MA solar policy faces change

Tuesday, March 1, 2016

Massachusetts solar energy faces uncertainty, as the two state policies most supportive of solar photovoltaic project development -- a solar project's right to produce solar renewable energy certificates and a customer's right to net meter -- reach their end.  With the Massachusetts SREC II and net metering programs ending, new solar energy projects face diminished and uncertain financial incentives.

Massachusetts has made a strong commitment to solar energy.  The Commonwealth met its original goal of 250 megawatts of solar power installations four years early, then set a new goal was set of 1,600 MW by 2020. As of May 2015, over 841 megawatts of solar capacity had been installed in Massachusetts.

As the Solar Energy Industries Association has noted, "The Massachusetts market is driven by net metering, a renewable portfolio standard with a solar goal along with an accompanying SREC market."  The Massachusetts Clean Energy Center seemingly agrees, listing net metering and SRECs as two key "production-based incentives and benefits" for solar system owners.
The Massachusetts Department of Energy Resources ran its Solar Carve-Out II, or SREC II, program from April 25, 2014 to February 5, 2016.  The DOER described the program as designed to support the market until 1,600 megawatts of photovoltaic capacity has been installed statewide.

But that limit has been reached, counting the 653.8 megawatts of PV capacity installed under the Department's SREC I program (which ran from 2010-2014), additional capacity installed under SREC II, and over 600 megawatts of additional projects having reservations filed for the remaining SREC II program capacity.  The practical effect is that new projects will not likely be able to participate in the SREC II program.  This removes a key incentive for Massachusetts solar development.

The other Massachusetts solar promotional program reaching its limit is the Commonwealth's net metering program.  Under net metering, customers of certain electric distribution companies who generate their own electricity may offset their electricity usage.  Effectively, the retail meter spins forward when the customer uses electricity from the utility grid, and it spins backward when the customer generates excess electricity.

Massachusetts law requires each distribution company to maintain net metering caps equal to 4% of the company’s highest historical peak load for private net metering customers, and another 5% for municipal or public entities.  Once an electric distribution company fills its net metering caps, it can no longer allow customers to take service under its net metering tariff.  National Grid has reached its cap in its service territory, with other service territories close to full.  If net metering is not available to Massachusetts customers, it will remove another incentive that has supported significant growth in the state's solar sector in recent years.

In 2015, several pieces of legislation were proposed to lift the net metering caps, but no bill respecting net metering passed both the House and Senate.  The House measure contained provisions including a shift from retail rate compensation for net metering to a wholesale rate for most systems after the 1,600 megawatt target is met, authority for utilities to impose a minimum bill charge on net metering customers after the target is reached, and increased opportunity for utility ownership of solar.  A 2014 effort to lift net metering caps and reform solar policy similarly died.

But with significant interest in solar, from citizens and communities to the Commonwealth, U.S., and even the United Nations following the 2015 Paris Climate Agreement, how will Massachusetts react to the end of its SREC II and net metering programs?  Will a third effort to increase net metering work?  What will the Department of Energy Resources offer as a successor to the Solar Carve-out II SREC program?

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