Massachusetts Department of Energy Resources releases new solar incentive program proposal - by Craig Huntley

Craig Huntley, Solect Energy

On Friday, September 23, the Massachusetts Department of Energy Resources (DOER) met to announce the proposal of a highly anticipated new solar incentive program that would be in effect by summer 2017. The proposed program steps away from the familiar Solar Renewable Energy Certificate (SREC) model, to introduce the idea of a Feed in Tariff-based incentive.

While this is certainly a departure from what the industry and its customers are accustom to, the program has the potential to simplify solar incentives and establish long-term stability for the industry. On the flip side, the complexity associated with the change is significant, and while all the details regarding the new tariff structure and rate are being considered, there is a strong possibility we could have a prolonged period without a promulgated program resulting in a loss of jobs and reduction in the growth of solar in the Commonwealth.

Here’s a first look at the program highlights, with specific criteria and design details subject to change.

Feed In Tariff Model While significant details of the program still need to be developed, at the highest level, the DOER has designed a Feed In Tariff (FIT) program. A FIT is a policy mechanism designed to encourage investment in renewable energy technologies, under which eligible renewable electricity generators, including homeowners and business owners, are paid a fixed price per kilowatt-hour (kWh) from the utility for the renewable electricity they supply to the grid. 

The tariff program is proposed to be a 10 or 15 year fixed rate that applies to all electric distribution companies (EDCs), across Massachusetts.

Declining Block Incentives The program calls for the development of an additional 1,600 MW of solar energy and a declining block model for pricing purposes. This means that as more residents and commercial property and business owners adopt solar energy, the FIT compensation value will decline.

The DOER’s declining block model proposes 8 blocks of 200 MW each. Within each block, there will be individual Electric Distribution Company (EDC) blocks based on load share; for example, 100 MW for Eversource, 95 MW for National Grid and 5MW for Unitil. In each successive block, tariff values are proposed to decrease by approximately 5%.

Tariff Project Categories The tariff-based program will contain incentive values based on the system capacity of the project, offering higher values per kilowatt-hour (kwH) for smaller sized projects. The proposed values are available for review on the DOER’s website and are subject to change until the new regulation is final.

Furthermore, the DOER has included “incentive adders” for different project types, divided into three categories: location based, off-taker based and policy-based. Examples include landfills, brownfields, solar canopies, low income housing and community shared solar projects. Specific incentive adder values have yet to be finalized, but their main purpose is to encourage the development of specific types of solar projects.

Standalone Solar + Energy Storage A major change in the new program compared to the current SREC- based models is the inclusion of both behind-the-meter and standalone energy storage incentives. Energy storage solutions have been gaining ground over the last decade, and we’re finally seeing technologies emerge that could make storage a possible common reality. However, many technologies are still not economically feasible without incentives. In an effort to depart from net metering, the DOER has included incentive adders to help encourage co-location of energy storage assets located behind-the-meter, and for standalone (off-grid) storage systems.

Non-Net Metered Facilities Net metering policies have been both a major contributor to the growth of solar in the Commonwealth, and a major headache for the industry, its customers, utilities and legislators alike. In designing the new program, the DOER sought to “prevent the success of a new incentive program from being driven by the availability of net metering” by providing a higher level incentive to non-net metered facilities.

Bottom-line The proposal is preliminary and there are many details that need to be worked out before the regulation is finalized. The DOER will be accepting written comments on the proposal through October 28, and it will continue to be modified throughout the fall, with an effective goal of filing the regulation by year end. Once the regulation is filed the EDC must submit their tariffs to the Department of Public Utilities for review. Rule making with continue throughout the spring of 2017 with the goal of having the new Tariff and Regulation in place by summer 2017.

While we’d like to believe that this date will be met, there are many important details regarding program implementation that need to be addressed, and could cause the program’s start to be pushed out until a later date. Should this be the case, the DOER will have to address the possibility of revising the current SREC-II extension deadline.

You may access a detailed summary of the proposed incentive program, along with program eligibility criteria on the DOER’s website.

Craig Huntley is founding principal and chief development officer of Solect Energy, Hopkinton, Mass.