Solar Hot Water Systems for Multi-family Housing in Massachusetts

By John Moore, New England Solar Hot Water, Inc, on 4/10/2017

           Massachusetts leads the nation in providing incentives for solar hot water (SHW) systems for both residential and commercial facilities. Typical solar thermal systems generate free, renewable heat energy to offset use of fossil fuels for domestic hot water. Thanks to current incentives, simple paybacks for such systems are quick, depending on the displaced fuel type and pricing. For low-income housing developments, paybacks can range from 2-4 years. The numbers are excellent even for non-profits that are unable to take advantage of tax credits. Here's a breakdown of the incentives available:

  1. 30% Federal Energy Investment Tax Credit (ITC.) This credit is applied to the system owner's tax bill during the year of installation. It is the same credit offered for solar PV systems and equal to 30% of the system cost.
  2. Modified Accelerated Cost Recovery System (MACRS.) Accelerated depreciation including Year 1 Bonus Depreciation of 50% of system costs is available to business owners of solar systems. The first year's depreciation benefit alone can be worth as much as 20% of the system cost.
  3. Commonwealth Solar Hot Water Rebates. Administered by the MA Clean Energy Center (MassCEC) these cash rebates are based upon system size and efficiency. They are paid upon system completion, and can equal 30-40% of the system cost if the Federal ITC is utilized, or for non-profits or low-income housing developments where the ITC is not utilized, equal to 60-80% of system cost. To qualify for the higher rebate, at least 50% of the property's units must be reserved for occupants with income below 80% of the state's median.

             Of course, the most powerful incentive for SHW systems is the energy savings. Most systems are designed to provide from 50-80% of domestic hot water energy needs utilizing free renewable energy from the sun. Depending on backup fuel, dollar savings varies and increases as fuel prices increase over the typical long life of these systems. Like any HVAC system, SHW requires ongoing monitoring and maintenance, but operational costs are minimal and if maintained well, these robust systems should perform well for 20-25 years or more.

            Unlike Solar PV systems, SHW systems require little relative roof space and are more affordable. They also do not require complicated time-consuming interaction with a utility company in order to develop the system or realize cash incentives. For many housing developers and designers looking for a solid investment to reduce ongoing energy costs, SHW systems offer a terrific option. The best source of local information can be found on the MassCEC website. Additional incentive information can be found on the DSIREUSA website.

By John Moore
New England Solar Hot Water, Inc.

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