By Adam D. Schmaelzle, Esq.
One of the many changes we are seeing these days throughout New England is the utilization of renewable energy. Massachusetts’ commercial property and residential homeowners are quickly jumping on the solar power bandwagon in an effort to harness clean independent energy while larger companies are making efforts to build massive European inspired offshore wind farms (See Link). And why wouldn’t we? We could potentially save some money on our electric bill while simultaneously doing our part to save the environment, right? It’s almost a no brainer, and it’s brilliant! But most people are not aware of the legal side of renewable energy. For the sake of this article I will be focusing on the legal aspect of residential solar paneling.
For some background: There are two basic types of solar energy systems that are commonly used in the residential setting: photovoltaics and thermal. Thermal solar systems are mostly used for storing heat while photovoltaics are designed to absorb sunlight and turn it into electricity. Due to the high cost of thermal energy systems and the ability to heat a home with photovoltaics alone, photovoltaic solar systems are becoming much more popular (and cost effective) than thermal systems in 2015.
According to the U.S. Energy Information Administration, 9.1% of net electricity generation in Massachusetts came from renewable energy resources in 2014. One-third from solar and wind. (See Link). In 2013, the DOE awarded a $566,354 grant to Massachusetts from the U.S. Department of Energy SunShot Initiative Rooftop Solar challenge to review the permitting process and develop model solar zoning bylaw language, basically to spread the word and make it easier for consumers to adopt solar paneling (See Link). As a result, we are seeing a boom in solar panel installation companies as well as state incentives and changes in our local laws.
One notable change is found in M.G.L Chapter 184 §23C, which states that “any provision in an instrument relative to the ownership or use of real property which purports to forbid or unreasonably restrict the installation or use of a solar energy system …or the building of structures that facilitate the collection of solar energy shall be void.” (See Link). Essentially, this could mean that if a developer decided that he or she didn’t like rooftop structures (or specifically solar paneling) in a development he or she constructed, any covenant they have attached to that development which would have an adverse affect on the installation of a rooftop solar panel will become void. This is a huge demonstration of state power because it gives a property owner the freedom to stray away from a restriction that was originally set to run with the land and it demonstrates exactly how import the solar panel movement is to the Commowealth. The state goes on to strong arm the zoning board in Massachusetts (restricting them from disallowing solar panels by code) with M.G.L Chapter 40A §3, which states, “No zoning ordinance or by-law shall prohibit or unreasonably regulate the installation of solar energy systems or the building of structures that facilitate the collection of solar energy, except where necessary to protect the public health, safety or welfare.”(See Link).
Ok, so now we know that the state wants us to have solar paneling on our roofs, and we see all the ads and fliers for solar panel installation. How do we know what to get? Truth is, there is no real answer to the question. I know it’s frustrating, but it really depends on what your financial goals are, and the truth is that YOU NEED TO READ WHAT YOU ARE SIGNING.
If you aren’t planning on purchasing the panels and having them installed yourself, chances are you are going to end up with one of two types of contracts: a Solar Leasing agreement or a Power Purchase Agreement (PPA). Both types of agreements are similar in nature, but have little differences. Generally, you will be locked into a 15-20 year contract with either agreement. A PPA will charge you a flat rate for the energy your panels produce with a small down payment upfront. With a Solar Leasing Agreement you would pay a monthly lease payment, plus any extra power you might need to buy from the electric company and no upfront costs. Both types of agreements are subject to increases and both will usually have a buyback option at the end of the contract term.
Things to pay attention to when reviewing your agreement:
- Is it possible to break the contract? If so, what is required?
- What are the buyback options?
- Can the contract be transferred to a new owner or a new home?
- Who is responsible for the maintenance of the panels, and do you have any say in when they go up on your roof?
- When the panels become dirty and less effective, will someone come and clean them?
- What happens if your home goes into foreclosure? Ask about fixture filings! (which are essentially liens)
- If the panels are being blocked by a buildup of snow, who is responsible for clearing them off?
- What are the potential increases in payments and fees?
- Is it possible to receive any tax benefits for having the panels installed? (If you opt for either of these types of contracts, the answer is usually no.)
If you are planning on purchasing the panels you are usually looking at a much greater cost up front. To help consumers lessen that cost, the government has provided three major incentives (See Link):
- A 30% Federal Investment Tax Credit
- A Massachusetts Personal Income Tax Credit. Which is the lesser of 15% of the total cost of the photovoltaic system or $1,000.
- Modified Accelerated Cost Recovery System. I.E. depreciation.
Whatever option you choose, always remember to read and understand what you are signing.
If you have any questions, or feel as though a mistake was made, please feel free to contact Attorney Adam D. Schmaelzle at 774-314-9124.