On Monday, June 5th, the Massachusetts Department of Energy Resources (DOER) filed the much-anticipated draft design for Solar Massachusetts Renewable Target (SMART), the Bay State’s new solar incentive program. SMART will replace Massachusetts’s current solar incentive program, SREC II, and is expected to officially open for business next summer.
The Road to SMART
The transition from SREC II to SMART has not been without its hiccups. When the SREC II program size cap was within reach in early 2016, solar energy installers and developers rushed to file applications under SREC II, fearing the unknown. To provide some clarity to the market, DOER provided a short-term extension and announced on August 31st that solar projects <=25kW with authorization to interconnect before January 8, 2017 would still be eligible for the original SREC II factors despite the cap. All systems receiving authorization to interconnect after the January 8th deadline would fall under the reduced SREC II factors. After a delayed release of SMART due to its inherent complexity, the DOER announced another extension to SREC II to serve as a bridge to the new program, and ensure that solar development would continue in the state with the highest number of solar jobs after California.
In late January 2017, the DOER unveiled an outline of the SMART program. Unlike SREC I and II, SMART would be a tariff-based incentive program. Under SMART, projects under 25kW lock into 10-year fixed-rate contracts and projects over 25kW lock into 20-year fixed-rate contracts. The total program capacity will be allocated among eight-200MW blocks, and apportioned by the electrical distribution companies (EDC’s) share of 2016 total electric load. This is a 1600MW total AC target with a maximum project size of 5MW per parcel.
A 100MW procurement program will also be included in the 1600MW target to set the base rate for projects >1MW. Note that there is a $0.15/kWh price ceiling for projects 1-2MW and a $0.14/kWh price celling for projects 2-5MW. Indices will determine capacity-based rates for projects <=1MW. Base rates decline by 4% per block. In other words, this procurement event will be critical to establishing pricing for SMART, and inherent to the success of the program.
SMART: Pushing to the Rooftops and Carports, and Away from Agricultural Land
DOER is also providing “adders” between $0.02-$0.06/kWh to the base compensation rate of a solar tariff generation unit to reach the Commonwealth’s policy objectives. Adders may be based on 1) location, 2) off-taker and 3) storage and tracking capabilities. Locational adders aim to incentivize projects on eligible roofs, brownfields and landfills; while keeping greenfields, historic sites and wetlands untouched. Off-taker adders focus on making access to solar more equitable, by providing adders for low-income, community solar and public projects. Finally, DOER is providing adders for solar storage and tracking- spurring development and innovation in each of these technologies. This is critical as DOER recently announced a storage program designed with a 600MW mandate. The finalized mandate will be announced this July.
Moreover, DOER has also introduced “greenfield subtractors” of $0.001-$0.0005 per acre of land to disincentivize development on greenfields and agricultural land. Thus, DOER is guiding developers and installers to focus on roof-mounted facilities and brownfields to protect its greenfields.
Adders and Subtractors will be integrated with the base compensation rate for a system per the equation below:
𝑆𝑜𝑙𝑎𝑟 𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒 𝑃𝑎𝑦𝑚𝑒𝑛𝑡 = (𝐵𝑎𝑠𝑒 𝐶𝑜𝑚𝑝𝑒𝑛𝑠𝑎𝑡𝑖𝑜𝑛 𝑅𝑎𝑡𝑒 + 𝐶𝑜𝑚𝑝𝑒𝑛𝑠𝑎𝑡𝑖𝑜𝑛 𝑅𝑎𝑡𝑒 𝐴𝑑𝑑𝑒𝑟𝑠 − 𝐺𝑟𝑒𝑒𝑛𝑓𝑖𝑒𝑙𝑑 𝑆𝑢𝑏𝑡𝑟𝑎𝑐𝑡𝑜𝑟) ∗ 𝑡𝑜𝑡𝑎𝑙 𝑘𝑊ℎ 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑 − 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑒𝑛𝑒𝑟𝑔𝑦 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑
While the greenfield subtractor will disincentivize greenfield development, onerous restrictions on Prime Agricultural land will halt any development on such land. For example, for fixed tilt systems, the minimum height of the low end of a solar module must be six feet off the ground, and for tracking systems, the minimum height of the panel at its horizontal position shall be 10 feet above the ground. While a small adder is provided to these projects to deal with restrictive requirements, it will not be nearly enough to pay for this, which is likely a minimum $0.30 cost increase to the project, as developers are essentially building a carport as opposed to a normal fixed-tilt ground mount. This also impacts O&M, perhaps at a minimum, 2x increase. It’s also possible that the height requirement poses other unintended consequences, such as planning/zoning conflicts, as increased height of equipment is rarely favored by permitting agencies.
If the agricultural limitations are not changed, Massachusetts’ policy on solar and agricultural land will create a dangerous precedent for states with much lower solar penetration are already considering zoning changes. To quote our engineering team: “On a given piece of land, you can catch the sun to make electricity or to grow crops. Trying to do both at once would just mean you are doing both badly.”
Massachusetts: A Solar Trailblazer
With the leadership of Governor Baker (R), SMART shows that Massachusetts is committed to addressing climate change and increasing resiliency through integration of more alternative energy resources. Since the launch of the Massachusetts-specific solar carve-out of the NEPOOL REC market in January 2010, the state has installed over 1600MW of solar. Through the SREC I and II program, the state created 14,582 solar jobs, ranking it second in the country. SMART will double Massachusetts’s installed solar capacity, increasing the demand for solar jobs as well.
Stay tuned for finalized SMART details. In the meantime, comments must be filed on the draft regulations by July 11.
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