Rhode Island solar incentives and rebates (2022)

Rhode Island probably isn’t the first state that comes to mind when you think of solar, but it actually has more solar capacity per capita than Florida (the so-called “Sunshine” state).

Why is this the case? First of all, Rhode Island has a good climate for solar that is comparable to the northwest corner of California.

Rhode Island also has expensive electricity, with a price of residential electricity that hovers around 22.5¢ per kWh. Expensive grid electricity means that electrons generated by rooftop solar is more valuable too.

But the big reason is the incentives. In Rhode Island, you can choose between one of two state incentives that provide a financial payback for adding solar panels to your home.

The Renewable Energy Growth Program (REG) is a state incentive that pays you a lucrative credit of 31 cents for every kilowatt-hour of solar electricity you generate for 15 years.

Meanwhile, Rhode Island Commerce operates the Renewable Energy Fund (REF), which provides homeowners with upfront grants that reduce the price of a home solar system.

Either program can be combined with the federal tax credit, letting homeowners go solar for less than half the sticker price. The big caveat, however, is that you can only choose one program: you can take advantage of either REG or REF, but not both.

This article will explain both and help you decide which is better for you, but first let’s take a look at net metering in Rhode Island.

Net metering policies in Rhode Island

One of the most important policies in any state when it comes to solar is net metering. When an ordinary home uses electricity, the utility meter records the usage, and the homeowner gets a bill every month.

If you have solar panels connected to the electric grid, excess solar electricity that you aren’t using gets sent into the grid. Your utility meter will track this. With net metering, you get a full credit for this electricity: for example, if you pay 21 cents for grid electricity you use, you will also get a credit of 21 cents for solar electricity you sell back to the utility.

Fortunately, Rhode Island utilities - National Grid, Block Island Power, and Pascoag Utility District all offer net metering. This is because Rhode Island has a renewable portfolio standard that requires the state’s electriity to be 38.5% renewable by 2035.

Without net metering, it’s much harder for solar homeowners to recoup their investment, so this policy is an important one.

RI Renewable Energy Growth Program (REG)

This is a program operated National Grid, and is available only to National Grid customers. Fortunately, National Grid is the largest utility company in Rhode Island, so most people in Rhode Island will be able to take advantage of it.

The Renewable Energy Growth Program pays you for the electricity that your solar array generates. It’s a straight incentive based on the gross amount of electricity you generate, and not the net metered amount. For example, if you generate 5,000 kilowatt-hours (kWh) of electricity in a year, your incentive will be based on 5,000 kWh. It doesn’t matter how much electricity your home uses.

It’s a large credit that varies between 27.55¢ and 31.05¢ per kWh, and lasts for 15 or 20 years, depending on the size of your system. Here’s a table that summarizes it:

Ceiling price means that this is the maximum price you can expect to receive on your contract. The amount has changed from year to year, so your solar installer will confirm the price you will receive based on the size of your system at the time you make your application to National Grid.

This type of incentive is known as a performance based incentive because the amount of money you receive doesn’t depend on the size of the system, but how much electricity you actually generate. This means that even if you have a very large solar array, if it has design issues - such as shading - that prevent it from performing well, your incentive will suffer too.

Your installer will help you apply for the incentive as part of the process to connect your solar array to the electric grid. The program has a capacity limit each year which you can check at the National Grid website. At the time of writing, there is plenty of capacity left in the program. Previous years did not hit the cap limit.

If approved, National Grid will install a revenue grade meter at your home to accurately track the credits that you earn.

The Renewable Energy Growth Program actually covers a wide range of technologies, including solar, wind, hydropower, and anaerobic digestion. Some of these are only of interest to business customers; homeowners will be using the Small Scale REG Program, which covers projects up to 25 kW in size. (That’s about 62 solar panels, which would be a very large solar array for a home.)

REG program rules to know

In addition to the rate structure described above, there’s a few other rules you’ll want to know about:

• The system size can’t be sized to produce more electricity than your historical annual usage.
• The compensation will come first as a bill credit, and then the remainder will be paid out as a performance based incentive.
• The PBI is taxable income, so you’ll need to provide IRS Form W-9 with your application.
• The maximum system size for the residential incentive is 25 kW. (That’s a huge system, so don’t worry about this cap.)
• The program application should be submitted before installation starts.

RI Renewable Energy Fund (REF)

Rhode Island Commerce Corporation, a quasi-public agency, operates the Renewable Energy Fund (REF).

In contrast to the REG Program, the REF is open to customers of any utility - not just National Grid. This makes it the default option if your electric utility is Block Island Power or Pascoag Utility District.

The REF incentive is a one-time payment based on the size of the system you install. At the time of writing, you can receive $0.65 per watt of solar panels that you install, up to a maximum of $5,000.

What does that mean? As an example, the average home solar installation in the United States is around 6.4 kilowatts (or 6,400 watts). If you installed a system that size, at the current incentive rate of $0.65/watt you would receive $4,160.

The maximum rebate corresponds to a system size of 7.7 kW. If your system is larger than that, you’ll still receive $5,000.

The REF incentive is paid as a cash rebate after your solar project is completed.

REF battery storage rebate

In addition to a rebate for solar panels, the REF has a new incentive for adding battery storage to your solar array.

It’s a flat incentive of $2,000. That’ll knock roughly 20% off the price of a single battery system, before you include the 26% federal tax credit.

A key thing to know about this program is that you’ll need to participate in National Grid’s Connected Solutions program. This is what’s known in utility lingo as a demand response program. During periods of really high load on the electric grid, the utility company will talk to your battery via the internet and tell it to switch your home’s electricity usage from the grid to the battery.

This helps relieve load on the grid, and also helps the environment by minimizing emissions from the most dirty power plants that are typically used during peak loads.

The best part of this program is that National Grid pays you for your participation. The rate is $400 for every one kilowatt of averaged power your battery discharges per event over the season. For example, if half the events ask for 1 kW of power and the other half ask for 3 kW of power, that averages out to 2 kW of power, and you would be paid $800 that year.

There are limits that National Grid places on the program, so they won’t have unlimited use of your battery:

• June to September
• 2pm to 7pm
• No more than 60 times per year
• A maximum of 3 hours per event

Those are the maximum boundaries in which the program will operate, so your battery may never be called upon, or you might get called 60 times per year. It really depends on how the grid is operating that year, so don’t count on this income in your calculation. Still, the compensation more than pays for the added wear-and-tear on your battery.

Other rules to know

There are deadlines and funding rounds for the REF program. In 2022, the funding rounds have application dates of March, July, and October. For the Small Scale solar residential program, the March funding round budget was $783,644. For the Energy Storage Adder, the combined budget for the Small Scale and Commercial programs was $1,224,500.

Commerce RI hasn’t yet published what the July and October budgets will be, so check their website for updates.

Some other key rules to know:

• The program only applies to customer-owned projects. This means that leases and power purchase agreements do not qualify. (This is another good reason to avoid these.)
• The system must be net metered. This means that any completely off-grid systems don’t count.
• Photovoltaic and solar hot water systems qualify.
• The system must be installed by a qualified company.
• Your installer must submit the application with the system design and specifications before the project begins.
• The project must be completed within 12 months of the contract signing.

There’s other rules too, bu† those are the most important ones to know. You can stay up-to-date and read the complete rules at the Commerce RI website.

Which is better: REG or REF?

Rhode Island has two great solar incentive programs that unfortunately have similar names. They are not similar in how they work though.

Most importantly, you can take advantage of only one program, so you have to decide which is better for you. How do you decide?

If you want to maximize your total financial return, the Renewable Energy Growth program will probably be your best option. The average home in Rhode Island uses 6,720 kWh of electricity per year. With a REG price of 31.05 cents/kWh, that’s $2,086 you’ll earn in credits every year. Even if you account for the income taxes you’ll pay on the credits you receive, over the 15 or 20 year program contract you’ll earn a lot of money.

If you’re a Block Island Power or Pascoag Utility District customer, the decision is made for you: the Renewable Energy Fund is the only program available to you.

There are other reasons why you might choose the REF program:

• You are stretching your budget to purchase the system. Maybe you’re using a short term, high interest rate loan to purchase your system. In this case, the quick incentive check you’ll receive from REF might be the desirable choice, even if it means making less money in the long run.
• Your estimated system performance is borderline. If you have a lot of shading or your solar panels aren’t situated where they will capture a lot of sunlight, you’ll generate less electricity and your REG credits will be lower. In this case the REF incentive, which is based only on system size and not performance, might be better. However, if your estimated system performance is poor, you might want to carefully consider if going solar is the right choice at all.

Bottom line: Rhode Island is one of the best states for solar

It may be a little bit of a secret, but Rhode Island is one of the best states for home solar. If you have a sunny roof in good condition, it’s very likely that it will be profitable for you to install solar panels. With an unshaded south-facing roof, your financial payback might be as short as four or five years.

Both the Renewable Energy Growth Program and the Renewable Energy Fund can be combined with the 26% federal tax credit, which means that you might pay less than half the invoice cost of your system. In the case of the REG Program, you’ll essentially be receiving a second income from your solar panels. You’ll basically become a sunshine farmer, which is a pretty neat thing.

Not only that, but you should strongly consider adding a battery to your system. With the federal tax credit, the ConnectedSolutions incentive, and potentially the REF incentive too, your battery could very easily pay for itself.

What to do next? Get some free quotes from eligible Rhode Island solar installers. We’ll help connect you with knowledgable contractors who understand these programs and can help you make the