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Rhode Island Solar Rebates and Incentives

How Much Can You Save on Solar in Rhode Island?

Rhode Island Energy Profile

Rhode Island ranks 35th among the sunniest states with 3,989 kilojoules per square meter (kJ/m2) of average annual sunlight. The Ocean State is the second-lowest energy-related carbon dioxide emitter in the country.

As of 2023, Rhode Island has up to 15 installations totaling 623 megawatts (MW), enough to power more than 111,000 homes.

Rhode Island provides various solar incentives for residents, commercial clients, and municipalities.

Rhode Island Solar Tax and Incentives at a Glance

Rhode Island Solar Incentives Local, State, or Federal Program Overview
Federal Solar Investment Tax Credit (ITC) Federal This federal incentive provides solar system owners with a tax credit of 30% of the cost of their solar system.
Energy-Efficient Mortgage Program Federal This federal solar incentive program enables borrowers to get a larger mortgage to cover the cost of a new solar system and its installation. It is administered by the US Department of Housing and Urban Development (HUD).
Rhode Island Renewable Energy Fund (REF) State The REF provides grants for renewable energy projects with the potential to generate clean and sustainable manner.
Rhode Island Renewable Energy Growth (REG) Program State State program provides National Grid customers that do not qualify for REF grants with compensation for every kWh generated over 15 years by their solar system.
Rhode Island Property Assessed Clean Energy (C-PACE) Financing This state program provides affordable and accessible solar loan options for renewable energy-related improvements in commercial and industrial buildings.
Solar Investment Property Tax Exemption State The state exempts the value added by installing a solar system to a property from being assessed for property taxes.
Renewable Energy Sales Tax Exemption State Rhode Island offers a 7% sales and use tax exemption for solar systems. This applies to the whole solar system, including panels, inverters, batteries, and other relevant equipment and installation costs..
Net Metering State Rhode Island net metering allows customers to earn credits for excess solar electricity they transmit to the grid.
Local solar rebates Local Local utility companies and municipalities provide different solar rebates and incentives. These rebates vary based on system size, location, and system type.

According to the EIA, Rhode Island’s total energy per capita was 47,000 kWh in 2020. The state’s residential energy usage was 15,620 kWh, commercial energy consumption was 12,015 kWh, and industrial energy consumption was 13,452 kWh.

How Cheap or Affordable is Solar Energy in Rhode Island?

According to the US Energy Information Administration (EIA), as of 2021, the average retail price for grid energy in Rhode Island was 18.44 cents per kilowatt hour (kWh). In comparison, the average price per watt for solar panels is $3.49.

State Number of solar Installations MW Installed Average cost for grid power (2021) Average cost per watts
Rhode Island 15 623 18.44 cents $3.49

Installing a 6 kilowatt (kW) solar system in Rhode Island costs an average of $20,940. However, the 30% Federal tax credit reduces the average cost to $14,658, and you can save up to $6,282.

State Cost of installing a 6kw system Federal tax credit value 2022 (30%) Cost of installing a 6kw system after Federal tax credit
Rhode Island $20,940 $6,282 $14,658

Renewable Energy in Rhode Island

Rhode Island generates energy using multiple renewable energy sources, including solar, wind, biomass, and hydropower. These renewable energy sources contributed about 13% to Rhode Island’s in-state electricity through utility-scale (1 MW or larger) and small-scale (less than 1 MW) generating facilities.

In 2021, the EIA reported that natural gas was the biggest contributor to Rhode Island’s in-state net electricity. About 87% of the state’s electricity was generated from natural gas.

Of the other renewable energy sources, solar energy was the largest contributor to the state’s electricity.

In 2020, solar energy accounted for 9% of the state’s total electricity generation, three times more than in 2019.

The state has over 600 MW of solar generating capacity. Gold Meadow Farms in Cranston is the largest solar-generating facility installation in the state. It began operation in 2019 and can generate up to 24 MW. It powers over 4,100 homes in the state. There is a 40 MW solar farm under construction in the state.

Almost 2.5% of Rhode Island’s net generation in 2021 came from biomass. The state’s largest onshore renewable electricity generating facility is a 31-MW biomass-fueled facility that uses landfill methane from Providence. The state also has a second, smaller landfill gas facility with a 6 MW capacity.

Wind power contributed 2% of the state’s net generation in 2021. This is because of the advent of offshore generation in the state in 2017.

In 2017, Rhode Island became the first state to have an offshore wind farm in the US. The wind farm is a 30 MW, 5-turbine Block Island project. Rhode Island also has 18 onshore wind farms with a joint generating capacity of 48 MW.

A 715 MW Revolution Wind project is expected to begin operation in federal waters 15 miles south of the coast of Rhode Island in 2025. Rhode Island will benefit from 400 MW of the wind energy generated from this offshore wind farm.

Hydropower contributed 0.1% of the state’s total electricity production. Rhode Island has two utility-scale hydroelectric power plants with less than 2 MW capacity.

Generally, the Rhode Island Government has set high renewable energy generation standards. The state requires retail electricity providers to get 22% of their electricity from renewable energy sources by the end of 2024 and 38.5% by the end of 2035. These retail electricity providers can use renewable energy certificates (RECs) to fulfill their responsibilities.

Providers can also generate their renewable energy or buy RECs from neighboring state-based renewable electricity producers.

In 2022, the state passed a law mandating that its electricity suppliers source all their energy from renewable sources by 2033.

It marked the fastest timeline set by any state in the US. Rhode Island is also a member of the Regional Greenhouse Gas Initiative (RGGI), a market-based program to reduce carbon emissions from electricity generation in 11 northeastern and Mid-Atlantic states.

Federal Solar Tax Credit in Rhode Island

The Federal Solar Investment Tax Credit allows residential solar system owners to deduct 30% of the total solar system cost from their federal taxes. There is no limit as to the credit amount allowed. This credit is tied to the system owner’s tax liability.

State Cost of installing a 6kw system Federal tax credit value 2022 (30%) Cost of installing a 6kw system after Federal tax credit
Rhode Island $20,940 $6,282 $14,658

The tax credit was introduced in 2005, with a 2021 deadline that was later extended to 2024. The period that the tax credit applies was further extended to 2032, and the credit rate was raised to 30% by the Inflation Reduction Act (IRA), which Congress passed in August 2022. The year of installation determines the tax credit that applies:

  • Solar systems installed on or before 31 December 2019 are eligible for a 30% tax credit;
  • Solar systems installed between 2020 and 2021 are eligible for a 26% tax credit.
  • Solar systems installed between 2022 and 2032 are eligible for a 30% tax credit;
  • Solar systems installed in 2033 are eligible for a 26% tax credit;
  • Solar systems installed in 2034 are eligible for a 22% tax credit;
  • The tax credit will expire in 2035.

The tax credit covers the cost of solar panels, installation, supporting equipment, energy storage system, and sales tax.


Below are the requirements to qualify for the Federal tax credit in Rhode Island:

  • The solar system must be installed between 1 January 2017 and 31 December 2034.
  • The solar system must be installed in your residence in the United States.
  • The applicant must own the system, through cash payment or loan financing. Third-party ownership does not qualify for the credit.
  • The solar system must be new or must be used for the first time. The solar tax credit applies to “original installation” of solar equipment only.

How Do I Claim the Federal Solar Tax Credit in Rhode Island?

Obtaining the Federal solar tax credit in Rhode Island is relatively easy. You only need to fill out one form. Follow the steps below to claim the tax credit:

Step 1. Purchase and install your solar system.

Step 2. Fill out the IRS Form 5695 with the relevant information, including your solar system size and cost details. You should also provide information about the installation company or contractor. You can get instructions on completing the form here.

Step 3. File the form with your taxes (Form 1040 or Form 1040NR) or give the form to your accountant at the end of the year.

Net Energy Metering in Rhode Island

Net metering is a state program that allows solar system owners to transmit electricity to and receive electricity from the electric grid through interconnection. When the solar system generates excess electricity (during peak sunlight hours) and transmits it to the grid, the owner is credited for the energy transmitted. The credits will be applied to future utility bills to offset utility costs when the system generates electricity lower than the energy consumed.

Net metering in Rhode Island mandates electric distribution companies to credit all electricity generated by renewable energy systems installed behind a customer meter. Customers with qualifying systems can get bill credits for all power produced up to 125% of the on-site consumption during a billing period.

Each kWh of electricity transmitted to the grid will be credited as a regular kWh of grid power until it reaches 100% capacity. Customers will get credits according to the “avoided cost rate” for the next 25% of qualified excess generation, which is lower than the regular grid costs. The utility company will not grant any credits for excess generation that exceeds 125%.

To participate in net metering:

  • The system must be installed on the customer’s property.
  • The customer must also use an eligible resource - solar, wind, geothermal, hydropower, biomass, fuel cells, or waste-to-energy.
  • The system must not exceed the average on-site load of three years and must have 10 MW or lower AC aggregate generating capacity.

Net metering policies in Rhode Island depend on if you are a Pascoag Utility District or Block Island customer. Pascoag Utility District gives customer credits at the utility’s wholesale rate, with credits carried forward for two years, and the customer may request a check for any unused credit.

Block Island awards credit for excess energy at avoided cost rate with credits carried forward to offset future bills indefinitely.

How To Enroll for Net Energy Metering in Rhode Island

You can apply for net energy metering in Rhode Island yourself or through your solar installer. Here are the steps to enroll for net energy metering in the state:

  • Applying for net metering is initiated by submitting a filled out interconnection application (Form K) to the National Grid’s Distributed Generation Group (DG).
  • The DG will review your application and notify you within 10 working days if your system can be installed as presented or if an additional review is needed.
  • If no additional review is necessary, DG will grant you Conditional Approval, allowing you to install your solar system.
  • You or your solar installer will give DG the Certification Approval letter after the installation is complete.
  • After receiving the letter from the DG group, DG has five business days to send the Final Acceptance letter.
  • At that time, an order will be placed to have a net meter installed within 10 business days. Once the net meter is installed, you or your installer can turn on your solar system. The solar array must be turned off until the net meter is implemented.

Rhode Island Property Tax Exemption

Rhode Island law offers its residents an exemption for property taxes related to the increased home value from installing solar or other renewable energy resources. This exemption applies to systems installed after 31 December 2015. The property tax exemption stops your property taxes from increasing because of the increase in your property value caused by installing a solar system.

Typically, when you make home improvements that increase the value of your property, your assessed value and your taxes increase along with the value. Although installing solar panels increases the value of your home by an average of 4.1%, the exemption prohibits this rise from impacting your taxes.

It is hard to determine the exact financial value of this incentive because it is based on the system value, the value of your home, and the local tax rate. The important thing is that this tax exemption will save you money every year over the life of your solar system, usually over 20 years.

You do not need to apply for the property tax exemption. Usually, the tax assessor in your area would re-evaluate your property’s assessed value based on improvements made. The process when you install a solar system in your home is as follows:

  • The tax assessor in your area re-evaluates your property value.
  • The value of your installed solar system will be excluded from your property assessment.
  • Your property taxes remain the same despite the home improvement done through the solar system.

Rhode Island Property-Assessed Clean Energy (PACE) Financing

Rhode Island offers Property-Assessed Clean Energy (PACE) financing for commercial properties. This is called the C-PACE financing program. There is no such program for residential properties.

C-PACE in Rhode Island is a financing program that provides low-interest loans to commercial property owners for renewable energy projects and repay them with their property taxes. The program offers long-term, fixed-rate financing for building upgrades in commercial and industrial properties. C-PACE helps businesses eliminate the need for upfront capital and get immediate funds for their renewable energy projects.

Project types that qualify for C-PACE financing include, but are not limited to:

  • Energy efficiency.
  • Renewable energy.
  • Water conservation.
  • Alternative fuel infrastructure.
  • Environmental health and safety projects.

Commercial and industrial properties that qualify for C-PACE financing include:

  • Office buildings
  • Manufacturing facilities
  • Agricultural
  • Non-profit
  • Multifamily (5+ units)

Existing properties and new construction projects are eligible for C-PACE.

C-PACE is available to all Rhode Island business owners. They can apply for C-PACE financing by approaching one of the approved Capital Providers in the state.

State Sales Tax Exemptions in Rhode Island

Rhode Island law offers residents sales and use tax for solar systems in the state. This tax exemption covers solar photovoltaic equipment, including panels or modules, inverters, batteries, chargers, racking, and other important parts of the system. It also includes the cost of labor for installation.

Applications aren't required. The tax exemption is automatically applied at the point of sale at a 7% rate. The amount the exemption takes off your solar system purchase cost depends on the system size and type.

Rhode Island Renewable Energy Fund (REF) Grants

The Rhode Island Renewable Energy Fund (REF) is a financial assistance program that awards grants for renewable energy initiatives with the potential to generate clean and sustainable energy. The Fund was created to increase the use of renewable energy in the state. The Fund is administered by the Rhode Island Commerce Corporation.

It funds renewable energy projects in small-scale solar, commercial-scale, and community renewables. REF grant assists with offsetting the cost of getting a new solar energy system connected to the grid.

The grant’s size depends on the system’s nature and scale. The grant ranges from $5,000 to $75,000. The grant money is normally sent directly to the solar installer and lowers out-of-pocket payments.

There is a simple process for applying for the grant. The solar installer handles the application process. Here are the steps involved in applying for a REF grant:

Step 1. Select a solar installer for your solar system.

Step 2. The solar installer applies for the REF grant for you. Here are the forms that your installer will complete and submit on your behalf. Page 2, 3, and 5 requires the system owner’s signature.

Step 3. The REF team reviews the application, ensuring that all requirements are met. An Award Letter may sometimes be created and sent to the installer.

Step 4. The installer will send the documents listed on the Award Letter to the REF office.

Step 5. Immediately after the requirements are met, the office establishes a Grant Agreement. This legally binding document states that your project’s funds have been allocated.

Step 6. Once the funds have been allocated, your solar installer will install your system and interconnection with the grid.

Step 7. After installation, your solar installer will submit another set of documents to the REF office. REF sends these documents to an inspection team, and your project will be scheduled for an inspection.

Step 8. The inspection team inspects your system. If there are any issues with your project, the inspection team will contact your installer to handle the problems.

Step 9. Once the inspection is successful and complete, REF submits a payment request, and payment is disbursed to your installer.

REF grants can be paired with the 30% federal investment tax credit to further lower the net cost of purchasing a solar system. However, it cannot be paired with the Renewable Energy Growth (REG) Program.

Rhode Island Renewable Energy Growth (REG) Program

The Rhode Island Renewable Energy Growth (REG) Program aids the development of distributed generation projects in Rhode Island. The Rhode Island Office of Energy Resources is in charge of running this program. Solar energy is one of the eligible technologies for this program.

Customers participating in the REG Program can sell their generated output under long-term tariffs at fixed prices. Customers can sell the solar energy they generate through the program for fixed prices over 15 years. The program is updated with new ceiling prices and a yearly megawatt allocation schedule.

The program is available to small-scale (25kW and smaller for homeowners and small commercial customers) and commercial-scale commercial solar power facilities. However, customers cannot combine this program with funding from the Renewable Energy Fund (REF). Customers can transmit their solar energy to the grid once they enroll in this program. They will receive payment for each kWh they supply to the grid.

Residential customers will get a bill credit for electricity and be paid the remaining Performance Based Incentive (PBI). Non-residential customers may get a bill credit for energy consumed during the month, and the remaining will be paid to the owner. Alternatively, the owner may get the entire PBI as a cash payment.

The REG Program begins on 1 April each year and is offered to customers on a first-come, first-served basis until all spots have been filled. The installation company normally submits applications to the REG Program on behalf of the system owner.

The solar installer applies for a new Distributed Generation (DG) system. The application includes forms, diagrams, and other relevant documents the installer will provide. If the application is accepted and interconnection is done, the customer becomes eligible for incentive payments under the REG Program.

Generally, the REG incentive can be very advantageous to customers who cannot take advantage of the REF grant. The REG program, similar to net metering, enables surplus power to be transmitted back into the grid with guaranteed payments. These tariffs are fairly generous and frequently match ordinary grid power.