New Incentive on the way for Geothermal and SHW

There is a new incentive coming and this is a big deal for a lot of our clients because it creates an income stream from their renewable energy systems! Explaining things is a little regulation wonky we’ll try to be brief. If you have read our website then you know that there are tax credits and sales tax exemptions for geothermal systems Geothermal Drilling Rigand solar hot water (SHW). The tax incentives are great but the renewable thermal options have lagged behind solar PV in some states like Massachusetts. Those installations also qualify for Solar Renewable Energy Credits (SRECs) which are traded on an open market and provide ten years of income for owners of PV systems. Now both Massachusetts and New Hampshire are poised to be issuing renewable energy credits for each MWh of renewable thermal energy generated.

In Massachusetts, Senate bill S. 1593 is working its way through the legislature. The bill would include renewable thermal sources in the Solar Hot Water ArrayAlternative Energy Portfolio Standard. Achieve was at a meeting this week with Massachusetts Senator Downing who is the Senate chair for the Joint House/Senate Telecommunications, Utility and Energy Committee. Based upon discussion at the meeting, S. 1593 seems to be in a good position to move forward this year. Once the bill is passed, MassDOER will modify regulations to integrate renewable thermal technologies into the Alternative Energy Portfolio Standard (APS). There is an active set of regulation and trading system for the credits so adding in the renewable thermal technologies should not be too big a task. Achieve has had some informal discussions with regulators and expects the revised regulations will include a cutoff date for entering the program, an eligibility term, metering requirements and may have differing rules for residential and commercial projects regarding how the AECs are minted. One option that may be considered is providing owners of smaller systems a number of years of AEC ‘up front’ to further offset installation costs.

So what does this mean for your wallet? For each 1 MWh of thermal energy (about 3.41 million Btu) an owner would receive one Alternative Energy Credit (AEC). AECs are purchased by utilites to comply with requirements under the APS. If utilities do not purchase enough AECs they must pay a compliance fee to the State. The AECs are currently severely under supplied so lots of compliance fees are being assessed. Currently AECs are trading at about $20 each. The addition of new thermal sources will help stablize the AEC market. One of our typical residential geothermal systems generates about 125 to 200 million Btu for heat, cooling and hot water. At current prices, the AEC income would be around $700 to $1,200 per year. This is in addition to all the money geothermal saves on heating, cooling and hot water and the substantial tax incentives! Commercial projects are generally larger and would generate more income from AECs proportional to the renewable thermal energy generated. With the anticipated new program, you get a tax credit on the installation, are exempt from sales tax, commercial projects qualify for accelerated depreciation and would have income for the renewable energy you produce.

In New Hampshire, a bill has already been passed and there is an on-going effort to develop the implementing regulations. A central issue is how metering of the thermal energy would be done. As we hear more about the up-coming New Hampshire program, we will provide updates.


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