Massachusetts solar legislation signed

Massachusetts Governor Charlie Baker has signed a bill passed by the state legislature to expand the Massachusetts solar industry and establish a long-term framework for sustainable solar development.

The bill, An Act Relative to Solar Energy, preserves and expands net metering.  Net metering -- a customer's right to offset its solar power production against its consumption of electricity from the grid -- has been an important incentive for solar projects in Massachusetts, leading to the development of over 1,000 megawatts of solar capacity currently installed in Massachusetts.  Previous law set caps on how much solar capacity each utility was required to let its customers net meter against their load.  But at least one utility has reached its cap, cutting off future projects' access to net metering in that territory, and the other utilities are close behind.

In response to interest in preserving net metering, the bill signed into law on April 11 increases the state's solar net metering caps, which limit how much net metered capacity may be installed in each utility's service territory.  It raises the cap on publicly owned projects from 5% of utilities’ peak load to 8%, and lifts the cap on private net metered projects from 4% of utilities’ peak load to 7%.   

At the same time, the bill changes the value of net metering credits for some new projects.  When a net metered customer's solar system produces more electricity than the customer uses, the customer receives credit for its excess production.  Historically, that credit was at the full retail rate -- meaning the customer is credited the same amount for a kilowatt-hour exported to the grid as the customer pays the utility to buy that kilowatt-hour from the grid.  The fact that net metered generation is credited at the full retail rate, as opposed to any lesser amount, has helped net metering drive solar project development.

But some utilities have expressed concerns that net metering imposes costs on other customers who don't have net metered distributed generation.  In an effort to balance cost containment against effective incentives for solar development, the Massachusetts legislation sets the new credit value for most solar projects (other than residential, small commercial, municipal and government-owned) at 60% of the full retail rate once the state hits its goal of 1,600 megawatts of solar capacity.

But to "facilitate continued solar growth within communities around the Commonwealth," the bill preserves retail rate credits for municipal and government-owned projects.  It also continues to exempt residential and small commercial projects from the net metering cap and any net metering credit reductions.

Looking forward, the bill also requires the Department of Energy Resources (DOER) to "develop a statewide solar incentive program to encourage the continued development of solar renewable energy generating sources by residential, commercial, governmental and industrial electricity customers."  The bill gives the Department guidance on the characteristics of that program, including that it must be one which: "promotes the orderly transition to a stable and self-sustaining solar market at a reasonable cost to ratepayers," considers underlying system costs, takes into account electricity revenues and incentives, relies on market-based mechanisms or price signals, minimizes costs and barriers, features a declining incentive framework, differentiates incentive levels, "ensures that the utility customer realizes the direct benefits of the solar incentive program," considers the value of distributed generation and encourages solar generation where it benefits the distribution system, shares program costs collectively among all ratepayers, and promotes investor confidence through long-term incentive revenue certainty and market stability.

With the bill signed into law, the Department of Energy Resources is expected to open a rulemaking proceeding and solicit public comment on the development of the new solar incentive program.