Meredith Hiller is an Associate in our Boston office.



The Massachusetts Department of Energy Resources (DOER) issued emergency regulations this week to launch its Solar Massachusetts Renewable Target (SMART) program. SMART follows the DOER's current SOLAR Renewable Energy Certificate II (SREC-II) program as the next major solar energy incentive program in the Commonwealth. SMART's main goal is to encourage development of 1600 MW of solar energy in Massachusetts in a cost effective way while providing long-term revenue certainty to project owners and developers.

In contrast to the SREC-II program, SMART will not include production of tradable solar energy certificates, but instead will use a declining block structure applicable to all electric distribution companies (EDCs) to provide the same compensation rates to projects across the Commonwealth. The value of the incentive is the net difference between the all-in rate and the value of the energy, and therefore will make up a smaller portion of the compensation than in the SREC-II program. Depending on the project capacity, the fixed price term will be 10 or 20 years, differentiated between sized-to-load and standalone systems, with a maximum project size of 5 MW per parcel. In addition, projects will be eligible for adders based on location and provision of unique benefits, such as community solar, low-income, public and energy storage projects, while a green field "subtractor" will reduce the compensation rate of certain facilities sited on open space.

SMART will set initial compensation rates via a competitive procurement for 100 MW of projects above 1 MW each, while indices will set those rates for projects below that threshold. Compensation for standalone and behind-the-meter systems, however, will either be net metered or receive a fixed incentive payment from the appropriate EDC equal to the all-in compensation rate. The DOER emergency regulations set ceiling prices for the initial competitive procurement of $0.15/kWh for 1-2 MW sized projects and $0.14 for projects over 2 MW. The clearing prices from the initial competitive procurement will be used to set the rates for different smaller project types. Projects eligible for SMART may elect to receive compensation for energy through net metering, qualifying through an additional on-bill crediting mechanism, or a buy-all, sell-all rate for standalone facilities.

The EDCs' capacity block allotments will be set proportionally using distribution load data, with Eversource and National Grid each receiving about half of the blocks, with a minimum of 20 percent of each block reserved for projects smaller than 25 kW.

The DOER's emergency regulations will remain in place for ninety days, but final regulations should be very similar. SMART will be implemented in 2018 following the competitive procurement to be conducted by October 3, 2017. In advance of the 2018 implementation, the DOER will extend the SREC-II program and has published guidelines on the transition and potential deadline extensions (at reduced incentive rates) for currently-qualified projects that have not secured construction deadline extensions.

The DOER issued its emergency regulations after conducting a stakeholder process started in 2016 and involving working groups for six different aspects of SMART. Given SMART's significant change to the Commonwealth's solar incentive program structure, the DOER process was well-attended by stakeholders and the regulations reflect their input, as well as the aim of the 2016 Act Relative to Solar Energy to implement a long-term and sustainable solar incentive program promoting cost-effective development and the Commonwealth's land-use, energy storage and off-taker based goals. For developers, owners and investors in solar, the long-term certainty SMART provides is undoubtedly the most valuable aspect of the program, which is one of the most novel in the country, and all stakeholders are eagerly waiting to see how the procurement process plays out this fall.

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