Solar Massachusetts Renewable Target (SMART): Massachusetts’ SREC replacement program

new MA solar incentive

Massachusetts has always been one of the best states for solar. Not only does the Bay State have the high electricity rates that lead to a short payback period for your solar investment – it also has a history of having strong solar incentives for property owners looking to own a solar panel system.

One of the best solar incentives currently available in the state is the Solar Renewable Energy Certificate (SREC) market, which incentivizes the production of a solar panel system for 10 years. However, the current SREC market, SREC II, has reached its cap, leading the state to plan on rolling out a new incentive. Legislators are hopeful that this SREC II replacement will encourage the solar industry to continue growing throughout the state, and also decrease costs for electric utility customers.

How does the the new Massachusetts solar incentive work?

The new proposed incentive is called SMART, which stands for Solar Massachusetts Renewable Target. Solar system owners in the SMART program will receive a payment from the state for their solar production at a fixed rate per kilowatt-hour (kWh) of solar energy produced.

The compensation, or “all-in rate,” that a system owner receives is calculated by subtracting the value of the energy (through net metering credits) from the total incentive amount (so, as the value of the net metering credits go up, the value of the incentive is lower).

The SMART program has a “block” structure that dictates the incentive amount you’ll receive. As more people install solar panels, a block will “fill up” towards a predetermined threshold, measured in megawatts of solar panel capacity. Once the threshold is reached, the incentive is reduced for everyone who goes solar after that. Each block is proposed at 200 megawatts of solar installations, and the value of the incentive declines by four percent between each.

As of early 2017, the exact values for the incentive haven’t been finalized. In order to set the final value of the incentive, the Massachusetts Department of Energy Resources (DOER) will establish a “ceiling” price, and solar system owners will be assigned a financial value for their solar electricity based on that price and the size of their system. For example, residential systems under 25 kW will get an incentive worth 200 percent of the ceiling price.

Similar to the current SREC program, the proposed incentive for small-scale projects of less than 25 kW (like the vast majority of residential systems) would run for 10 years. For larger projects, developers would be looking at a 20-year period.

One major difference between the current SREC program and SMART is that, in addition to the baseline incentive amount, the program offers bonuses for particular types of installations. These “adders” increase the per-kWh incentive for building a solar canopy, using energy storage, building a system on a landfill, and other innovative solar systems.

Solar canopies, energy storage, and other adders that increase the value of your new MA solar incentive

The incentive payment that you initially qualify for depends on the size of your solar panel installation, but you can increase your total per-kWh incentive with adders for a few different circumstances. (Note that these are proposed values, and may change before the program goes into effect.)

Some of these adders are based on the location of the installation. For example, if you’re installing a solar canopy, you could increase your base incentive by $0.06 per kWh. Other location-based installs that are eligible for an adder are building-mounted projects and those installed on brownfields and landfills.

Other adders are based on the off-taker (also known as the person utilizing the electricity). These adders can range from an additional $0.02 per kWh to $0.06 per kWh and include incentives for public entities and community shared solar users. Low-income property owners are also eligible for an adder worth $0.03 per kWh.

There is also a proposed adder for battery storage that is integrated with a solar PV system. Depending on how big the battery is compared to the solar panel system it’s paired with, this adder could be anywhere from an extra $0.0247 to $0.0763 per kWh of electricity. The adder is dependent on two factors: how big the battery is compared to the solar panel system it’s paired with, and how much electricity the battery can provide at a given time.

For example, if you have a 4 kW solar panel system and install a 1 kW Aquion Aspen battery with it, you’ll get an additional $0.0247 per kWh of electricity. If you install a 3 kW sonnen eco compact, your incentive will increase to $0.0667. The final adders for energy storage aren’t yet set in stone, but these numbers can give you an idea of what to expect if you install a solar-plus-storage system.

The difference between SMART and SRECs

Both the SMART program and SRECs award customers based on the amount of electricity produced by their solar panels. However, there are some practical differences in the two programs. 

With SRECs, you receiving a certificate that you can trade on the market, the value of which varies depending on market conditions (including supply and demand). SMART, on the other hand, is fixed: once you’re awarded a particular incentive amount per kWh, that is going to be what you receive for the duration of the incentive program.

Should you wait for SMART or sign up for SREC II?

The design of the SMART program is being finalized in 2017, and is currently expected to go into effect in early 2018.

Both the SMART programs and SRECs award customers based on the production of the system. With SRECs, you’re receiving a certificate to trade on the market, the value of which depends on current market conditions (including supply and demand). SMART, on the other hand, is fixed: once you’re awarded a particular compensation rate for your combined value of energy and incentive, that is going to be what you receive for the duration of the program.

Whether or not you should wait or go solar now can depend on preference. In a way, the decision between SRECs and the SMART program is similar to the idea of investing in stocks versus mutual funds. If you move forward with the SREC II program, you can likely get a higher return, but because you sell your SRECs in a market, there is some risk. By comparison, the new incentive program provides long-term revenue that can be predicted with certainty.

If you hold off on solar in Massachusetts (and you own your solar panel system, rather than lease it), you’ll still receive a strong state incentive. However, moving forward sooner and getting into the SREC II program could mean more savings overall. Plus, the sooner you go solar, the sooner you’ll start saving on your electricity bills!

It’s never too soon to go solar. On EnergySage, you can get started shopping for solar and comparing options side-by-side from local Massachusetts installers that take into account the current incentives available. To start receiving free solar quotes, take a look at the EnergySage Solar Marketplace. Alternatively, if you want to start out your process with an estimate for what solar would cost you, try our Solar Calculator.





Don



Leave a Reply

Your email address will not be published. Required fields are marked *