An amendment to a climate change action bill (S 1973), sponsored by State Senator Ben Downing, has passed in the Massachusetts Senate in favor of raising the state’s net metering caps. Lifting the net metering caps is critical for the Massachusetts solar industry, which now employs over 9,400 solar workers, second only to California in solar jobs. In 2014 alone, Massachusetts installed 308MW of solar electric capacity. However, solar development in Massachusetts has slowed since National Grid hit its private and public net metering caps earlier this year. Now, the House and governor must decide if the caps will actually be raised, bringing the Commonwealth closer to its goal of 1,600MW of solar by 2020.
The caps, along with other solar regulatory issues, were analyzed by the Massachusetts Net Metering and Solar Task Force, tasked by the legislature to report on the issues surrounding solar incentives and regulation.
On April 30, 2015, one month after their original deadline, the Task Force released their Final Report to the Legislature. While the report intended to include the needs of utilities, customers, solar industry representatives, legislators and non-Task Force stakeholders alike, the original document was disjointed, drawing a firm line in the sand over the divisive issues without a strong solution.
For many issues, the Task Force actually released two separate opinions with Task Force members associating their names with a specific opinion, distancing them from the alternative. Regarding the incentive delivery mechanism – or program design – for large scale solar projects, one group supported a Declining Block Incentive (like we see in New York’s Megawatt Block, for example), while the other supported a Competitive Procurement Model (similar to what one would see in Illinois, Delaware, and other comparable markets).
Program Design: What Will the Commonwealth’s Next Solar Program Look Like?
The pro-solar group supporting Declining Block Incentive (consisting of representatives from the solar industry, town administrators, legislative appointees, and others), sees this program design as optimal for clear, reliable, and sustainable solar development. With a Declining Block, the program is “always on,” meaning developers know the rate they can receive as they develop a project, and they don’t have to tie their development schedule to a procurement schedule. A bidding process would tie developers to a schedule, and prevent earlier stage projects from attaining a certain level of certainty that they can proceed.
Net Metering Caps: Raise Now, Later, or Not at All?
The Task Force was also split on net metering compensation, as well as immediate and long term changes to net metering Caps. Nine members supported raising the caps in the near-term, while three members opposed a short-term cap raise. Absent an interim solution for the net metering caps that have been met, or are close to being met, solar installations are already beginning to stall in Massachusetts. Rabinowitz asserted that the caps in National Grid territory do not need to be raised, since National Grid is still receiving applications. On the contrary, developers are most likely applying in hopes that other projects fall through and they can move their own projects forward. It is incorrect to assume that the program is unnecessary simply because applications are being received after the cap has been met. As noted in this July’s SOURCE: the Sol Project Finance Journal, some projects such as completely behind the meter and small projects in municipal territories can continue without any change to the caps.
Solar Geography: Getting Beyond National Grid
The Task Force took a united stance on some issues such as Geographic Distribution stating that “The Task Force Members agree that there should be an equal opportunity for solar development across the state.” This is likely to have minimal to no impact on the industry however, and was low-hanging fruit for consensus.
What Solar Needs in Massachusetts
What solar needs to be successful, in Massachusetts and elsewhere, is a clear regulatory framework to operate within. While the Task Force was a prime opportunity for developing a sustainable plan for solar in Massachusetts, they seem to have stuck to their own interests. Providing such disparate recommendations to the legislature is not only inefficient, but it fails to reduce uncertainty within the industry.
Sen. Downing’s amendment may face an uphill battle in the house, and with Governor Baker, who has come out against the caps being raised until more protections are put in place for non-participating rate payers. With the report from the Task Force, it is still unclear what those protections are, and if they’re warranted. What is clear is that at least in the short-term, the net metering caps must be raised for solar development to continue in the nation’s #4 solar market.
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