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Massachusetts sets rules for new solar incentives to spur investment

Massachusetts has issued a new set of incentives that seeks to increase solar energy capacity by 1,600 MW.

The Massachusetts Department of Energy Resources, or DOER, published on June 5 emergency regulations for its new solar program known as the Solar Massachusetts Renewable Target, or SMART, that seeks to spur the development of another 1,600 MW of solar energy within the state, starting in 2018.

The incentives are the product of legislation passed by lawmakers in April 2016 that increased the state's solar net metering cap by 3% so to free up the development of distributed solar projects but reduced the value of new metering credits to 60% of full retail rates once Massachusetts reaches its goal of 1,600 MW of solar capacity. All projects installed prior to the reaching of the 1,600-MW goal will continue to receive the full retail rate for 25 years from the date of grid interconnection in addition to receiving other benefits under the incentive program.

The SMART program will succeed the current Solar Renewable Energy Certificate II, or SREC-II, program and aims to provide a more cost-effective and secure long-term solar subsidy plan. The new program offers a transitional mechanism to accommodate the completion of SREC-II while awaiting full implementation of SMART. Most notably, the program will drop tradable solar energy certificates that fluctuate in price in favor of fixed electric distribution company tariffs to compensate eligible projects under long-term contracts. The distribution companies will pay for both the energy value and the solar incentive under a fixed price for 10 or 20 years, depending on the size of the projects.

SMART will use a declining block mechanism to procure the solar generation at an initial rate for projects larger than 1 MW that will be set by a competitive request for proposals slated for Oct. 3 and initial rates set by DOER for projects 1 MW or smaller. Subsequently, 200-MW blocks of capacity will be procured at rates that decline by 4% for each block. The maximum size for any project is 5 MW.

Stand-alone projects with no associated load other than parasitic or station load and behind-the-meter projects will receive compensation at different rates. The program will also gradually increase incentive rates for smaller projects while simultaneously decreasing rates for larger projects.

With the aim of making use of empty or underused space and land, the program also seeks to use adders to encourage the construction of building-mounted, brownfield, landfill and canopy solar facilities as well as off-taker projects, such as community-shared solar or solar for public facilities or low-income housing. A separate adder will encourage combining energy storage with solar as well.