New Smart Program Final Regulations

On July 14, 2020, the Massachusetts Department of Energy Resources (“DOER”) filed the final version of the emergency regulations for the Solar Massachusetts Renewable Target (“SMART”) Program DOER filed in April 2020.  Foley Hoag discussed the emergency regulations in an earlier blog post. Responding to comments received from solar developers, lawmakers, and others, DOER made two major changes in the final version of the regulations, reworking provisions dealing with land use exclusions and behind the meter generation incentive payment calculations.

The original emergency regulations filed by DOER excluded all projects sited on land designated as Priority Habitat, Core Habitat, or Critical Natural Landscape.  Comments from the solar industry, state lawmakers, and others were critical of this exclusion and argued that it would effectively end many solar projects already in development.  DOER revised the exclusion so that projects sited on land designated as Critical Natural Landscape are eligible to participate in the SMART Program for the first 1,600 MW in the program but are ineligible for the 1,600 MW of additional capacity created by the updated regulations.  This change may somewhat soften the blow to projects that were developed in response to (and within the program cap of) the prior regulations.  The impact will be muted because many areas have already reached or are approaching the end of their allotment from the first 1,600 MW.

The final regulations also changed the methodology for calculating incentive payments for behind the meter generation based upon whether the generation unit is qualified as a Net-Metering Generation Unit, an Alternative On-Bill Credit Generation Unit, or a Non-Net Metering Generation Unit.  All types of generating units use the same general formula, below, for determining the Behind – the – Meter Solar Incentive Payment.

Behind – the – Meter Solar Incentive Payment

= [(Base Compensation Rate + Competitive Rate Adders

– Greenfield subtractor) – value of energy] + total kWh generated

However, the final regulations have different formula’s for calculating the “value of energy” depending upon the type of generation unit.

Net – Metered Value of energy

= (distribution kWh charge + transmission kWh charge

+ transition kWh charge

+ three year average of basic service kWh charge)

Alternative On Bill Credit and Non Net Metered value of energy

= [0.65(three year average of basic service kWh charge + distribution kWh charge

+ transmission of kWh charge + transition of kWh charge)

+ 0.35(three year average of basic service kWh charge)]

This approach is a significant restructuring relative to the emergency regulations, which were widely perceived as lacking clarity on this point.  This was likely done to increase economics for behind the meter systems to incentivize use of buildings for solar projects and rely less on greenfield installations.  These calculation changes will also likely require changes to each utility’s net metering tariff.

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