What is REF?
The Renewable Energy Fund helps people go green by providing upfront grants to defray the cost of a solar system. Funds are allocated to four project categories: Commercial Development, Pre-Development Feasibility Studies, Early Stage Commercialization, and the most relevant for this article, Small-Scale Solar. In this category, directly owned solar systems receive $1.00/watt, capped at $8,000, meaning the REF has the potential to cover 25-30% of installation costs of residential solar projects. Additionally, after taking the grant out of the system cost, the project is still eligible for a 30% federal tax credit on the remaining balance. So an 8 kW system, which normally costs around $30,000, could drop in price all the way down to $15,400; that’s almost 50% of the system cost covered up front! To receive an REF grant, you must work with your installer and send in an application. It is also important to receive an energy audit before applying for the REF program because Commerce RI prefers that owners are educated about ways to use energy more efficiently, and it will help your chances of getting accepted.
What is REG?
The Renewable Energy Growth program is a performance-based incentive that encourages solar growth by awarding bonus compensation for solar energy production. Installing solar decreases your monthly electricity bill via net metering, and REG provides a bonus payment for every kWh of solar production. Residential (Small-Scale Solar) projects are given two options for Performance Base Incentive (PBI) rates: (1) 32.25 cents/kWh for 15 years or (2) 28.55 cents/kWh for 20 years. When calculating how much you will save from REG, subtract your current electricity rate from the REG rate you chose. It is calculated this way so that customers enrolled in REG are not receiving the net metering value twice. At current RI National Grid prices, option one will give you an additional 13.75 cents/kWh for 15 years, and option two will earn you an additional 10.05 cents/kWh for 20 years on all your solar system’s production, both resulting in over $10,000 of revenue.
How do they Compare?
As an example, we will look at a standard residential size solar system: At 6 kW, we can expect a cost of $23,400 ($3.90/Watt) and about 6,500 kWh/year of production.
REF Program: With a grant of $1.00/W, the cost would decrease by $6,000 making the new cost $17,400.
REG Program (32.25 cents/kWh over 15 years): If the system produces 6,500 kWh per year, then REG will award $13,406 in revenue over 15 years, on top of net metering. That’s a $75/month bonus* in addition to your electricity bill savings.
REG Program (28.55 cents/kWh for 20 years): If the system produces 6,500 kWh per year, then REG will award $13,065 in revenue over 20 years, on top of net metering. That’s a $54/month bonus* in addition to your electricity bill savings.
*This is an average. The system production varies on a monthly basis due to environmental conditions, so these numbers will vary, being higher in the summer and lower in the winter.
Which is Better?
Determining which incentive program is better depends on the size and price of your solar system as well as your current financial status. If you are looking to decrease the initial cost of your system, the Renewable Energy Fund program is best for you. But, if you are looking to realize the most savings out of your system and time isn’t as strong of a factor, the Renewable Energy Growth program is best for you.
Before choosing your program it is important to remember the following points: 1) These incentives cannot be used together; a customer must choose between the two, and 2) Both programs involve an application process and are based on a first come first serve basis. The faster you apply the better your options.
Taylor Frothingham. Taylor is a Solar Analyst at NRGTree
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