New SMART Program Regulations Double Size of SMART Program to 3,200 MW, Impose Storage Requirement and Make Community Solar and Other Changes

by Adam Wade and Ethan Severance

On April 14, 2020, the Massachusetts Department of Energy Resources (“DOER”) filed emergency regulations for the Solar Massachusetts Renewable Target (“SMART”) Program. A redline showing the additions to 225 CMR 20 is available here: MA DOER 225 CMR 20 Emergency Regulations 4.15.20. As emergency regulations, these changes went into effect Wednesday, April 16, 2020. DOER plans to hold a virtual public hearing on the new regulations on May 22, 2020 with comments due to DOER by 5 p.m. the same day. DOER may make changes to the emergency regulations in response to testimony at the public hearing or written comments. Any changes made, however, are likely to be minimal. The emergency regulations will be officially promulgated on July 15, 2020.

As expected, the regulations double the size of the SMART Program from 1,600 MW to 3,200 MW and require the addition of energy storage systems on all projects over 500 kW, a requirement that may be a benefit to the burgeoning energy storage industry in the Commonwealth and may (or may not) mitigate interconnection issues.

The regulations make a number of changes to land use controls under the SMART Program, continuing the trend increasing disincentives for greenfield development. First, they expanded ineligible land use areas by defining and including Core Habitat, Critical Natural Landscape, and Priority Habitat for projects that are not Category 1. Second, the regulations increase the Greenfield Subtractor by approximately 2.5x. The regulations also make a number of other changes to encourage development outside of greenfields including adding specificity for Floating and Canopy Solar projects under Category 1.

Some of the more detailed changes in the regulations relate to community solar, including:

• New consumer protection measures are adopted in the form of increased DOER audits of customer disclosure forms.

• Detail regarding by when a community solar project must document its allocations to customers and the consequence of its failure to do so. Applicants must document allocation of 90% of Alternative On-bill Credits by the Incentive Payment Effective Date for the project.

• A new ‘3-strikes’ rule that would permit DOER to exclude offending applicants from submitting further SMART Program applications for 12 months. (DOER references a new DOER Guideline on SMART Consumer Protection, which has not yet been posted to the DOER website.)

• Addition of a new requirement that a project “must demonstrate that no individual or distinct legal entity will receive bill credits or electricity in an amount that exceeds” either (a) permitted allocations to not more than two “anchor customers” each of which may receive bill credits in excess of 25kW of capacity so long as all anchor customers receive not more than 50% of a project’s bill credits or (b) 25kW of a project’s capacity.

• Electricity or bill credits may be allocated through a municipal load aggregation program established pursuant to M.G.L. c. 164, § 134, or through a community shared solar program established and administered by a Distribution Company.

Several of these changes were expected and yet the potential ramifications of some of the unexpected changes is not entirely clear. On the one hand, these new provisions provide some clear guidance to developers of community solar projects. However, the details of the consumer protection guideline remain unclear and the differences between a SMART “applicant”, project companies, project sponsors and third party community solar service providers leave room for unintended consequences that could affect larger swaths of the industry than intended. Many third party service provides now manage the origination and maintenance of customer relationships for dozens of projects and many different companies across the Commonwealth. Presumably failures of one entity would not taint the industry as a whole. Similarly, the addition of the “distinct legal entity” requirement may create further questions for the DOER. Lastly, the role of aggregations and distribution companies in managing community solar programs remains unclear.

The regulations also:

• Create a 20% set-aside for projects greater than 25 kW and less than or equal to 500 kW in each block allocation.
• Create a 5% set-aside for Low Income Community Shared and Low Income Property projects in each block allocation.
• Create additional oversight and verification of project types.
• Change the Calculation of Incentive Payments for Behind-the-Meter generation.
• Create a Pollinator Adder of $0.0025/kWh Compensation Rate Adder.

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