Energy Musings - September 29, 2025
We examine the performance and financials for our solar system as Rhode Island is interested in the views of participants in its solar programs - Net Metering and RE Growth Program.
RI’s Solar Policies And Our System’s Economics
The arrival of our September electricity bill from Rhode Island Energy coincided with an email request from the company to answer survey questions about our solar program. When we took the survey, we realized it was focused more on the state’s Net Metering Program rather than the program we are in, the Renewable Energy Growth Program. We were aware Rhode Island had a net metering program, but we were not familiar with all the details. That sent us to the internet to find out more information about the program. Our understanding is that the introduction of net metering was to reduce the cost of the RE Growth Program—more info to follow.
When we updated our spreadsheet on the economics of our solar system, we discovered that the September bill marked the completion of eight years of generating electricity for our power company, in return for healthy subsidies.
Yes, we are happy to accept subsidies when the government offers them and they make economic sense, at least for this consumer. Our financial analysis of the system proved more accurate than that provided by our installer, which we had discussed over the years. We were also fortunate to be able to afford the construction of the solar array and utilize the associated tax credits.
Let’s deal with the provisions of the RE Growth Program. Our system was installed during the summer of 2017 atop our summer home in Charlestown, Rhode Island. It began generating electricity on August 27, 2017. Designing the system was the installer’s job, and it had to be approved by National Grid, the electricity company acquired years later by Rhode Island Energy. Our installer told us that they would design the largest system our roof could accommodate, knowing that National Grid would likely reduce it. National Grid would not approve systems that generated more power than the house would consume in a year, and they had records for this house going back decades.
Our system has a peak power capacity of 7.2 kilowatts (kWp). The kWp is based on tests required of every solar panel manufacturer and measures the maximum power output capacity of a solar panel or solar system. The test requires solar radiation of 1,000 watts per square meter, an ambient temperature of 25 degrees Celsius, and clear skies. This test enables comparisons between different solar panels, helping optimize the design of solar systems. The theoretical annual energy production of 1 kWp is 1,000 kilowatt-hours (kWh). Therefore, our system has a theoretical yearly output of 7,200 kWh. Interestingly, we have exceeded the theoretical annual output every year except for 2017, when the system was only in operation for three months and still generated more than 30% of the kWp. Even through the first nine months of 2025, we have exceeded that theoretical peak.
Our system was installed in the third year of the RE Growth Program. Our interest was driven by our town’s agreement with the installer, which promoted their solar systems in exchange for discounts to customers based on the number of systems installed, as well as the price being offered. The discount was based on the installation cost and not on the cost of the panels.
Our system cost $26,810, but after applying a $3,490 discount because the town had exceeded the number of customers for the installer, the net cost was $23,320. Both numbers are healthy expenditures, well beyond the capability of many homeowners without taking out a loan or arranging to lease the system.
Under the RE Growth Program, we entered into a 15-year contract with National Grid, now Rhode Island Energy, that pays us 34.75 cents/kWh for the power we generate that flows back to the grid. The contract is guaranteed to be renewed and is assumable should we sell our home; however, the renewal contract price will be determined at the time of renewal.
As a result of this arrangement, we have two electricity meters – one measuring the power we consume from the grid and another tracking the power our solar array sends to the grid. The RE Growth Program initially offered 41 cents/kWh, then 39 cents/kWh, and finally 37 cents/kWh.
Let’s put the payment price into perspective. In 2016, our electricity cost $0.183/kWh, which included the energy charge of $0.087/kWh. That was when National Grid was paying $0.37/kWh. Still, what we received was approaching twice the retail electricity rate National Grid was charging us. This appeared to generate an attractive return on our investment, something we needed to model.
The RE Growth Program determines the amount of power we consume and calculates our electricity bill. It then calculates the amount of power we sold to the grid. It gives us credits for some of that payment against specific cost categories, and sends us a payment for the balance of the income generated by our solar power. We always have a monthly bill, but the credits minimize it. The supplemental payments have almost always eliminated the bill’s balance.
How have we done over the eight years with our solar system? Our total electricity bill during this period was $14,574. The program produced $10,476 in bill credits. Therefore, we only paid $4,097. However, the utility company sent us supplemental payments in the amount of $15,387. Our total solar earnings from bill credits and supplemental cash payments equaled $25,865. (We ignored the cents.)
Remember that our system cost $26,810, but we received a $3,490 discount. However, we were also able to claim a 30% federal tax credit equal to $6,996. Since the tax credit is a direct reduction of our tax obligation, it is the equivalent of cash. Therefore, our system’s net cost was $16,324. That means our credits and cash payments exceeded our net system cost by roughly $9,500.
Between credits and cash payments, we recovered our net system cost in 60 months, or five years. Since the cash payments are taxable income, even if we taxed those payments at a 27% marginal tax rate, we still recovered the net system cost in 72 months.
What about the net metering program? The Rhode Island Office of Energy Resources provides information on state and federal tax incentives available to utility customers. Under net metering, they wrote:
“The net-metering program is one of two solar programs available to homeowners and businesses interested in going solar. Customers can choose to have a net-metered system, or a REG system (see below), but not both. The decision is binding for the lifetime of the contract. Net metering is a mechanism for crediting the power produced by renewable energy systems installed behind a customer meter. Net metering allows customers with eligible renewable energy systems to receive bill credits for all power generated up to 125 percent of the on-site consumption during a billing period. To participate in net metering, a renewable energy system must be sited on the customer’s premises. Eligible customer-sited net metering systems must be sized to meet on-site loads, based on a three-year average of electricity consumption at the property.”
Note the 125% limitation of credits that can be earned with the surplus carried forward. If you exceed that amount of generation, you will lose some of the credits. Furthermore, the rate at which you are credited is not the retail rate, but an “avoided cost” rate determined by the utility, which is usually the wholesale power rate. Various blogs by organizations in Rhode Island explain net metering and outline the requirements that customers must meet to participate in this program. Besides being on-site, it must be owned or leased by a customer.
One example of the financial aspect of net metering utilized a wholesale power rate of $0.075/kWh. Another used at $0.10 rate. A third added a distribution rate to the wholesale rate, which resulted in a rate of $0.25/kWh. We have not attempted to analyze every month of our bills for the 125% cap issue, but every rate illustrated is substantially below the rate we are earning on our solar power. Yes, we still do not get 100% credit on all the expenses charged to us, which is why we still have a monthly bill. A net metering customer never receives a cash payment. They can only roll their credits forward to future monthly bills, while potentially losing some excess credits.
We understand from media accounts that there is an issue with R.I. Energy’s calculation of excess power in the net metering system. This is reportedly due to problems with the accuracy of the bi-directional meters installed, rather than having two meters as we have.
While net metering is offered as a popular way to eliminate expensive electricity bills, which are only becoming more expensive each year, there is never any mention of the fact that customers must pay for their system or lease one. That is a cost that is never recovered.
Rhode Island’s electricity has become much more expensive.
Since 2016, Rhode Island’s electricity costs have increased by 54%. Although our chart indicates that the 2025 rate is down from the 2024 rate, we only have the year-to-date figures for 2025. We know that the remaining three months will be more expensive for energy than the past six summer months, as they are the costliest winter energy months, and Rhode Island Energy has announced its monthly winter rate. The energy cost will be $0.1477/kWh, which is lower than the $0.16387/kWh cost in last year’s comparable months and the first three months of 2025. This reduction, along with lower summer months compared to 2024, reflects the low price for natural gas contracted by Rhode Island Energy. The state requires utilities to purchase six months of fuel supplies, which establishes the monthly cost. The utility is not allowed to profit from its fuel charge.
The RE Growth Program has become costly for ratepayers. Every bill contains a flat monthly charge for the program. It is currently $5.75 a month, or $69 a year. When the program began in 2014, the monthly charge was $0.13, or $ 1.58 annually. This increase reflects the large subsidies the utility must pay for its solar power, which are offset by the amounts the utility can earn by selling the excess solar power into the commercial power market. It also explains why there is a push to get people into the net metering program.
We are happy with the performance of our solar system and the financial returns we have enjoyed. We look forward to seven more years on this contract, knowing that thereafter it will be considerably less rewarding. At that time, net metering may become our preferred solar program, as it eliminates the need to pay a monthly electricity bill.