Are solar panels worth it in Rhode Island?

7 factors to consider before getting solar panels in Rhode Island

We’ve heard from more than 100,000 verified solar customers since 2018, including dozens in Rhode Island. A couple of things we know for sure: People like powering their homes with a reliable source of cheap, clean energy. They don’t like getting into solar contracts that don’t meet their expectations. Here’s what to consider before making the switch.

1. Solar panel installation costs
2. Your energy consumption
3. Rhode Island solar incentives
4. Net metering buyback rates
5. How long you stay in your house
6. How you pay
7. The solar company you hire

1. Solar panel installation costs: $10,000 to $30,000

Average solar panel costs in Rhode Island are comparable to the national average. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $16,400 to $32,800. That price drops to $11,480 to $22,960 after the full 30% tax credit.

Most installers set the price according to the system's wattage, with a typical cost between $2.50 and $5 per watt. “Cost per watt” is a little like looking at the price per square foot when you buy a house. It helps you compare the value of solar energy systems in different sizes. In Rhode Island, the average cost per watt is $3.28.

Average solar panel installation cost by system size in Rhode Island

2. Your current energy consumption

A typical Rhode Island household needs a system with the capacity of 8.86 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

Homeowners with solar panels typically save $20,000 to $90,000 over 25 years.

Your energy needs are a big factor in whether solar panels are a worthwhile investment. Leslie in Tiverton realized they needed a second battery after the installation was complete. Otherwise, their septic system and water well wouldn’t work during a power outage and “the whole reason for going solar was to eliminate those things,” Leslie told us.

Leslie’s experience is a good reminder to other residents: Make sure you understand exactly what you’re paying for and how all the different components work together.

You’ll get the most out of solar if most of your appliances are electric. One resident, Valerie in Newport, said her electric bill went from $322 to $0. “I’m very happy. I love it,” she said.

3. Rhode Island solar incentives: federal and state

Despite its small size, Rhode Island punches above its weight when it comes to renewable energy policy. The state offers some of the nation’s best consumer-friendly solar policies. In January 2020, it set an ambitious goal to meet 100% of Rhode Island’s electricity demand with renewable energy by 2030.

The federal solar investment tax credit (ITC) is still the most significant incentive for most homeowners going solar. The ITC provides a 30% tax credit on your total system costs, including equipment, labor and permits. It will drop to 26% in 2033 and 22% in 2034.

On top of the federal ITC, residents can take advantage of additional solar incentives in Rhode Island:

• You’re exempt from sales tax when you purchase solar equipment.
• Homes with solar can get property tax exemptions for the value your solar energy system adds to your home.
• The Renewable Energy Growth Program offers a performance-based incentive to homes with solar energy systems up to 25 kilowatts (kW).
• The Renewable Energy Fund offers grants for home solar energy systems. You can get up to $5,000 per project.

» GREENEST STATES: Rhode Island ranked 16th in 2024

4. Net metering in Rhode Island

Net metering is a system of give-and-take between you and your utility company. It lets you access power from the grid when your panels don’t generate enough electricity. You can also earn credits for sending any excess solar energy to the grid. These credits can offset the cost of electricity consumed at other times.

Rhode Island Energy’s price per credit is updated every month. In April 2024, the credits ranged (based on what type of customer account you have) from about 10 cents to 20 cents per kW/h, based on rate class and service type. The Pascoag Utility District, as well as Block Island Power Company, are subject to different rates and policies.

» BEST STATES FOR SOLAR: Rhode Island ranked 11th in 2024

5. How long you plan to stay in your house

It takes years for electric bill savings to make up for the initial cost — about 2 years on average in Rhode Island. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

Solar panels last 25 to 30 years.

A Zillow study found that, on average, houses with solar panels sell for 4.1% more. Let’s say you spend $25,000 putting solar panels on a house that costs $400,000. It might sell for $16,400 more in a few years, according to Zillow. But you miss out on some of that $60,631 in total avoided utility costs over 25 years.

In other words, don't get solar panels just because you want to sell your house soon. Consider a home improvement project with a better return on investment, like remodeling the bathroom or kitchen, instead.

6. How you pay

It’s great if you can pay for the whole thing upfront. You own the system from day one and receive the benefits of available tax credits; plus, you don’t have to pay interest on a loan. Of course, cash isn’t always an option. That’s when loans, leases and other agreements come into play.

• Loans: Solar loans work like any other type of loan. They have relatively low fixed interest rates. Once you pay it off, you own your system outright.
• Leases: Leasing panels is one way to get the benefits of solar energy without the high upfront cost. A solar lease works like a car lease — you get to use the panels but don’t own them. Leasing can be good if you have limited savings. Solar lease agreements typically last 20 to 25 years.
• Power purchase agreements: Similar to leasing, a power purchase agreement (PPA) lets homeowners install solar panels without the upfront costs. You sign a long-term contract with a solar services provider to purchase the electricity generated by the panels at a predetermined rate. The provider owns and maintains the panels throughout the agreement, which usually lasts 10 to 25 years.
• Home equity loans or lines of credit (HELOC): Eligible homeowners can borrow against equity in their house to finance a solar panel system. These often have variable interest rates, meaning monthly payments can increase over time.

7. The solar company you hire

We’ve heard from dozens of solar customers in Rhode Island. In the best-case scenario, it’s easy, and you’re happy with your system’s performance. In the worst-case scenario, you end up paying thousands for mid-tier solar equipment from a company with poor customer service and no follow-up or support.

One of the most common complaints is related to pushy sales reps who make promises that can’t be delivered. That’s why it’s so important to thoroughly research and verify claims made by sales teams before making a decision. Use the National Renewable Energy Laboratory’s PVWatts Calculator to estimate how much electricity a solar panel can produce over a year on your house — just type in your address. Project Sunroof is a free solar savings estimator powered by Google Earth imagery.

In November 2023, Rhode Island’s attorney general took aim at a Providence-based installer of residential solar panels, calling out deceptive practices. Though the company denies allegations, the case highlights concerns about transparency, clear regulations and consumer protection in the saturated solar market.

Monthly costs: solar payments vs. savings

Think of going solar in terms of your monthly costs. Given rising energy costs in Rhode Island and elsewhere, financing solar panels makes sense as long as your monthly loan payment is less than what you would be paying the utility company anyway.

Is my house a good candidate for solar panels?

Going solar ends up being worth it for many homeowners as long as their house is a good candidate to support the panel installation. Here’s what to think about before you commit:

• How much sunlight do I get? Solar panels need regular exposure to sunlight to produce the most energy possible. Rhode Island averages 3 to 4 peak sun hours each day. However, lots of shading — like trees or tall buildings above your roof — could make your solar system less efficient.
• What is the size and angle of my roof? Rhode Island (and the rest of the United States) is in the Northern Hemisphere, so solar panels perform best on south-facing roofs. The worst place to install would be on north-facing roofs, especially if those roofs have a high pitch. For example, if the only place you can install is a north-facing roof with a 30-degree pitch, your costs will likely go up by 30% to 40%.
• What is the condition of my roof? If you have to replace your roof, do that before you install solar panels. Solar panels are designed to last up to 30 years, so you want your roof to last just as long. Otherwise, it could cost thousands to remove the panels, fix your roof and reinstall the panels.
• How old are my appliances? It’s smart to get your electrical loads as low as possible before going solar. That way, you can get a smaller system, which will be cheaper overall. In other words, if you have electrical appliances, upgrade those before investing in solar panels.

Pros and cons of solar panels in Rhode Island

It’s a common misconception that solar panels will completely eliminate your monthly power bill — but this is not always the case. Still, you’ll likely be paying much less than you would for traditional utility bills.

Benefits of solar panels in Rhode Island

• Cheaper energy bills: The average homeowner in Rhode Island uses a lot of power, which adds up to a lot of savings when you switch to solar. Going solar now means that your monthly energy expenses will be more predictable (and very often significantly lower). Solar panels also protect you from future energy cost increases.
• Better for the environment: Traditional energy sources like coal and natural gas release carbon dioxide and other harmful pollutants into the air. Solar panels generate electricity from sunlight, a clean and renewable energy source. Installing solar panels on your roof helps the environment primarily by reducing greenhouse gas emissions and dependence on fossil fuels.
• Higher home resale value: Installing solar panels can significantly increase a home's value. According to the study mentioned above, houses with solar panels sell for 4.1% more on average. The exact increase in value varies by location, with homes in active solar markets sometimes seeing even higher boosts.

Drawbacks of solar panels in Rhode Island

• Solar equipment is expensive: Even with rebates and other financial incentives, the price typically starts between $10,000 and $30,000. It’s even more expensive if you want a solar battery for energy storage. Solar battery costs are generally between $7,000 and $18,000. Getting a solar battery might be strategic if net billing rates continue to decline in Rhode Island. That way, you can store energy at home instead of tapping into the local grid when you need to.
• Potential roof leaks: The installation process involves drilling holes into the roof to anchor the panel mounting systems. If not done correctly, this can lead to leaks or structural damage. 
• Energy production varies: Solar panels are dependent on weather conditions and seasonality. Solar panels still work on cloudy days, but less available sunlight does affect how efficiently they produce energy. Snow cover may also temporarily reduce efficiency until it's removed or melts off.

» MORE: Solar energy pros and cons

Find solar companies in Rhode Island

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Rhode Island’s top solar companies to learn more.

Bottom line: Is going solar in Rhode Island worth it for you?

Going solar in Ocean State isn’t just a green move; it's often a smart money move. With electricity costs continuing to rise, more homeowners find solar power is financially worth it in the long run.

Many Rhode Islanders are opting in on this financially and environmentally sound home improvement project. However, the rapidly expanding solar market can open the door to scams, which leaves many consumers wondering who to trust with such an expensive energy investment.

Going solar in Rhode Island might be easier than you think. The main obstacle to going solar is the high upfront cost of purchasing and installing solar panels, inverters and other equipment. For a lot of homeowners, it ends up being worth it as long as their cost savings over time outweigh the initial investment. Others are happy to go solar for the environmental benefits alone.

Solar costs vs. savings: Rhode Island and nearby states