SMART Program Update

Massachusetts solar system owners can currently benefit from solar renewable energy credits (SRECs), which like the APS program, provides credits for energy generation that is traded to obligated suppliers for revenue. The renewable energy portfolio standards (RPS) were designed to lower solar costs to promote increased penetration of renewable energy in the state. Regulations are being finalized to replace this program with a new structure, the Solar Massachusetts Renewable Target (SMART) Program.

The current market-based $/MWh structure with be replaced with a declining block tariff-based structure, outlined below.  DOER filed the proposed final version of the regulations[1] on August 11 which has been officially promulgated by the state as of August 25th. The program is expected to start  January 1, 2018.

Overview

The program provides a $/kwh incentive for solar systems, for up to 1,600 MW of new solar generation capacity. It is structured with 8 capacity blocks, with the incentive declining by 4% each block. Capacity available is proportional to each electric utility’s load (i.e. Eversource customers can fulfill more capacity than National Grid). Incentive amounts vary based on size of system and other provisions; the tariff has “adders” to the base rate for certain types of systems, including:

• Low Income Property Generation Units
• Community Shared Solar
• Energy Storage pairing
• Floating Solar (solar on bodies of water)

 How it Works

• The first capacity block sets the rate for the rest of the program, not to exceed the ceiling price of $0.17/kWh
• Owners/authorized representatives of system sizes 1 to 5 MW bid in the first capacity block with a base price (not including adders)
• The distribution company selects proposals up to their MW allotment (total capacity across all utilities in the first block is 100 MW)
• Prices are established based on the bids received:
  • Clearing price is the highest requested base compensation among the proposals, established separately for each distribution company
  • Base compensation is the average price of all proposals in the distribution company territory
  • After the base compensations are established in Block 1, only units eligible to receive Adders (described below), or systems 1 MW or less in capacity can qualify for Block 1
• After the first block concludes successfully, the base percent decreases by 4% each block
  • The compensation adders similarly decline by 4% for every portion of capacity designated available by DOER

Compensation Rates

The new incentive program rewards beneficial siting and implementation of energy storage through adders to the base rate. For systems larger than 25kW, the calculated incentive is provided for 20 years. For behind-the-meter systems, the calculation of the compensation rate is as follows:

= (Capacity Based Rate + Compensation Rate Adders-Greenfield Subtractor[2]) – (distribution kWh charge+ transmission kwh charge+ transition kwh charge+ three-year average of basic service kWh charge)

The following rate factors are applied to the base compensation price determined, depending on the type and size of the generation unit.

Examples of other Adders are as follows:

Off-Taker Based Adder:

Location Based Adder:

Solar PV + Storage: Varies by system size and storage size. DOER provides a storage calculator on their webpage.

Those who are in the solar development process can still capitalize on the current SREC II program through 2018, as long as they are qualified with DOER, a service that Next Grid provides. Please contact us if you need assistance calculating the SMART factor.

More information on the SMART program can be found at: http://www.mass.gov/eea/energy-utilities-clean-tech/renewable-energy/rps-aps/development-of-the-next-solar-incentive.html

[1] 225 CMR 20.00 Solar Massachusetts Renewable Target (SMART) Program

[2] To encourage environmentally preferred installations, there is a subtractor for solar built on Greenfields.