2022 Rhode Island Solar Tax Credits, Rebates & Other Incentives

Here’s a quick look at the solar incentives in Rhode Island:

  • Federal Solar Tax Credit (ITC)
  • Rhode Island Renewable Energy Growth Program
  • Net Metering
  • Sales & Property Tax Exemptions
  • Financing Help & Grants
Ecowatch Author Karsten Neumeister

By Karsten Neumeister, Solar Expert

Updated 5/20/2022

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Our solar experts have sifted through hundreds of local governments’ and utility companies’ websites to find accurate information about current solar incentives in each state. We’ve also unbiasedly ranked and reviewed hundreds of solar installers to empower you to make the right choice for your home.

How Much Can You Save With Solar Incentives in Rhode Island?

In this article, we’ll discuss the solar incentives and rebates available to Rhode Island homeowners. When you’re ready to speak with a qualified professional, follow the links below. Each of these companies can help you identify and apply for incentives available in Rhode Island.

Jump to Section:

  1. Solar Rebates, Tax Credits and Incentive Programs in Rhode Island
  2. Net Metering in Rhode Island
  3. Federal Solar Tax Credit
  4. FAQ: Rhode Island Solar Incentives
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With an average monthly electricity rate of more than $0.25 per kilowatt-hour (kWh), Rhode Island has the second-highest electricity rates in the country (Comparatively, the U.S. average is just under $0.14).1 If high electric bills aren’t reason enough for Rhode Islanders to want to explore renewable energy options, the state has also made solar power more attractive with financial incentives.

Whether you’re looking to install a solar panel system for energy savings, to reduce carbon emissions or because you’re seeking energy independence, we’re here to let you know what kind of solar incentives and rebates are available in Rhode Island.

Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

Current Solar Rebates, Tax Credits and Incentive Programs in Rhode Island

Here’s a breakdown of the main Rhode Island solar incentives and rebates. We’ll go into more detail on each in the sections below.

Rhode Island Solar Incentive Description
Federal Solar Tax Credit (ITC) The federal solar investment tax credit, or ITC, allows homeowners to claim 26% of their system costs as a credit against the federal taxes they owe. The credit is set to reduce to 22% in 2023 and will be eliminated for residential systems in 2024 unless it is extended by the federal government.2
Net Metering Through net metering programs, any extra energy your solar energy system produces is sent to the grid in exchange for utility credits that you can use toward your next month’s bill.
Rhode Island Renewable Energy Growth Program This is a program similar to net metering, but the payout is higher in most cases. National Grid’s Renewable Energy Growth (REG) program awards customers between 24 and 29 cents for each kilowatt-hour (kWh) your solar system produces for the first 15 years.3
Rhode Island Renewable Energy Fund REF provides grants for renewable energy projects that have the potential to produce electricity in a cleaner, more sustainable manner.4 It’s a first-come, first-served basis and applications are due by March every year. You can check the website for availability.
Residential Solar Energy Property Tax Exemption Rhode Island has a 100% property tax exemption for eligible renewable energy projects.5
Renewable Energy Products Sales and Use Tax Exemption Rhode Island has a 100% sales tax exemption for eligible renewable energy projects.6

Rhode Island Solar Program

The Rhode Island Renewable Energy Growth (REG) Program is the state’s main solar incentive program that awards solar customers for the energy their solar panels produce. It works similar to net metering (which we’ll discuss in more detail later on) but is actually what’s called a “feed-in tariff program.”

close up of solar panel details

Residential customers of National Grid will receive a Performance Based Incentive (PBI) for the energy they produce.7 The PBI will come in the form of a bill credit, as well as a cash payment every month. The payout you receive will depend on the size of your solar project.

Most home solar panel systems will be under 25-kilowatts (kW) and will therefore fall under the “small scale solar” class.”8 Projects between 1 and 15 kW are classified as solar class I and projects between 15 and 25 kW are under solar class II. The payments are as follows: 

  • Small-scale solar class I will earn 28.75 cents/kWh for the first 15 years (1-15 kW). 
  • Small-scale solar class II will earn 24.35 cents/kWh for the first 20 years (16-25 kW).9

We know it doesn’t sound like much, but with the current average cost of electricity in Rhode Island at more than $0.25 per kWh, you’ll be sure to see these savings on your monthly electric bill.10 Keep in mind that, because the REG program works so similarly to net metering, you cannot enroll in both programs.

The REG program is currently set to expire in 2029 and applications must be submitted during the open enrollment period.11 If you’re looking for more information on the REG program for large-scale projects (over 25 kW), click here.

Other Rhode Island Solar Incentives

The REG program is Rhode Island’s main solar incentive, but homeowners in the Ocean State are also eligible for other incentives, like property tax exemptions and net metering, as well as the federal solar tax credit.

Rhode Island Solar Sales and Property Tax Exemptions

Good news for residents of the Ocean State: Most renewable energy systems and accompanying equipment are exempt from Rhode Island’s sales and use tax. Eligible products include solar electric systems, solar thermal systems and associated equipment, such as inverters and mounting racks.12

Plus, in July 2016, Rhode Island lawmakers voted to make qualifying renewable energy systems and equipment exempt from property taxes as well. This includes solar photovoltaic (PV) systems, as well as wind and small hydropower systems.13

Net Metering in Rhode Island

Net metering programs in Rhode Island are fairly standard compared to other states. With net metering, your electric company is required to credit you for the power your renewable energy system produces (up to 125% of on-site consumption) per billing period.14

While the policies are fairly standard, they are beneficial for homeowners with systems that produce an excess of electricity. The utility company pays you back at the “avoided cost rate,” which sits slightly lower than full retail value.

Again, we want to reiterate that it’s not possible to enroll in both net metering at the Renewable Energy Growth (or REG) program we discussed above. We recommend asking your solar installer which program would benefit you most in the long run.

Local Incentives

Rhode Island has so many statewide incentives, there aren’t any additional local county or utility incentives for solar we’re aware of. However, it’s always a good idea to ask your solar installer or local government what additional incentives or rebates you may be eligible for. Many utilities offer rebates for energy efficiency upgrades that may include clean energy projects. Check out DSIRE for a full list of incentives.

Rhode Island Solar Funding and Financing

CommerceRI’s Renewable Energy Fund (REF) provides small-scale solar grants for owners of solar power systems.15

Solar PV systems are eligible for up to a $10,000 grant at an incentive of $1.05 per watt (W) for directly owned systems, or a maximum of a $5,000 grant at an incentive of $0.70 per watt for third-party-owned systems (through a solar lease or power purchase agreement).

Additionally, Solar domestic hot water systems are eligible for up to $5,000 or a maximum of 25% of the total project cost.

It’s important to note that solar customers participating in the REG program (explained above) are ineligible for these grants. 

Although the REF grant is for the homeowner, the application must be submitted by “eligible entities,” which could be your solar contractor or neighborhood association.16 Applications must be submitted by March of each year.

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Commercial and industrial property owners may be eligible for Rhode Island’s Commercial Property Assessed Clean Energy (C-PACE) Program, which is sponsored by Rhode Island Infrastructure bank. PACE financing allows you to take out low- to no-interest loans for energy efficiency and renewable energy projects. These loans can be paid back with an assessment added to your property taxes.

Federal Solar Tax Credit

Regardless of which state you live in, all homeowners in the U.S. are eligible for the federal solar investment tax credit, or ITC, for installing solar panels as well as solar batteries and other energy storage systems. You can claim the ITC on your federal tax returns, and it deducts 26% of the total cost of the system from the taxes you owe.

With the average cost of a solar system in Rhode Island at about $17,040, the federal tax credit can lead to a savings of about $4,430.

The ITC was first developed through the Energy Policy Act of 2005, under the Bush administration. Initially, it was set to last for just two years, but due to its success, it has continually been extended for solar panel installations. It’s important to note that, unless Congress extends the credit, it is set to phase out for residential systems by the end of 2023.

To be eligible for the solar tax credit, homeowners must meet the following criteria:

  • You have installed a residential solar energy system at any point from 2006 through the end of 2022.
  • You have placed the solar energy system in a residential location. It does not have to be your primary residence.
  • You own the solar energy system, either having paid for it in cash or by taking out a solar loan. Homeowners who lease solar panels are not eligible to claim the ITC.

Related Topics

FAQ: Rhode Island Solar Incentives

EcoWatch routinely gets questions from Rhode Island homeowners about going solar. Here are a few of the most common questions we see, along with our answers:

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Karsten Neumeister

Solar Expert

Karsten Neumeister is a solar energy specialist with a background in writing and the humanities. Before joining EcoWatch, Karsten worked in the renewable energy sector of New Orleans, focusing on solar energy policy and technology. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.