Cloudy Skies for Solar Incentives in the Bay State

Reader Contribution by Ryan Willemsen

Massachusetts’ new SMART program will lower incentives for new rooftop solar installations.

The Bay State has had its share of successes in the solar sector. First, a goal of 250 megawatts (MW) of solar was met in 2012, four years early. Now, Massachusetts has surpassed its most ambitious goal for solar energy three years ahead of schedule. The state reached 1,600 MW of installed solar energy capacity, enough to power over 260,000 homes. This achievement marks the success of initiatives lead by former Governor Deval Patrick, and continued by Governor Charlie Baker. Upon taking office in 2007, the former governor outlined a series of challenging goals for the state that at the time had only 3 MW of solar, not even enough to power a small town. The Massachusetts Department of Energy Resources (DOER) has finalized plans for the next generation of solar goals and incentives. Highlights have been the announcement of the eventual elimination of the Solar Renewable Energy Credit (SREC), and the unveiling of the next-generation comprehensive program, the Solar Massachusetts Renewable Target (SMART). While the past decade has seen a focus on providing optimal incentives for homeowners who go solar, it’s becoming clear that the next era of solar in Massachusetts will provide more benefits to large-scale utilities.

The successes of the past decade have been attributed to rebates, utility requirements and especially the generous SREC program. Net metering has paid solar homeowners thousands of dollars for excess electricity production that has supplied the grid with clean energy. The SREC program allows homeowners to sell commodities generated from their clean energy production to utilities looking to meet renewable energy standards. The value of these credits fluctuates based on market conditions. It has been a win for homeowners, with credits earning well over $1,000 per year for the typical solar residence.

Utility-scale solar has flourished, launching the state to 7th in the nation for total solar capacity. Roughly 15,000 jobs have been created in Massachusetts. Talk of doing away with SREC has put both the solar industry and prospective homeowners on edge. The consensus is that if DOER is doing away with popular incentives, they better replace them with something at least as generous if solar growth is to continue. Unfortunately, it doesn’t look like that happened.

The headline from the debut of SMART is a call for doubling the installed capacity of solar in Massachusetts by adding 1,600 MW. That should be no problem given the record-low costs of photovoltaic equipment, installation and wholesale electricity prices at utility auctions. It appears that the overarching goal of the new SMART program is to provide long-term revenue certainty for utilities. For homeowners with rooftop solar, there’s no reason to worry. Options for future installers are undoubtedly less generous, but incentives will remain to a lesser extent. If you are already in either SREC I or SREC II, nothing changes and you will remain in the program for the remainder of your ten-year term. Starting in 2018, SREC will end for new installations. The incentives of the SMART program will immediately replace SREC for new installations only. Net metering will remain an option, along with the new option of on-bill crediting. According to Mark Durrenberger of The Energy Miser, the SMART program reduces cash incentives over ten years by about 45%. Acting fast to go solar makes all the difference now. Homeowners are likely to collect roughly $8,000 more in cash incentives if they go through with a qualifying home solar installation before March 31, 2018. Starting in April 2018, the SMART program will be the only option, and SREC will be gone.

Is There a Drawback?

One of the biggest drawbacks of SMART is the end of state incentives for homeowners who live within the territory of a municipal utility provider, rather than larger investor-owned utilities. If you are a municipal utility customer considering solar, you really want to do it now to save over $15,000 in combined incentives. Remember, SREC incentives are paid out over ten years but only for installations qualified before March 31, 2018.

For utility-scale solar, more profound changes have been made. Location-based incentives are meant to encourage solar growth in optimal environments, but may deter those in marginal areas from making the switch. The new block pricing and incentive limits also alarmed those in the utility-scale solar industry.

While the new SMART program was created with the intention of supporting continued growth, some prominent industry representatives have voiced their concerns over some provisions. The Solar Energy Industries Association (SEIA) has encouraged DOER to make changes that will protect solar jobs in the state.

It remains to be seen kind of impact the change in the SMART program structure will have on the demand for solar panels in Massachusetts – it takes anywhere from three to six months to get rooftop solar from start to finish, and the program has set a the March 31, 2018 deadline to qualify for ten years of SREC incentives. The new SMART program does provide incentives for new solar installations, although homeowners will receive thousands of dollars less over a ten-year term.

It’s clear that the DOER had the utility companies in mind when they crafted the plan. The SEIA and other regional solar advocates are now pushing for net metering caps to be increased, along with other proposals aimed at keeping rooftop solar competitive. With 15,000 jobs and thousands of homeowners committed to the success of solar, it’s likely that the Baker Administration will consider the needs of the Massachusetts solar industry.

Additional reporting for this article provided by Justin Fischer.

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