The Massachusetts legislature enabled community solar in Massachusetts when it passed a virtual net metering bill in 2008 as part of the Massachusetts Green Communities Act (SB 2768). The bill enables “neighborhood net metering,” or virtual net metering between customers who have “an ownership interest” in the renewable energy facility and are located in the same neighborhood as the facility. The facility may generate up to two megawatts of power and must have at least 10 subscribers. Solar, agricultural, and wind technologies are included in the virtual net metering policy.
Though the virtual net metering bill passed in 2008, the Massachusetts program did not take off until 2014 — the first year the Solar Carve-Out II Renewable Energy Certificates (SREC II) were available as financial incentives. Community solar gardens qualify for one of two Massachusetts Department of Energy Resources programs: Solar Carve-out II and Solar Massachusetts Renewable Target (SMART). SMART, the newer program, replaced Solar Carve-out II as it was phased out. The Massachusetts community solar program addresses low-income subscriber access through the SMART incentive.
See Massachusetts’s program progress in our Community Solar Tracker.
Solar Carve-Out II
In 2008, an update to the Massachusetts Renewable Portfolio Standard (RPS) mandated the development of 1,600 megawatts of solar by 2020. This portion of the RPS is called a solar carve-out. Electricity suppliers were required to provide both a base percentage of renewable electricity to customers, as part of the broader RPS, and a target percentage of solar to meet the carve-out. A previous Massachusetts solar carve-out required only 400 megawatts of solar statewide.
Solar Carve-Out credits phased out when the first goal (400 megawatts) was met and they were replaced by Solar Carve-Out II credits. Though virtual net metering enabled community solar in 2008 and community solar gardens would have been eligible for the first Solar Carve-Out, ILSR found zero community solar gardens certified under the first carve-out. This indicates a lag in program launch that is shared by most state community solar programs.
Solar generation facilities under six megawatts are eligible for Solar Carve-Out II certification — if they became operational after 2012. In addition to allowing larger projects than the initial 2008 legislation, the Solar Carve-Out certification provides projects substantially more value than a Class I or II Renewable Energy Credit. The 2018 utility alternative compliance payments (payments utilities make for not fulfilling the requirements of the renewable standard and carve-out) were as follows:
- Class I: $68.95/MWh
- Class II: $28.30/MWh
- Class II Waste Energy: $11.32/MWh
- Solar Carve-Out: $426.00/MWh
- Solar Carve-Out II: $350.00/MWh
The Solar Carve-Out programs, thanks to their high credit value, supported 2.4 gigawatts of distributed solar energy development in Massachusetts — including 313 megawatts of community solar under Solar Carve-Out II. Solar Carve-Out II was complete when 1,600 megawatts of distributed solar capacity had been certified for the credit.
The Massachusetts Department of Energy Resources introduced SMART to replace the completed program.
Massachusetts Gets SMART
The Solar Massachusetts Renewable Target (SMART) incentive was designed to support an additional 1,600 megawatts of new solar. In 2020, the program size was doubled to 3,200 megawatts under “emergency revisions.” The additional program capacity will help the solar industry recover from the COVID-19 pandemic and economic slowdown. The 2020 revision also reserves five percent of SMART capacity for community solar gardens that serve low-income residential customers.
Read SolarReviews’s in-depth explainer of the SMART program.
SMART is not tied to the state’s Renewable Portfolio Standard. Still, it has a similar structure to the previous solar incentive programs. Massachusetts’s four investor-owned utilities (Eversource, Massachusetts Electric, Nantucket, and Unitil) are assigned an appropriate amount of SMART capacity to fulfill. Each utility’s assigned portion is also divided into many capacity blocks. The utilities, on their part, pay more to purchase the energy from qualifying SMART generation facilities. The Massachusetts Department of Energy Resources sets the purchase price for SMART electricity. The base purchase price varies by utility and by which capacity block that utility has reached.
The value of SMART-generated electricity increases if the generation facility qualifies for a value “adder.” Adders reward attributes of the solar garden seen to provide benefits beyond the electricity they generate. Value adders include community shared solar, low-income community shared solar, agricultural solar, and brownfield solar. The value of each adder ranges from one to six cents per kilowatt hour.
There are also multiple levels of “adder tranche.” An adder tranche is a block of capacity reserved for gardens that qualify for the respective value adder. The tranche has a declining block rate structure, so once Tranche 1 is filled, projects qualifying for Tranche 2 receive a lower compensation rate. The compensation rate for a project is locked in for 10 years after interconnection.
For example, if a low-income community solar garden in Eversource West service territory applied for interconnection in October 2021, the utility might pay a rate of $0.28368 per kilowatt hour. This is because Eversource West is on its 7th capacity block, which has a base rate of $0.22368 per kilowatt hour, plus up to $0.06 per kilowatt hour for the low-income community solar adder. The garden will receive that rate from 2021 – 2030.
If that same low-income community solar garden tried to interconnect in Unitil territory, it might earn $0.31889 per kilowatt hour. Unitil is on its third capacity block, which has a base compensation rate of $0.25889 per kilowatt hour, and the garden gets up to $0.06 per kilowatt hour for the value adder.
For a better understanding, Massachusetts offers a SMART Solar Incentive calculator.
Unlike previous Massachusetts solar incentives, where the customer sells their renewable energy credit to the utility, utilities automatically receive the renewable energy credit for purchasing and distributing the electricity generated by a qualified SMART facility. The credits help utilities pay the higher compensation rates for SMART electricity.
Program Implementation
The Massachusetts community solar incentives look great on paper. In fact, community solar earned 5 out of 6 available points for Massachusetts on ILSR’s 2021 community power scorecard. SMART also covers all four of ILSR’s principles for successful community renewable energy: it has tangible benefits for participants, there is flexibility in ownership structure, it is additive to other renewable energy policies, and considerations are made to extend access to all.
Still, Massachusetts’s developers and community solar advocates are frustrated. The structure of SMART and its capacity blocks fundamentally limits the growth of community solar over time and overall. The demand for solar is incredibly high, and the limited program was nearly overwhelmed in its first two years. The 2020 expansion is an improvement, but still institutes a cap. Additionally, the program has favored solar developers with the most resources. As the capacity blocks fill, projects applying for SMART certification will land in later Tranches — which receive lower compensation. The developers who were able to put together projects quickly, which are most likely larger and well-resourced, get the best return.
For more on solar in Massachusetts, check out these ILSR resources:
- A Massachusetts Town Realizes a Community Vision to Transition from Coal to Sol – Episode 73 of Local Energy Rules Podcast (2019)
- The New 1,600 MW Solar Program for Massachusetts Really is SMART (2017)
- A Massachusetts Co-op Makes a Powerful Vintage (2016)
Learn more about community solar in one of these ILSR reports:
For podcasts, videos, and more, see ILSR’s community renewable energy archive.
This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Energy Democracy weekly update.
Featured photo credit: National Renewable Energy Lab on Flickr. (CC BY-NC-ND 2.0)
