Performance-Based Solar and Storage Incentives

When your customers are considering solar and storage solutions for their home or business, it’s essential to understand the various incentives available to help offset the initial investment and provide ongoing benefits. 

In this blog post, we hear from Spencer Fields, Director of Insights at EnergySage, as he discusses the two main types of solar and storage incentives – one-time and ongoing – from the Customer Contracts & Agreements course.

While one-time incentives, such as rebates, can significantly reduce the upfront cost of installing solar panels or storage systems, ongoing incentives can provide a steady stream of financial benefits over an extended period. These performance-based incentives may seem small initially, but they can add up substantially over time. Tune into the video or read the transcript below. 

 Performance based incentives may look minor in a vacuum, but they can add up over time and often are paid out over 10 or even 20 years. They can show up as either a bill credit or as a direct deposit from your state or utility once a month or once a year. Here’s what you need to know about these types of incentives.

Ongoing incentives are paid out over time based on how productive your solar panels are. There are two main types of performance based incentives for solar. One kind is based on how much electricity your solar panels produce. The other way is the environmental attributes of your solar installation, so more about how many emissions they’ve helped to offset. 

That type of incentive is most frequently provided by your state, though may be administered or paid out by your utility. Generally, these incentives are designed to comply with state level policy targets around clean energy adoption and usually they’re funded by collecting a very small fee each month from every electricity customer in the state.

The same as energy efficiency program incentives are funded. There’s really no difference between programs that pay for the energy from your solar itself versus paying for the environmental benefit or emissions reductions. They just are likely named differently. For instance, you’ll hear SREC thrown around a lot for solar renewable energy credit.  Not every state has these types of incentives. So again, it’s helpful to check out EnergySage state incentive pages or DSIRE.  

For storage, the main type of performance based incentive is usually through a virtual power plant program administered either by your utility or by a third party organization. 

This is a newer type of incentive program that recognizes that energy storage systems can play a role in helping to keep the grid up and running. The way it works is that your customer’s utility will pay a certain amount per year to be able to remotely access the energy stored in their batteries a certain number of times per year. 

In some instances, the payout may not be worth it. In other words, the dollar value you get each time the utility uses your battery may be much less than you paid per cycle over the battery’s lifetime. However, other programs, like the Connected Solutions program in Massachusetts, can actually drive a quick payback period for storage, making it more financially attractive to install.

These types of incentive programs are still reasonably uncommon, but we expect to see many more of them in the years to come.