Switching to SMART: What the next-gen solar policy means for your project

What is the solar SMART program, Massachusetts SMART program commercial projects

Changes are in the works for solar policy here in the state of Massachusetts. Thanks to innovative policies that have existed in the state for a decade, Massachusetts leads the nation in both solar power generation capacity and savings initiatives for residential and business systems. Changes in technology and costs have caused policy makers and industry experts to take a closer look at existing programs and incentives for new solar projects, resulting in the soon-to-be implemented SMART (Solar Massachusetts Renewable Target) program. If you have been considering getting a solar project, especially in a large-scale capacity, continue reading to see how policy changes could impact you.

First, Some Definitions

Researching about solar policy may introduce an entire new vocabulary to the lay-reader. Before we dive into the programs, let’s lay the foundation for some important vocabulary.

Photovoltaic System (PV): industry-used term to refer to solar panel systems. PV systems are made of individual cells with negatively-charged and positively-charged wafers that convert the sun’s rays into usable electricity.

Net Metering: A special billing arrangement between a major utility company and homes/businesses that have PV systems that are tied to the electrical grid. Customers with net metering get credit for the electricity they have used from their solar power system at its full retail value. Typically, the utility provider keeps track of the energy flowing from the utility an “nets” it against the energy flowing back to the grid from the PV system each month. Adjustments are made for seasonal various over the course of a whole year. (This varies from utility company to utility company, with municipal utilities often differing significantly.)

Solar Renewable Energy Credit (SREC): An SREC is credit you earn from the state for the energy produced by your solar panel system. It’s not a measure of the amount of energy you use. It simply a recognition of the amount of energy your panel system produces.  The credit, which is considered a tradable commodity, is then sold back to your utility company at a variable rate depending on market value. Because of this, their value is unpredictable.

What We’ve Had: SREC II

In an effort to incentivize a significant switch-over from conventional to renewable energy, the state of Massachusetts has used a very popular program known as the Solar Carve-Out Program, or SREC-II. This program used a combination of Net Metering and SRECs, allowing for financing of new PV systems to be built, and allowing customers to be paid back for the energy that their systems produce and put back into the grid. With multiple ways to gain access to the market (through financing their systems, leasing them, or purchasing them outright), customers are assured energy savings over the long term, even as the cost of energy fluctuates.

What SMART Does

The biggest feature of the SMART program is it creates a defined base-compensation rate for solar projects based on their size, output capacity and location. This is effective for the entire state. This rate is set for either 10 or 20 years (again, depending on the size and capacity). While net metering won’t disappear completely, SRECs will be replaced by this more predictable system. By assuring long-term revenue certainty for a given project, income can be more definitively projected, meaning less financial risk and therefore lower costs for investors. Additional incentives to encourage projects in high-need areas, called Adders, encourage builders to put solar panels on places like building rooftops, landfills, garage roofs (solar canopies), and brownfields (urban spaces that would otherwise go underdeveloped due to environmental concerns). It also encourages communities to invest in solar by building community-shared solar (CSS) facilities, and for owners of low-income properties to convert to PV systems. Interestingly, such Adders and bonuses are stackable, meaning a project can earn even more value by qualifying for multiple criteria.

Basically, SMART expands the market for those who are looking to jump into green energy but would like to do so at lower risk. Investors and adaptors win by having a very predictable way to measure the income of their systems. The state wins by expanding the capacity of solar energy for the state, putting new spaces to use for the greater good, and reducing our use of traditional energy sources by expanding the green infrastructure for our state.

There is also incentive to invest quickly: the new policy has set the total extended solar capacity of the state to over 3 gigawatts, which they’ve divided into “blocks” of capacity. Each block is about 200 megawatts of capacity, with about 20% of each block reserved for smaller scale projects of 25kW (daily capacity) or smaller. With each filling block, the base and adder incentives are reduced by 4%. This means that early investors get the best rates.

What the Switch Means for You:

Though SMART has not been fully implemented yet, it’s likely that your upcoming solar project will fall under the new policy. This is a great thing: it means that you’ll get in early, assuring the best rates under the new system, and you’ll benefit from a new, easier to predict compensation system that will last for the life of your system. Working with Solar Five means that you’ll have an expert working with you every step of the way, explaining how your system will save you significant money over time, building you a custom system that will be attractive and effective, and working with you for the life of your system.

You’ve probably got more questions about the SMART program. That’s great, because we’re here to help. If you are thinking about switching to solar and want to know more about how the SMART program may impact your project, please give us a call. One of our friendly, expert advisors will be happy to answer your questions.


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