Maine Solar – Everything You Need to Know
Information about Solar Panels in Maine
Maine is the most northeastern state in the continental U.S, and is a bit of an outlier when it comes to solar. However, for those living in there, Maine solar is still a great deal worthy of consideration.
Despite an aggressive renewable portfolio standard on paper, there is almost nothing in the way of incentives for residents outside of the federal tax credit.
Read on to discover how much profit you stand to make with Maine solar, and whether or not it makes sense for you in your current situation!
#1 Are Solar Panels Worth it in Maine?
* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.
#2 Options for Buying Solar Panels in Maine
You can’t find a wrong way to purchase your solar system in Maine — you stand to profit from your solar whether you are paying cash, taking out a loan, or even leasing. However, there are pros and cons to each one. Let’s see how the numbers look using cash, loans, and leases to get you where you need to be!
If you happen to be sitting on a pile of money and looking to both help the environment and your bank account, then purchasing a solar system in cash is a solid choice. Because you aren’t dealing with loans or leases, you’ll own the system outright and will be able to include it if you happen to sell your home soon after the purchase.
Let’s see how much profit you could expect to make and how long it will take to get a return on your cash investment!
We took a look at the installation costs from several sources for installing a 5 kW system in Maine and we arrived at an average price of $15,700. Of course, your experience may vary as prices have been trending downward for a while!
If we subtract the federal income tax credit that you’ll earn ($4,710), we land on a total investment of $10,990 after the first year. It’s good that solar prices seem to be a little lower than average in Maine, because unfortunately there aren’t any other incentives to subtract from this price.
When assessing solar, it’s not just cost that we consider though. Savings are also incredibly significant for the overall value proposition.
According to the National Renewable Energy Lab, your system panels will decline in performance by about 0.8% each year that they are in operation. That’s certainly a bummer, but remember that utilities in Maine are also likely to increase their prices by about 1.4% each year on average.
This price change disparity coupled with Maine’s higher-than-average utility prices means that you’ll save about $1,107.30 during the first year, and that number will only go up! In fact, if we take the numbers all the way through the end of its 25-year life expectancy, we find that the system will pay for itself after ten years, generate $18,730 in profit, and earn about 9.4% each year as a return on investment.
Leasing can be a reliable option for someone with little money or equity to purchase their system. With a lease, you won’t have to put any money down, nor will you have to worry about any of the maintenance costs associated with owning a system of your own. The leasing company will be responsible for installation, upkeep, and removal at the end of the leasing period.
Leasing solar means that you will be pay your leasing company monthly installments for use of the equipment and purchasing any remaining power needs from the local utility. You won’t save as much as a cash purchase, but the idea is that, at the end of the day, you’ll pay a little less for your electricity and be helping the environment at the same time.
The caveat emptor here is that solar leases aren’t always the best option, depending on the terms of the contract. Be on the lookout for anything that bars you from getting out of the agreement, transferring the lease if you sell your home, or doesn’t explicitly cover potential installation-related damages to your home.
Another possible issue revolves around ballooning rates. Some solar leases also include an ‘escalator’, where monthly payments increase each year (typically around 1% to 3%). Although your utility will likely raise their rates over time, you need to ensure your solar escalator increases more slowly than your utility’s costs.
More: Solar Leases
If you don’t have the pile of cash mentioned above under your mattress, don’t worry. Taking out a loan to purchase your system can still be a solid financial move. You’ll enjoy the same benefit as cash regarding owning your system (albeit with an outstanding loan), so you’ll get to use the federal tax credit to help make your loan payment!
For some, it might make even more sense to use a loan because it will allow that person to generate a return on their investment with no money down. Making money with no money down is always a win!
To show you exactly how a loan will affect your bottom line, we’ll use a standard 15-year loan at 5% interest for our example.
If we look at the numbers behind a loan, we’ll see that after the 15 years have passed and the loan is paid off, your system will have paid for itself on paper as well. Even better: over the 25-year lifespan of the system, it will generate about $11,739 in profit, which works out to a 4.2% annualized return on the original investment of zero!
More: Solar Loans
#3 Maine Solar Policy Information
Legislative policy is usually the strongest factor in how the rest of the state landscape forms around solar adoption. If they are enthusiastic, mandated incentives are a boon to residential solar and things will take care of themselves. Unfortunately, Maine seems to be in a holding pattern and doesn’t have much focus on this area at all. Don’t worry, there are still a few glimmers of goodness to be found!
Renewable Portfolio Standard
RPSs are one of the most important drivers of renewable energy adoption within a state.
This standard, written into law by the state legislature, defines the future vision of renewable energy and outlines the goals, milestones, and commitments that will be required to get there by a specific date. These laws are often enormous motivators for the local utilities, who wouldn’t otherwise be as interested in devoting time or money to developing new infrastructure.
If there is a threat of penalty, however, they will start to create their own projects or subsidize residential projects to help meet their quotas.
In the case of Maine, the state has quite an aggressive RPS on paper compared to other states, but it isn’t nearly as provocative as you might think. Dating way back to 1997, Maine’s law has evolved with changing trends and needs. It settled into its current form in 2011, requiring that 40 percent of all energy produced in the state originate from renewable sources by the end of 2017.
This goal is impressive until you consider the fact that Maine is already generating nearly two-thirds of its energy from renewables as of 2016.
Since Maine is home to an abundance of forests and waterways, about half of its energy is produced from hydroelectric and biomass alone. A further 14 percent is generated by wind power. Up until this point, the state hasn’t been overly concerned with solar energy and has instead put more attention on other renewables.
This is excellent news for the environment, but not so good for solar subsidies! Without their feet being held to the fire, local utilities just don’t have cause to provide much incentive.
A highlight in the solar savings equation for Maine, as we discussed in the purchasing section, comes with local utilities’ high electricity prices. Electricity prices are significant because any electricity produced by your system will be offsetting the energy that you would typically purchase from the utility company. The higher their rates, the more money you will be saving by producing your own!
Maine’s price (as of August 2017) is about $0.1596 per kWh, 21 percent higher than the national average of $0.1319 per kWh. This difference means you’ll be able to save more than many of your fellow Americans with solar!
Along with electricity prices, the way a state handles net metering factors heavily into how much money you can expect to save over the course of a year with solar. It is essential because of how and when your system will be generating electricity.
If you imagine your home as a tiny power plant that is producing a lot of power during the day and almost nothing at night, then you’ll understand why it is important to measure this give and take. It is unlikely, for instance, that your home will use all the power it is generating during the day and will, therefore, be dumping excess energy into the grid at that time. It will also be drawing power from the grid once the sun has set.
After your system is interconnected to the local grid, a meter will record how much energy is passing back and forth through the network. If your home produces more electricity than it uses overall, you’ll have what’s known as “net excess generation.”
Many states force utilities to pay residents for this extra power in the form of credits or actual monetary payments. In Maine, things are a little complicated, as they are currently phasing out their net metering system in favor of a “buy-all, sell-all” program.
As of 2017, residents with solar will be able to carry any net excess generation over the course of a month into the next month at the full retail rate. This allows months of ample sunshine to help during dark ones, and could lead to a situation in which a homeowner would spend no money for electricity. At the end of the year, however, any unused credits will be granted to the utility with no compensation for the resident.
Further, starting in 2018, the utility will be able to reduce the nettable power from a solar system by 10 percent each year, which will slowly reduce the amount of credit a home can earn for producing extra power.
By 2026, zero percent of the energy will be calculated and it will be difficult to save money with this method. It is important to note, however, that there is a 15-year grandfather period that will “lock in” whatever the going rate is for the year — so act fast!
More: Net Metering
Once you’ve installed your shiny new solar system, you’ll be required to connect it to the grid so that the utility can ensure that it is operating safely and all of the equipment is up to code. Maine’s interconnection rules are pretty simple and most residential systems will fall into their “Tier 1” category which covers anything under 10 kW and only requires a $50 application fee to get started.
With systems this size, there is also no insurance requirement and – provided that the equipment is certified – there is no need to install an external disconnect switch at your expense. Overall, interconnection is a pretty painless process.
Solar Access Rights and Homeowners Associations
With all of the equipment, time, and effort involved with installing a new solar system, it is an investment that is worth protecting. As such, it is essential to consider a couple of often overlooked areas that could dramatically affect your solar experience.
First, your solar system will only be able to produce energy if it has direct line-of-sight to the sun. Any obstructions to that could put a permanent crimp in your savings. To help protect solar users, many states have adopted solar access rights or solar easements that allow residents to create a legal instrument to protect their sunlight.
In Maine, these rights allow someone with solar to create a document with a map of protected properties that can be recorded in the same way as any other real property interests. This might come in handy if your neighbor decides to build a giant treehouse next door a year after your system goes live!
Another area, Homeowner’s Associations, are covered in Maine as well. Picture that you really want to install solar, but your HOA flatly denies your application, citing concerns that your panels will affect neighborhood aesthetics. What do you do? In Maine, thankfully, HOAs must adhere to the state laws forbidding the banning of solar systems in their areas of influence. No need to worry!
#4 Maine Solar Incentives, Rebates, and Tax Credits
Having already met the RPS quota is usually a bad sign for incentives in a state. With Maine solar, there just isn’t anything available to potential solar adopters besides the federal tax credit. Don’t worry, however, because the federal incentive is enormous and you’ll still be able to save money with solar!
Federal Tax Credit
The biggest shark in the tank of solar incentives is always the residential renewable tax credit. It is the easiest and most rewarding way to save on your solar installation, and it currently offers an incredible 30 percent federal tax credit based on the equipment and installation costs of your solar system.
As an example, a $20,000 system would allow someone to claim a $6,000 credit on their federal income taxes at the end of the year. Remember that although it is not refundable – you won’t be able to get money back if you don’t owe enough taxes during that year – you’ll be able to break it up over several years to get the full credit owed to you.
This credit is terrific but unfortunately won’t be around forever, unless the federal government decides on a last minute change. Starting in 2020, the credit amount will drop to 26 percent, then 22 percent in the year 2021, and then finally it will go away entirely in 2022. Fingers crossed that it will get renewed (again) between now and then, but for now it makes the case to adopt solar sooner rather than later!
More: Solar Federal Tax Credit
Maine Tax Credits/Rebates
In addition to the federal tax credit, many states opt to create tax credits of their own or even offer rebates to help offset the cost of solar for their residents.
Unfortunately, due to the state’s RPS requirements already being met, the state doesn’t have much motivation to go around creating extra incentives for solar energy. Governments and utilities don’t tend to give away money if they don’t have to, and the lack of any local credits or rebates is a testament to this.
As we’ve mentioned, Maine’s utilities have no reason to want to give residential solar any money that they aren’t compelled to give. In some states, utilities will offer payments to residents on a per-kW basis or even provide rebates when they install their system. Unless the Maine state legislature adopts a more solar-friendly set of laws, it is unlikely that utilities will change their plans anytime soon.
Be sure to be on the lookout, however, for ways to get rebates through utilities for installing energy-efficient equipment or weatherizing your home!
Property Tax Exemption
Most additions to a home will end up increasing its value in some way or another. A savings-generating solar system is no exception to this rule and, as we’ll learn about shortly, they can have a real impact on the numbers.
Many states acknowledge this value and allow their residents to exempt it to calculate property taxes. This can lead to hefty savings on the tax bill for years while still allowing the homeowner to capture the value if they decide to sell.
Unfortunately, Maine does not currently offer this exemption.
Sales Tax Exemption
Similar to the property tax exemption, avoiding sales tax can be a great way to save money on a solar system. Many states allow this exclusion to further incentivize solar, but Maine doesn’t seem too interested in that at the moment. You’ll still have to fork over the 5.5 percent tax!
General Increase in Home Value
We mentioned earlier that solar could add real value to your home and we’ll explain why now.
A 2015 study at the Lawrence Berkeley National Lab showed that, from 1999 to 2013, homeowners earned an average of $4 per watt premium from your solar system, provided that they owned the home and the system outright. This value comes from the fact that solar systems produce sizable electricity savings for the home for at least 25 years. This is a tremendous value!
Using the 5 kW system from the purchasing examples above, we’d see a $20,000 increase in the home’s value that would translate into a higher asking price if you decided to sell down the road. Essentially, you’ll at least be getting paid back for your system’s cost plus the potential for a little extra!
If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.
#5 Augusta, Maine Solar Information
Some cities within a state are a bit more progressive than others and like to go the extra mile with solar incentives. Unfortunately, Maine doesn’t include any cities that are enthusiastic enough about solar to start dishing out money to their residents, and that includes the capital city of Augusta.
If you feel like there deserves to be a movement in your city, then don’t be afraid to start getting some people together that share your values. You never know, the local government might just take notice and put something into action!
What to Do Next?
Now that we’ve explored the landscape for Maine solar, it is pretty clear that there aren’t many extra incentives for current buyers nor will there be many in the future if the state government doesn’t decide to change up how they prioritize solar in their renewable portfolio standard.
Despite these issues, higher-than-average electricity costs make the economics work in your favor should you choose to purchase a system. You can still make money! The Coastal Maine Botanical Gardens, shown above, did go all out with their solar installation and are certainly reaping the benefits.
As always, please be sure to do your own due diligence before dropping thousands of dollars with an installer. There are lots of great options out there and plenty of bad ones as well. Take a look around for accurate pricing and solicit reviews from anyone you can! If you have any thoughts or questions about Maine solar, please let us know in the comment section below!