Rhode Island Solar – Everything You Need to Know


Information about Solar Panels in Rhode Island

Rhode Island may be the smallest state in the Union, but there are some very big reasons why Rhode Island solar can be a big hit for you. Between the grant program, federal tax credit, and some absolutely insane performance payments offered in the state, there is more than enough here to make a strong financial argument for getting over the pre-solar jitters. The performance payments alone can total around $5,000 in savings over time! It is clear that the state government strongly endorses both current and future solar in the state, and Rhode Island homeowners enjoy some of the highest solar savings in the country!

Read on to find out more about how you could save a lot of money while positively impacting the environment at the same time!


#1 Are Solar Panels Worth it in Rhode Island?

Overall Grade
4 years Avg. Payback Time (For Cash Purchase)
32.2 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$52,024 Your Net Profit Over 25 Years (Cash Purchase)

* 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 Rhode Island

As with most things, there are a few different ways to pay for your solar system and installation. In just a second, we’ll discuss each of the three major options in detail so that you can decide which is best for you.

As a bit of a spoiler, I’ll just go ahead and say that if you have the cash, paying upfront will likely be your best option in terms of return on investment. Luckily, if you don’t have the cash, you still stand to make a lot of money over the course of the system’s lifespan with a solar loan (like, a lot of money).

Leasing is usually the worst option financially, but if you are flat broke and have no equity in your home, it can still be a reasonable option for getting renewable energy with zero dollars down!

Cash Upfront

As I said, cash is going to end up being the best method to purchase a new solar system if you have the liquid funds on hand. With cash, there won’t be any additional interest to worry about and you’ll get all of the fantastic savings through the federal tax credit, tax exemptions, and more.

Let’s run a couple of numbers to see what we might expect to pay for the system, how much we can save each year, how long it will take to pay it off, and the total amount of money that we could expect to save over its 25-year lifetime. Please keep in mind that all of these numbers are estimates and should be used as such.

For a 5 kW system in Rhode Island, you can expect to pay about $18,633 before any incentives for equipment and installation. Almost $19k is quite a bit. Let’s list some ways to drop that price:

  • The renewable energy fund could pay for about 28% of the total cost in the form of a grant that will be reimbursed after purchase. That’s a $5,287 discount.
  • The federal tax credit is currently sitting at 30% and will kick in for the current year’s tax bill. That’s another $5,590 off.

This means that the system could end up costing you only about $7,756 after all is said and done, which is a pretty remarkable discount from the sticker price.

To see how much you could be saving, we’ll need to use a bit of simple math. In Rhode Island, a 5 kW system produces about 6,660 kWh per year. With the average utility in Rhode Island charging $0.18/kWh, your system will offset about $1,198 per year in electricity costs (6,660 kWh X $0.18/kWh = $1,198). Although your system will degrade in performance by about .08% per year, your utility will also raise its rates by about 3.5% annually (which is the average yearly increase in Rhode Island). This leads to more savings each year!

We aren’t stopping there, however. Rhode Island solar has another fantastic perk: the renewable energy growth (REG) program. This program pays double the typical utility rate for any energy produced by your system (minus utility fees for infrastructure and programs) as a performance payment. If your system is operating at peak levels, this could be putting an extra $1,200 in your pocket each year! What’s more, this rate is guaranteed to be paid for the first 15 years of ownership!

With a system cost of only $7,756 and about $2,500 or more in yearly savings for the first 15 years (from the REG and avoided utility costs), you could pay your system off in as little as four years and then be raking in profit after that!

Bottom Line: According to our analysis, when you include all the incentives discussed above (federal tax credit, state renewable energy fund, and state REG program) you could reap over $52,024 in net savings from your solar system over a 25-year period. Considering that you are also doing your part to help save the earth, this is utterly insane!


Leasing options do exist in Rhode Island, but conditions have not been very favorable for enticing the big solar leasing companies, such as SunRun and SolarCity, to jump into the market. Their hesitation stems from the fact that for a while, third-party ownership was prohibited in the state and it allowed the smaller, more locally owned installers to get a footing and push for the sale of solar panels rather than leasing them.

Last year, the state government passed a handful of laws that helped pave the way for solar leases by allowing for the ownership of a solar array by a third party and exempting them from paying property taxes on that installed equipment. Since then, SolarCity has expanded their operations from a 20 person satellite office to over 200 employees in Coventry, RI.

When using a lease option to install solar, you will end up paying a little less for your electricity each month as long as everything is running fine. The leasing companies are careful to price their services so that you can save money, but not as much as you would if you owned the panels outright. They have to make a buck, too!

Over the course of your lease, your payments will probably go up a little at some fixed rate, but it is likely less than the increases you would see on your power bill.

Bottom Line: Leasing gives you the option to spend no money on solar and not have to worry about the hassle of maintaining it, yet enjoying some of the benefits. Plus, you’re still doing your part to go green!

More: Solar Leases


Solar loans represent a reliable option for homeowners that simply don’t have a lot of extra cash lying around. This is because financially, the loan only changes the equation by adding the additional loan interest that you’ll be paying.

Because Rhode Island’s biggest discounts for solar, the Federal Tax Credit and Rhode Island’s grant program, are based on how much you’ve already spent, you’ll have to take out a loan for the total cost of the solar system and then apply to get some of your money back. If you immediately put those payments to the loan upon receiving them, however, you’ll be able to capture even more savings.

Using the system price from our cash example, you’ll still have to fork over about $7,889 in interest over the course of a 15-year loan with 5% interest. This will make a dent in your overall profit, but because your savings and performance payments will be much more than your loan payments, you’ll still be coming out ahead.

In fact, if you put the grant money, Federal Tax Credit, and all of the performance payments toward the balance of your loan as you received them, you could actually pay your loan off in about five years and then be on your merry way!

Bottom Line: According to our numbers, you could still reap over $43,958 in net savings over the course of 25 years by purchasing your system with a solar loan – an ROI of 15.4%!

More: Solar Loans

#3 Rhode Island Solar Policy Information

In Rhode Island, the government has made a hearty endorsement of solar with their RPS.


Renewable Portfolio Standard

When it comes to supporting growth in the solar industry, the Renewable Portfolio Standard (RPS) is one of the clearest indicators of each state government’s intention. The RPS allows officials to set the target for what percentage of total power they would like to have generated by renewable methods, what year they want to hit this objective by, as well as any other stipulations for how to get from “A” to “B”.

In the case of Rhode Island, the government makes a hearty endorsement of solar with their RPS. Although it falls short of the top tier standards, Rhode Island has shown that it is committed for the long haul by setting performance targets as far out as the year 2035.

By that year, they expect to have a full 38.5% of the power generated in the state to come from renewable sources. Just to touch base with the present, the target for the year 2017 is only 11.5%, but the RPS indicates that the target will increase by 1.5% per year until it hits the final goal.

Having an RPS is extremely important because established utility companies are not usually too enthusiastic about a state’s adoption of solar power. Unless they are the ones building the solar arrays and leasing the power, individuals powering their homes at the residential level can have a negative impact on their bottom line.

On the one hand, it might seem a little unfair to the utility companies, but let’s be honest – if they cared about their communities, they would be looking into more sustainable ways to generate power for them!

It should be noted that many states have a rider on their RPS that states how much of the total percentage of renewable energy should come specifically from solar. In the case of Rhode Island solar, there is currently no such carve-out.

In the grand scheme of things, the environment will benefit from any sustainable source, but solar carve-outs can help bring down prices or increase the likelihood of other incentives down the road. Hopefully, a solar carve-out will be added in the future!

More: Renewable Portfolio Standard (RPS)

Electricity Prices

Another area that requires attention when evaluating a state’s solar friendliness is the price of electricity. The price is important because it is a big part of the equation when we talk about how much money you stand to save by switching to or supplementing with solar. If it costs you twenty cents to produce a watt of solar power and one cent to buy it from the utility company, there’s a big financial gap between you and renewable energy.

In the case of Rhode Island, however, the average cost of electricity is $.018/kWh which compares nicely to the national average of $.128/kWh. Remember, from a cost perspective, you actually want to be paying a lot of money for your electricity now so that you can save more by going solar!

Net Metering

It’s pretty obvious that solar panel systems are only able to produce electricity during the day, so it is imperative that the house stays connected to the grid or has a hefty battery-backup system for nighttime hours. In most cases, your house will be connected to the grid and will use its own power during the day and purchase electricity from the utility at night.

Depending on your home’s system, however, it might actually be generating more power than you need during peak sunny times. This is where net metering comes in.

Net metering is the system in place that allows residential solar arrays to send excess energy back into the grid and requires utility companies to keep track of how much energy is going each way. If your solar array is sending more energy into the grid than you’re using, the utility is responsible for giving you credits for the surplus.

In the case of Rhode Island solar, there is a pretty solid net metering standard in place that ensures you will get credit from the utility company for any excess electricity you produce each month, up to 125% of your monthly consumption of energy, at the utility’s avoided-cost rate. This means that you will typically be getting paid what it would cost them to produce that electricity (typically about 1/3 of the retail price, so around $0.05 per kWh).

Although they have been tweaking the net metering laws over the years by upping the limit to 10 megawatt generation capacity and adding support for 3rd-party owners, there is still room for improvement. Many states actually give the system owner the choice between rolling credits over to the next bill or taking cash payments.

More: Net Metering

Interconnection Rules

Like we mentioned above, most homes will stay connected to the utility grid as a backup for when their system is not able to cover their energy needs. The rules that govern how these systems interact with one another are called the interconnection rules, and each state approaches this topic a little differently.

Rhode Island does not have the best set of rules, but they are not the worst, either. In general, the issue with Rhode Island is that they are not very comprehensive with their rules and many issues are left without answers. Two of the more important factors to consider are:

  • Ease of connecting a new residential solar system – Rhode Island solar throws a little bit of red tape to potential applicants in that it requires the utility to conduct an impact study, including an estimate for connection costs before the system can be connected to the grid. This study could take up to 90 days to complete. If requested, it must also complete a feasibility study within 30 days to see whether or not the system can be connected at all. Luckily, these studies will typically be free for the resident.
  • Limitations or restrictions on system size – Some states have strict limitations on system sizes, but Rhode Island just doesn’t specify any. This could be either good or bad depending on the situation.

Solar Access Rights and Homeowners Associations

A couple of areas that probably don’t get a lot of thought but are nonetheless very important for anyone considering going solar are the ability to protect the access to sunlight around the solar array and the right to have solar in the first place!

As solar installations on rooftops are a relatively new phenomenon in the mainstream, unexpected problems tend to pop up now and again that remind users that they need to be paying attention and protecting themselves.

One such issue that commonly plagues solar owners is that once their shiny new system has been installed and everything is chugging along smoothly, a neighbor decides to put up a tall fence, plant a tree, or build an addition on their house that blocks their array’s access to sunlight! To prevent this problem, you’ll need to apply for what’s called a “solar easement.”

Now, not every state has this protection, but luckily Rhode Island enacted a law in 1981 that allows for the protection of solar and wind access. It says that the easement must be created in writing and must include descriptions of the property involved, all of the angles and three-dimensional space, the terms under which it might be granted or terminated, and the way in which the property owner will be compensated if the easement is breached.

That’s a lot to worry about, but at the end of the day, your investment won’t be ruined by your neighbors’ plans.

The next worry, that homeowner’s associations could block your ability to install solar panels in the first place, is something that you will have to deal with on a case-by-case basis when it comes to Rhode Island solar. Unfortunately, the state has no provision to block HOAs from writing bylaws against solar.

#4 Financial Incentives, Rebates, and Tax Credits

We’ve looked at Rhode Island’s solar policies and it’s clear that the state makes it convenient for residents to jump on board the solar train. Now, we’ll look at some ways that you can make or save money by going solar with tax credits, rebates, exemptions, and other incentives. If you live in Rhode Island, you are in luck because they have a very generous landscape for solar adopters so read on below to see how you can actually get paid MORE than the utility companies for the power you are feeding back into the grid through net metering!


Federal Tax Credit

Always a must-mention, the federal tax credit is one of the single most significant benefits of going solar in the US.

Originally introduced in 2005, the residential renewable energy tax credit allows for a staggering 30% tax credit on any dollars spent on a residential solar system and the system does not have to be installed on the taxpayer’s principal residence. What this means is that you can pretty much take a third of the price of solar right off the top!

Now, it is important to point out that although this policy was recently extended until 2021, it currently has a sliding scale on the credit amount. Before the end of 2019, you’ll get the 30%, but it decreases to 26% in 2020, 22% in 2021, and then goes away completely (unless they elect to renew it again) so you’ll need to get moving to get the full amount!

More: Solar Federal Tax Credit

State Tax Credits and Rebates

Unfortunately, Rhode Island doesn’t offer anything in the way of direct tax credits for solar systems in the state, but check out the utility-based incentives below to see how Rhode Island residents can even up taking around $5,000 off the cost of their system over time!

Rhode Island Renewable Energy Fund

Not quite the same as an actual tax credit, the Renewable Energy Fund is a program that provides grant money to help cover a substantial amount of the installation costs and is among the top grant programs in the nation.

The program works in block format, with different dates of application and approval for each block throughout the year. As of the time of this writing, their current round of funding has $1.4 million waiting to help residents hop into the solar game!

The remarkable thing about this program is that it is currently funding about $1.05/W of installed solar on systems up to 10kW, up to $10,000 per project. With Rhode Island’s $3.72 cost per Watt to install, this is a whopping 28% discount off the initial price!

Utility Based Incentives

In some states, the government provides an additional incentive for residents going solar by creating programs that require utilities to pay a set amount of money for any amount of power fed back into the system by the solar array.

Rhode Island’s renewable energy growth program allows residential systems under 10kW to get 0.3765 $/kWh guaranteed for the next 15 years. After accounting for all the fees to cover the utility’s costs (like infrastructure upgrades and repair, efficiency programs, etc), the actual incentive is more around $0.19 per kWh. While the actual payout is lower than the incentive, it’s still pretty incredible since, if you’ll recall, the cost of electricity here is only 0.18 $/kWh! You’ll be getting paid more than the utility company does! Most residential systems fall under this threshold, which is good news because the price actually goes down as the system gets bigger.

This is the type of incentive that just cannot be ignored and has the potential to bring in a ton of extra money if your system performs well.

Property Tax Exemption

With all of the talk about the value that a solar system can bring you, it might be time to start thinking about the value that it is bringing to your home! When homes are improved in some way, such as adding an extra bathroom or a pool, they often increase the value of your home and therefore increase the property taxes that you owe.

Fortunately for the citizens of Rhode Island, the state legislature thinks that bringing more renewable energy into the world shouldn’t be held against the homeowner and waives any extra home value added by a solar system for the purposes of assessing taxes.

Sales Tax Exemption

For the same reasons as the property tax exemption, the state government has also agreed to waive any sales tax on your solar system, with no discernible cap. This exemption covers electric solar systems, DC-to-AC inverters, thermal solar systems, racks for mounting, and many other accessories involved in the typical installation process.

General Increase in Home Value

Even though the state won’t leave you holding the bag for the property taxes, there could be a very real increase in the value of your home by installing solar. In fact, a multi-year study involving the sale of almost 22,000 homes in eight states showed that homes with solar tend to sell with about a $4/Watt premium compared to other homes.

This means that a 5kW system could net an extra $20,000 upon the sale of your home, depending on the age and condition of the system. This is the sort of study that helps prove solar to be a reasonable investment for a homeowner, even without the other benefits! However, the increase only applies to homes where solar was purchased either through a loan or cash–leases don’t add additional value to your home.

More: Buyers Will Pay More for Solar Homes

If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.

#5 Providence SolarProvidence-Rhode-Island

If you are living in Rhode Island’s capital, Providence, then you won’t need to worry too much about having a different solar landscape than the rest of the state. Because Rhode Island is so small, most residents use National Grid for their electric service.

Although they participate in all of Rhode Island’s fantastic renewable energy programs, such as the REG (Renewable Energy Growth), they don’t offer much in the way of extra incentives on their own.

It is worth mentioning, however, that they do offer a program based on energy efficiency in general and they offer free attic-to-basement evaluations of your home along with recommended improvements.

What’s more, they will even install a few no-cost products for you on the spot such as a programmable thermostat and advanced power strips. Depending on the results of their analysis, you might even qualify for rebates or cash to go towards improvements like insulation, new appliances, and more!

What to Do Next?point-judith-light-rhode-island

As you can see, going solar in Rhode Island is a compelling offer in nearly every circumstance. If you have been on the fence for a while or even if you just had a casual interest in getting a new solar system for your home, hopefully you see now that it can make a lot of financial sense. Let us know how your journey goes!

Please remember that the advice and estimates here cannot take the place of a qualified installer. Be smart and do your homework before making any final decisions!

Image Credit under CC License via Flickr - 1, 2, 3, 4 & Pixabay

  • by Joshua Bartlett
  • |
  • June 18, 2017
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