Rhode Island solar incentives, tax credits and rebates

Residential solar panel incentives in Rhode Island

The federal solar investment tax credit (ITC) is the most significant financial incentive for most homeowners buying solar panels in Rhode Island. It reduces your federal tax liability by 30% of how much it costs to install solar panels.

The ITC drops to 26% in 2033 and then 22% in 2034.

The ITC is a credit, meaning it directly decreases the amount of taxes you owe. For example, if you spend $10,000 installing a solar panel system, the ITC is worth $3,000. If in the year your system becomes operational you owe $15,000 in taxes, the ITC reduces what you owe to $12,000.

More solar tax breaks

• Property tax exemption: Rhode Island exempts most renewable energy systems from 100% of property taxes. The exemption applies to solar panels, solar water-heating and solar space-heating systems. Essentially, your property tax bill won’t go up because your solar panels increase the market value of your home.
• Sales tax exemption: Many renewable energy systems and related equipment sold in Rhode Island are exempt from 100% of state sales and use tax. Eligible items include solar electric and thermal systems, solar panels and solar pool heating systems.

Grants and performance-based incentives

• Small-scale solar grants: CommerceRI’s Renewable Energy Fund (REF) offers a selection of grants to assist residents with the cost of their renewable energy systems. Any residential or small business (up to 7.69 kilowatts) with solar panels and domestic solar water heating systems in Rhode Island are eligible to apply.
• Renewable Energy Growth (REG) Program: This statewide program offers a performance-based incentive to homeowners and small business owners with properties with solar energy systems up to 25 kW. This statewide energy-purchasing program allows homeowners and small-scale businesses to sell their generated electricity under long-term tariffs at fixed prices.

Additional solar incentives in Rhode Island

In April 2023, a state lawmaker proposed a bill that would have required rooftop solar on all new single-family homes, multifamily residential buildings and parking lots. It did not pass, but has been sent for further study by legislators. Check DSIRE for the most comprehensive source of information about solar policies in Rhode Island.

What to know about net metering in Rhode Island

Net metering lets homeowners with solar panels sell any excess electricity they generate to their local power grid. In Rhode Island, Net Metering Credits (NMC) are credits that apply to your future electricity bills. Though these credits accrue as a dollar value to cover your electricity bill, do not expect a check in the mail. Net metering credits will continue to accrue, though you can allocate a percentage of your credits to other customers (who also have established net metering accounts in Rhode Island).

Remember, the goal of net metering is to let you produce enough renewable electricity for your own home's needs, but not drastically more than what you use. Here's how it works:

1. Your home's electricity meter keeps track of both the electricity used from the utility company and any extra electricity fed into the grid from your solar panels or other system.
2. At the end of each billing period, your utility company looks at whether your system put more electricity into the grid than you pulled out.
3. If you put back more than you used, you get a credit towards next month's bill for the extra amount. If you use more than your system produces, you only pay the utility company for that additional amount.

Any grid-connected systems can still tap into the local power grid when needed. The alternative is to store it in a battery. That way, you can still turn your lights on when panels aren’t generating electricity, like at night or on especially cloudy days. The biggest downside is that solar storage battery costs can be almost as high as the panels — $7,000 to $18,000.

» GREENEST STATES: Rhode Island ranked 16th in 2024

How much are solar panels in Rhode Island?

After considering the federal solar tax credit, solar panel costs in Rhode Island typically range from $11,480 to $22,960.

Leasing or entering a power purchase agreement (PPA) is often cheaper upfront, but you won’t be eligible for the federal solar tax credit and other financial incentives.

Your system size greatly affects how much you pay overall. The typical system size for solar systems in Rhode Island is 8.86 kW (kilowatts). You might need a larger or smaller system, depending on your average household energy usage.

Average solar cost by system size in Rhode Island

Solar resources in Rhode Island

Rhode Island's residential guide to going solar has lots of helpful information. Below are some additional resources.

• Net metering in Rhode Island
• Rhode Island Renewable Energy Fund
• Rhode Island Renewable Energy Growth Program
• Rhode Island Office of Energy Resources
• Going solar in Providence

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

Installing solar panels leads to big long-term savings on electricity bills for Rhode Island homeowners. On average, you’ll spend $11,480 to $32,800 for panels that last about 25 years. Over that same time period, you’d avoid approximately $60,631 in total utility costs.

The ConsumerAffairs Research Team conducted an in-depth analysis to determine the average costs of going solar and incentives in other states. Turns out, it’s worth it for many homeowners, particularly for Rhode Islanders.

Solar costs vs. savings: Rhode Island and nearby states