The Mass Solar Loan (MSL) program was created by the Massachusetts Department of Energy Resources (DOER) and administered by the Massachusetts Clean Energy Center (MassCEC), launching in December 2015 with a budget of $30 million. The impetus for the program was the transition in Massachusetts from upfront rebate style PV incentives to production based incentives, as well as a DOER-commissioned study highlighting how direct ownership of solar economically benefits both the homeowner and their community. The main barrier to direct ownership, and the major issue the MSL program tackled, was access to financing for residential solar projects. At the time the program was developed, the primary options were third-party ownership or outright purchase. Through extensive stakeholder work with the solar and financial services industries, the MSL design was developed. It aimed to increase access to financing by bringing local banks and credit unions into the space, leveraging their existing capital and expertise in consumer loans with a structure that would encourage their continued participation in the market beyond the program’s funding/operation. The program was also particularly designed to expand ownership opportunities and ensure that residents who were income-qualified or had lower credit scores had access to financing.
During the course of the program 5,800 solar loans were supported, with about 54% (over 3,000 projects) belonging to income-qualified residents, demonstrating the program’s impact in enabling underserved residents to pursue solar. The program reached over 340 municipalities across the Commonwealth. Seventeen participating lenders were introduced to the solar loan market and given the opportunity to gain experience with solar financing. Over 100 installers participated in the program, offering competitive financing to their customers and improving their ability to reach low- to moderate-income customers.
The MSL program offered three different types of loan support incentives to reduce costs to consumers and help lenders reach a range of customers:
- Interest Rate Buy-Down (IRBD) - at program launch, provided a 3% interest rate reduction to all participants; subsequently, the IRBD was gradually reduced and offered to income-qualified customers only.
- Income Based Loan Support - provided a decrease in the loan principal for income-qualified customers
- Loan Loss Reserve - expanded the credit score range that lenders were willing to lend to by acting as a safety net in the event of default