Market Update

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.


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:

[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.

MA Thermal Regulations Update

The Massachusetts Department of Energy Resources (DOER) is continuing the regulatory process in revising the APS (225 CMR 16.00) to incorporate the eligibility of renewable thermal technologies. The most recent draft regulations were filed on June 2, 2017. The revisions have not yet been finalized as DOER is reviewing comments received from the public hearings and comment period, which concluded on August 7, 2017.

Eligible Technologies

Under the latest draft, technologies that are included to receive credits for thermal generation include:

  • Air-Source Heat Pump
  • Ground Source Heat Pump
  • Deep Geothermal Heat Exchange
  • Solar Thermal
  • Woody Biomass
  • Biogas
  • Liquid Biofuels

Technologies can earn APS credits for each net MWh of new useful thermal energy generated on a quarterly basis. The calculations for APS credits vary by technology and size.

The revisions also establish provisions for alternative energy credit (AEC) “multipliers”, where one unit of energy production earns two or more credits. Renewable thermal generation units that do not emit criteria air pollutants are eligible for these extra AECs per unit of thermal production. Multipliers are also based on system size.  A summary of the AEC multipliers is provided in Table 1.

AEC Multiplier for Non-Emitting Technologies

Non-Emitting Technology AEC Multiplier
System size Small Intermediate Large
Active solar hot water systems used for domestic hot water 3 3 3
Active solar hot water systems used for domestic hot water and/or space heating 1 1 1
Active solar hot air systems 5 5
Solar sludge dryer 1
Ground source heat pumps 5 5 5
Deep geothermal 1
Air source heat pumps (electric or engine driven) – partial system 2 1 1
Air source heat pump (electric or engine driven) – all other 3 3 3
Biomass, biofuels, biogas N/A N/A N/A

A renewable thermal generation unit will retain the multiplier provided at the outset for its lifetime. DOER may re-evaluate the multipliers periodically considering several factors including observed market uptake of the different technologies, rebates, and grants available from federal or state agencies.

In addition, any small ground source heat pump or air source heat pump installed in a building will be given an additional multiplier of 2 (added to the base multiplier) if:

  • The residential building achieves a Home Energy Rating System (HERS) Index rating of 50 or less, or
  • The non-residential building meets the definition of “Zero Energy” as defined by the U.S. Department of Energy.

It is expected that the regulations will be finalized at some point in Q4 2017. Once the qualification and metering requirements are finalized, Next Grid can work with you to enroll in the program.

For more information on the regulations, please refer to this link:

MA Energy Storage Initiative

Massachusetts’ Energy Storage Initiative (ESI) was created in 2015 to accelerate the commercial use of energy storage in the Commonwealth. Driving the work, $10 million in 2014 Alternative Compliance Payments (ACP) were allocated to advance the initiative. The state has been working to create a framework to first better understand the benefits to energy storage, and second create an implementation plan based on the findings. As such, the state commissioned an energy storage study, State of Charge, which was released in September 2016.

Based on economic modeling of the grid and benefits of energy storage, the study determined that ratepayer benefits could be maximized up to 1766 MW of storage, with a total system benefit of up to $2.3 billion.

System benefits included: 

  • Energy cost reduction
  • Reduced Peak capacity (given ISO-NE ease of market rules)
  • Ancillary services cost reduction (given ISO-NE ease of market rules)
  • Wholesale market cost reduction (given ISO-NE ease of market rules)
  • T&D Cost reduction;
  • And Integration of distributed generation cost reduction

The document ultimately recommended policies that would aid Massachusetts in developing 600 MW of energy storage. Some suggestions which would economically incentivize additional storage included:

  • Expanding the APS to include advanced energy storage, other than the existing flywheels
  • Create a “solar plus storage” pilot program to finance site assessments for small commercial and industrial facilities
  • Provide grants for municipal resilience projects which use clean energy and storage and under the “Community Clean Energy Resiliency Initiative”
  • Include storage as an eligible technology in the Green Communities Grant Program

Post-Study Energy Storage Implementation

After the study, the state began implementing the various study suggestions. A $10 million grant program was created for energy storage demonstration projects that provide replicable energy storage use cases outlined in State of Charge. The intent of the funding was to create projects that address barriers to storage deployment in Massachusetts, and help to grow the state’s energy storage economy. The opportunity closed in June and grants have yet to be awarded.

In July, DOER put forth an aspirational target of 200 MWh of energy storage for electric utilities to procure by January 1, 2020. This will likely create an avenue for additional innovative projects.

While there is still much to be determined, Massachusetts is gearing towards creating an energy storage market, making storage a more accessible and viable option. For sites with cogeneration, and additional distributed generation like solar, energy storage can provide added resiliency and stability by leveling energy peaks throughout the day. Additional benefits include incentives through the SMART program, and access to additional revenue streams by participating in capacity and ancillary markets. Next Grid is following the developments in order to understand how it might apply to our clients.

More information on ESI can be found here: