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Notes about Solar (Massachusetts, circa 2014)

I wrote this in Feburary 2014, as a note to a friend, about solar. Though the market has changed, it might be useful to you.

My partner and I bought a house a couple years ago, and our roof is pretty ideal for solar. This fall, we spent awhile trying to understand the options, and we completed our installation in December. How programs work vary by state and year.

Since you're not installing new, you don't get much choice in the Photovoltaic panels. But, for what it's worth, panel lifetimes generally get reported as about 30 years, with a decreasing production over that time. Inverters are generally quoted as having a 5-10 year lifespan. There are a couple of brands that are supposed to do "better" over the long term, but I don't have direct experience.

There are 3 different kind of solar install. It mostly comes down to who owns the panels. You may not have choice here.

  1. The panels may be owned by someone else. In this case, you're basically leasing your roof to a middleman, who then gets various benefits and sells power back to you at some discounted rate. This is usually called a PPA, and does not cost the home owner anything. It did not seem to be very financially beneficial to us, so we didn't do this.

  2. The homeowner owns the panels. This has a fairly high upfront cost, but all of the benefit (and risk) is the homeowners. This is what we've done, so it's what I'm most familiar with.

  3. There may be a complicated leasing agreement. This can mean almost anything, and you'd mostly need to check the terms of the lease. It's at least a little interesting at install time because of some weird depreciation fudging.

If you're in a PPA, I don't think any of this email is applicable. Whoever owns the panels will set your rates, and you won't be able to participate in the SREC market.

From my perspective, there are 3 ways one can "earn" money around solar. (There are also tax incentives for installing solar, but I think that's only new stuff)

First, you get to reduce your energy bill. This one is pretty obvious. Though generally, solar is a really expensive way to get this, I think it's cheaper to get more efficient appliances.

Second, you can "sell" excess energy back to your supplier. This may vary by region, but for us, nstar won't really pay us money, but they will let us build up a service credit. To me, this feels like using them like both a battery and a bank, and seems simple enough. There's also an option to transfer capacity to someone else (via schedule z), but they have to be in the same billing zone. I haven't looked into it, but there might be something interesting around transferring excess to a charity and deducting it. Maybe.

Third, and possible most important, is the Solar Renewable Energy Credit, "SREC" for short. The energy suppliers are required to obtain a certain percentage of their electricity from renewable means. This is achieved by weirdly regulated market. In addition to the energy I produce, I also produce SRECs. The energy I consume or sell to the grid, and the SRECs are traded on the SREC market.

The SREC market is wholly constructed as a solar incentive. So it's a little weird. I haven't been involved for long, so I'm a little fuzzy on the details, but as I understand it, there's a floor enforced through a fee on unsold srecs, and a cap. These numbers change each year.

Generally speaking, the incentives around solar have been very successful. So, the incentives have been scaling back. The tax incentives are smaller, and the SREC-I was replaced by SREC-II.

SREC-I and SREC-II are different markets. It's not really clear to me how they'll effect each other. But from my perspective, there are 3 main differences:

a) The floor and ceiling numbers are lower for SREC-II. This is probably worse.

b) In SREC-I, I produce SRECs at 100% of what I generate. In SREC-II, I produce them at 90%. Also, clearly worse.

c) SREC-II has an option to pre-sell 10 years of production at current market rates. I don't really understand how to evaluate whether that's a good idea, but the choice is probably beneficial.

Nominally, Dec31 was the deadline for SREC-I. Since I think it's more valuable, I pushed my installer to get us done by then. This required our install to be completed, and nstar to have approved the interconnect. I'm not really sure how this applies to an existing install, presumably it's already been approved electrically, though you probably haven't filed forms. OTOH, I don't even know what forms you'd file. There was also some extension, though that might have only been till Jan13.

Being an existing install probably has a very different process than a new install.

For us, we contracted with an installer, and they did the actual work and coordinated electricians, city inspectors, opening an SREC account, and filed some nstar "intent to interconnect" form for us.

I'm not really sure how this works for an existing install. So, this part is speculation....

I imagine that if there was ever net metering, that the electrical company should have a record of that, and you would not need to get re-inspected. I would probably start by calling the electrical company and asking them how to get setup. If you happen to also be nstar, I think I have the contact info for somewhere who administers that program.

Concurrently, I'd also recommend talking to an SREC broker. They might have guidance on the process. Our installer recommended 2 brokers to us: is a fairly flexible broker. They'll handle the sale for us, or let us do it ourselves. Their contract did not have onerous terms, and we decided to try them. is a pretty full service broker, they wanted a 10 year contract. We did not use them.

I think that's an overview. I'm happy to try to answer questions, though I might not know the particulars. If it's easier, I can probably also talk on the phone.

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