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It’s time to remove our (net metering) caps and get back to work.

Etiquette dictates that a man tips his cap by raising it slightly above his head to signify recognition, greetings or a simple salutation. However, once a man enters a building to settle down for work, he removes his cap. The greetings and formalities in the solar industry are finished, and it’s time to remove our caps and get back to work.

In the solar industry, net metering caps are limits placed on how much solar capacity is eligible for Net Energy Metering, or the ability to sell excess generation back to the grid. Caps are usually set per utility service area and are a percentage of that area’s peak historical maximum load. Unfortunately, once these caps are filled, solar facilities may not be able to sell excess generation at a fair rate. After hitting its net metering cap earlier this year and putting much of its solar development on hold as a result, Massachusetts is considering options to raise its caps and allow its solar market to flourish once again.

In July, the Massachusetts State Senator Downing introduced legislation to lift the state’s net metering caps. In response to the Senate bill, Governor Baker has introduced his own legislation. While the Senate bill changes the cap from a percentage of demand to a capacity cap of 1600MW, which is the state’s goal for solar,  Baker’s version sticks with a demand percentage, only expanding the current caps by only 2%, or about 445MW. Under both versions, Class I systems, or systems under 10kW on a single-phase circuit and 25kW on a three-phase circuit, are exempt from the net metering caps.

On the one hand, it is promising that Governor Baker is showing support for at least a version of raising the caps, because he had previously opposed an increase in the caps – and a general opposition to solar “subsidies.” Unfortunately for the solar industry, however, the bill hopes to replace net metering with an avoided cost rate after the 1600MW goal is met; this could be a potential game changer for the Commonwealth’s solar industry, and not in a good way. A comparison of Governor Baker’s bill and the original legislation from State Senator Downing can be found below.

Baker’s Bill

  • Net metering caps are raised 2% for private and public utilities.
  • When 1600MW DC state-wide goal is met, net metering is replaced by avoided cost (ISO rate).
  • Projects approved before 1600MW goal will be given 20 years of net-metering credit.
  • MA DOER is tasked with establishing new incentive program after 1600MW goal. This may be different from the current SREC program, but will be defined by the DOER.

Downing’s Bill

  • Eliminates net metering caps except for cap of 10MW for municipal or government entities.
  • Net Metering credit would be the full credit for excess kWh, not just ISO rate.
  • Also calls for DOER to create a new incentive program after reaching 1600MW to accommodate the changing solar market.

The differences between Downing and Bakers’ bills reflect the mixed opinions presented by the Massachusetts Net Metering and Solar Task Force, which was released a report in April. National Grid opposed Baker’s small increase to the caps, claiming that it would still cost non-participating ratepayers significantly. Mary-Leah Assad, a National Grid spokeswoman also added that a 2% raise would likely by filled by October. Thus, if Baker’s version of the bill passes, the solar industry may race ahead to yet another abrupt standstill. Without a long-term solution in place, the future of the country’s number #4 solar market remains uncertain.

Still need help navigating the Commonwealth’s complicated regulatory landscape? Call our finance line (888) 235-1538 x2 or drop us a note at finance@solsystems.com. We look forward to hearing from you.

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Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 262MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.