026: REF rebate ($0.65/W up to $5,000 plus $2,000 battery adder), REG program ($0.27/kWh guaranteed for 15 years), net metering (80% retail credit for post-April 2023 installs), 20-year property tax exemption, 7% sales tax exemption, ConnectedSolutions battery payments ($225/kW summer), and Section 48E commercial ITC for lease/PPA systems (30% through July 4, 2026). The federal residential 25D credit is $0.
No. The federal residential solar tax credit (Section 25D) expired December 31, 2025. Homeowners who buy solar with cash or a loan receive $0 in federal tax credits. However, lease/PPA companies that own the system can still claim Section 48E (30%+) on projects beginning construction before July 4, 2026, passing savings to you via lower monthly payments.
The Rhode Island Renewable Energy Fund (REF) rebate pays $0.65 per watt, capped at $5,000 for residential systems. If you add battery storage, you get an additional $2,000 adder for a total of up to $7,000. The REF is administered by Commerce RI and operates in grant rounds (spring, summer, fall). You must apply before installation begins.
The Renewable Energy Growth (REG) program pays you a guaranteed $0.2723/kWh for every kilowatt-hour your solar system produces for 15 years (residential). This is on top of net metering credits. For an 8 kW system producing 9,700 kWh/year, REG pays approximately $2,639/year or $39,591 over 15 years. Enrollment opens April 1 annually on a first-come-first-served basis.
Even without the federal ITC, most Rhode Island homeowners see payback in 5-7 years. This is driven by the powerful REG program ($0.27/kWh for 15 years), the $5,000 REF rebate, high electric rates ($0.29/kWh), and dual tax exemptions. After payback, you get 18-20 years of essentially free electricity plus ongoing REG income.
Yes. The REF rebate and REG program stack together, and both stack with net metering and tax exemptions. This is what makes Rhode Island solar so financially compelling. You receive the REF upfront rebate ($5,000 max), ongoing REG production payments ($0.27/kWh for 15 years), net metering bill credits, and property and sales tax savings — all simultaneously.
Yes. Systems installed after April 15, 2023 receive credits at 80% of the retail rate (about $0.232/kWh with RI Energy). Systems installed before April 2023 are grandfathered at 1:1 full retail. Excess credits roll over monthly, and annual excess is settled at the avoided-cost rate. Systems are capped at 125% of annual consumption.
Rhode Island offers two tax exemptions for solar: (1) Sales tax exemption — the full 7% sales tax is waived on solar equipment, installation labor, and battery storage, saving about $1,714 on a typical system. (2) Property tax exemption — solar installations are exempt from property tax assessment for 20 years, saving approximately $375/year or $7,500 over the exemption period.
ConnectedSolutions is a battery demand response program through Rhode Island Energy. Your battery discharges during peak grid events for cash payments: $225/kW in summer plus $50/kW in winter. A 10 kW battery earns approximately $2,750/year. Only RI Energy customers are eligible — Pascoag and Block Island Power do not participate.
Indirectly, yes. When you lease or sign a PPA, the third-party company owns the system and claims the Section 48E commercial ITC (30%+ for projects beginning construction before July 4, 2026). They pass savings to you through lower monthly payments. You do not file anything on your tax return — the benefit comes as a below-retail electricity rate.
Yes. Rhode Island has one of the strongest state incentive stacks in the country. Between the REG program ($39,591 over 15 years on an 8 kW system), REF rebate ($5,000), net metering savings ($2,260/year), ConnectedSolutions battery revenue ($2,750/year), and dual tax exemptions ($9,200+ combined), the total value exceeds $70,000 over 25 years. Payback is 5-7 years even without the federal credit.
Rhode Island has one of the top 3 state solar incentive programs in New England. The REG program ($0.27/kWh for 15 years) is more valuable than most state programs nationwide. Combined with the REF upfront rebate, high electric rates ($0.29/kWh), ConnectedSolutions battery payments, and dual tax exemptions, RI delivers a faster payback than most states even without the federal ITC.
The REG program opens April 1 and fills fast. The REF spring grant round is coming soon. Section 48E expires July 4, 2026. Get your free solar design now so you are ready to apply.