Rhode Island Solar Incentives: Tax Credits & Rebates Guide (2022)

By Britt Olizarowicz

Of all the great reasons to live in the state of Rhode Island, affordable electricity is not one of them. The electric costs in Rhode Island are considerably higher than in other states, making a solar power system something that many homeowners are looking for. However, these systems can cost $15,000 or more, and finding the best incentives or a solid grant program can save you thousands of dollars. If you are looking for all of the best Rhode Island solar incentives, our guide will provide the following:

The state of Rhode Island has a really strong Renewable Energy Fund that helps support both business and residential solar power producers.

Why Go Solar in Rhode Island?

Rhode Island currently ranks 31st in the nation according to the SEIA regarding solar friendliness. In 2021 Rhode Island was ranked 24th, so there has been a slight decrease in the total ranking of this state. However, there are still some really great programs that can help you with energy savings and lower electricity rates.

The main reason to go solar in Rhode Island is the high cost of electricity. Over time you will find that the system cost of the solar installation will recuperate itself much quicker because of these high kilowatt-hour charges from utility companies in Rhode Island.

In addition to the money savings, many homeowners and business owners decide to go solar as it benefits the environment. The renewable energy system will allow for long-term greener energy and less reliance on the grid. These upgrades to your home can also increase the value and equity in your home.

Rhode Island Solar Cost

Rhode Island solar costs will vary depending on the system size and the financial incentives you take advantage of. For most, the system costs will range from $15,000 to $20,000. With the Rhode Island Renewable Energy Fund, grand programs, C PACE financing, and federal tax incentives, you can save quite a bit of money upfront and as your system produces electricity.

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How Much Can You Save on Solar in Rhode Island?

The average savings from the Federal Tax savings programs for Rhode Island homeowners will be around 5,000 dollars. However, in addition, the REF fund makes it easier to make money through the years with the production of energy. You will also not pay taxes on solar panel purchase and installation, which can save a few thousand dollars. Homeowners and business owners will be able to significantly reduce the total out-of-pocket spending on their solar installation.

The Best Solar Incentives, Tax Credits, & Rebates in Rhode Island

The Federal Solar Investment Tax Credit (ITC) is the best solar incentive in Rhode Island, and it is a program offered by the federal government. However, in addition to this strong program, there are other ways to continue to earn money on your solar system as you use it and learn live more efficiently. Many state governments have an additional tax credit that they offer homeowners, but Rhode Island does things a little differently.

Incentive Summary End Date
Federal Solar Tax Credit (ITC) Rhode Island residents can take advantage of the Federal Solar Tax Credit and get a discount of up to 26% applied to their tax returns. If you purchase $20,000 worth of solar panels, you can get a credit for more than $5,000 on your next tax return. December 31st, 2023
Net Metering Net metering allows homeowners that create excess energy to use it as a credit on their next electric bill. Net metering in Rhode Island is not mandated, but companies like Rhode Island power do participate in it. None
Property Tax Exemption The state of Rhode Island does not increase property taxes for those that have a solar panel installation. This can save thousands in property taxes through the years. None
Sales Tax Exemption No sales tax is charged on the purchase of a solar system in Rhode Island, this applies to both commercial and residential customers None
Renewable Energy Growth The state-mandated program from Rhode Island is known as REG. This program allows homeowners to earn credit for the renewable energy they produce and use it to their benefit for years to come. 15-20 years from date of installation

Rhode Island Solar Energy Tax Credit

There is currently no state-level tax credit for those that install a solar power system in Rhode Island. The program that Rhode Island has put in place instead of the tax program is one that pays customers for their solar photovoltaic and solar array contributions to the grid. Details of this program are seen below, and many find it more beneficial than the tax credit.

Rhode Island Solar Sales Tax Exemption

When purchasing a solar power system in the state of Rhode Island, you will be 100% exempt from the sales tax that would typically be paid on this purchase. The Rhode Island Solar Sales Tax Exemption is a program that works for residential, commercial, and even nonprofit businesses.

Rhode Island Solar Property Tax Exemption

The Rhode Island Solar Property Tax Exemption helps to make the cost of a solar panel system much more affordable long term. Solar panel installation will typically increase the value of your home and therefore raise your taxes. Luckily with the Rhode Island Solar Property Tax Exemption, this is not something that homeowners need to be concerned with.

With the property tax exemption, your property values will increase, but your taxes will remain the same. This is an excellent benefit to a homeowner, especially those looking to sell their home at some point.

Rhode Island Net Metering

Net metering is the process of banking some of the excess energy you create and having the utility company give it back to you at a reduced rate when your system is not producing enough. There are some excellent Rhode Island Net Metering programs, but unfortunately, they conflict with the Renewable Energy Growth Program.

The Renewable Energy Grown Program tends to be a much better overall saving, and if you get in at the right time, it can save you quite a bit of money. It can’t be combined with net metering, so make sure that you carefully decide which of these routes is the best for you to take.

Renewable Energy Growth Program

The Rhode Island Renewable Energy Growth or REG Program is the best way for homeowners to save money on their solar system at the state level. The program is very similar to net metering, but it is run by the state instead of individual utility companies.

As your system produces solar electricity, you will earn a Performance Based Incentive or a PBI for the energy produced. This PBI is then paid back as a bill credit and then an additional cash payment if you go over the total amount of energy used. If you have a small solar system, chances are you won’t see much of an impact. For large systems that create excess energy, expect a large amount of payout.

With a small-scale solar class which is less than 1 and 15 Kilowatts, you will earn about 28 cents per kWh for the first 15 years. With systems that produce between 15 and 25 kW, the payout is 24.35 cents/kWh for the first 20 years.

This is a very strong program that will add up quickly and save you quite a bit of money. Unfortunately, the program will expire in 2029, so it makes sense to enroll now to receive the full benefits for as long as possible.

Small-Scale Solar Grants (Commerce RI)

Some local areas will provide solar grants to residential customers. These grants typically require you to apply before purchasing and installing the solar system. There are both minimum and maximum grant amounts, and your application can be denied for various reasons.

For solar domestic hot water heating, you can see up to 25% of the project contract price being given to you as a way to afford a greener, more solar-friendly home. There are also grants available for Solar PV systems.

Commercial Rhode Island Solar Incentives

As you saw, the residential programs for Rhode Island homeowners were quite good. Luckily there are some strong programs for commercial customers as well. These include a variety of ways to save between grants, tax incentives, and rebates.

Solar Incentives for Nonprofits and Businesses in Rhode Island

The solar incentives for nonprofits and businesses will not be any different than they are for commercial customers. In the state of Rhode Island, these groups are put under the same umbrella and can apply for the same programs. The biggest opportunity for solar system owners is typically the REG program put in place.


The United States Department of Agriculture offers a REAP grant or Rural Energy for America program. This is a great loan program for agricultural producers. Agricultural producers have to use a lot of electricity to keep their facilities up and running.

With the REAP Grant, agricultural producers can save money on loans for their solar system product costs and any out-of-pocket installation for the panels.

Getting a great rate and having the ability to qualify for a loan are the major reasons that agricultural producers will take advantage of these financing options.

Federal Solar Tax Credit for Businesses in Rhode Island

For a federal corporate income tax return, there is a 30% credit against the cost of any system that was placed into the building that year. The Federal Solar Tax Credit is the best way for Rhode Island state businesses and property owners to save the most amount of money on their solar system installation, even if the REG program is the best for long-term savings.

Unfortunately, this program is going to expire. The savings rate will drop to 10% in the year 2023, and by 2024 the program is set to expire. Something like this could be renewed, but it will take some time before we see which direction this project heads.

Rhode Island Commercial Net Metering

The net metering program in Rhode Island is not bad, but again it cannot be combined with the Renewable Energy Growth Program. For most business owners, the REG program ends up saving more money. Also, since this program only lasts a certain number of years, it makes sense to use it while you can and eventually switch to net metering when the program expires.

Renewable Energy Growth Program

As we discussed with the residential Renewable Energy Growth Program, this is a way to save money on your electric bills for many years. This incentive program works as a feed-in tariff. Any extra energy that your home solar projects create daily will go back to the national grid providers.

At the end of the month, any of the electricity that you need to use will be offset by the money you have earned through the REG program. If you have produced more energy than you paid for, there will be a cash payment at the end of the month.

Depending on the size of your system, these credits can last 15 to 20 years.

Agricultural Energy Program

Even though the Federal REAP program is in place in Rhode Island, there are additional options for agricultural businesses looking to work on renewable energy projects. Anything done to improve energy efficiency can be included as part of this program.

The total amount of these grants can be up to $20,000, considerably more than you will see with other options. The best way to qualify for the Agricultural Energy Program is to have a combination f your own financing with a bit of help from the AEP.

Commercial Solar Sales Tax Exemption Rhode Island

Rhode Island has a commercial solar sales tax exemption for those that are purchasing and installing new solar panels. These solar panels would typically be subject to the 7% state sales tax, but that is not the case in the state of Rhode Island. This 7% savings is a considerable amount and should be calculated into the total amount that you save.

Key Takeaways: The Best Rhode Island Solar Incentives

Rhode Island has taken some time to develop and implement these impressive solar incentives and programs. Even though there is no state-level tax incentive, many homeowners and business owners would rather have the REG program in place to help with these savings. In the state of Rhode Island, the cost of electricity is really high. Therefore homeowners and business owners will quickly be able to recuperate any costs that were put into the purchase and installation of their solar panel system. Keep this in mind as you make the decision to go solar.

Rhode Island Solar FAQ

Is solar worth it in Rhode Island?

Solar in Rhode Island is worth it because of the higher costs of electricity in Rhode Island. Overall the cost of living in Rhode Island can be greatly reduced by installing a system like this. Solar is worth it for the financial benefits and the environmental impacts in the state of Rhode Island.

How much does it cost for solar panels in Rhode Island?

Solar panels in Rhode Island are about $20,000, but this will change based on the number of incentives, rebates, or grants that you qualify for. In addition, the total costs can vary based on the size of your home and how much electricity is needed.

Can you get solar panels for free in Rhode Island?

Solar panels are not offered for free in Rhode Island. The best saving program for clean energy in Rhode Island is the Federal ITC program and the REG program.

What solar rebates are available in Rhode Island?

Currently, the solar rebates in Rhode Island include federal rebates, as well as the state-level REG program. These will help to ensure that you are saving money at the time of purchase as well as over time

How many homes in Rhode Island have solar panels?

Currently, there are only about 30,000 homes in Rhode Island with solar power. Hopefully, as more programs are created and the cost of solar goes down, more houses will be willing to make the switch.

Do solar panels increase property taxes in Rhode Island?

Solar panels will increase the value of your home, but they will not raise your taxes in Rhode Island. Luckily taxes in Rhode Island are not impacted at the residential or commercial level for the installation of green power initiatives.

How much can you write off for solar panels on taxes in Rhode Island?

The current Federal ITC programs allow a 26% rebate on the total cost of the solar system. There is no additional tax benefit at the state level, and the program is set to decrease in saving percentage in the next few years.

House Method’s Solar Companies Rating Methodology

At House Method, transparency and trust are our most important values for the reader. That’s why we took the time to create an objective rating system and score each solar energy company/service according to our methodology.

Our research team dug deep into the fine print of contracts, combed through more than one hundred customer reviews, and thoroughly investigated all of each solar energy company’s services, costs, and products. We’ve done the homework for you by researching nearly all of the solar energy companies on the market so you can have the information you need to make the best choice for your home.

We developed a formula to objectively determine the best solar energy companies and give each a score out of 100 based on the following criteria:

  • Plan Options (30): Do they provide a variety of plan options? We looked at the number of plans each solar energy company offered and the flexibility of adjusting the plan.
  • Services offered (20): How many services are offered in each plan? We looked at whether the company manufactures its own solar panels, whether it contracts out installation, and what additional products each company offers.
  • Trust (10): What do customers say after their solar panels are installed? Does this company offer a guarantee? We considered how satisfied customers are post-service if the company does what it says it will, BBB accreditation, and service guarantees.
  • Prices (10): How reasonable are the costs of the plan or service in comparison to the industry average? We compared the costs of each company to competitors that offer the same solar energy services.
  • Unique perks (10): Does the company offer discounts or special services such as financial incentives, rebates, or a useful mobile app? We looked for extras each company offers that set them apart from the competition.
  • Customer Service (10): How is the customer experience when contacting the company? We considered the speed of response, weekend/holiday availability, and ease of communication through phone calls, email, and online chat functions.
  • Nationwide availability (10): How many states does the company offer its services? Companies that operate nationally and in all zip codes are favored over those with limited availability.

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