Solar energy in Massachusetts is back on track.
A year of solar turmoil came to an end last week, as two pieces of policy granted the Massachusetts solar industry the ability to get back to work. The first piece of legislation came out of the state legislature, addressing the net metering caps that have been limiting solar development for over a year. The second was an announcement of emergency regulations from the Department of Energy Resources (DOER) that extends the previously oversubscribed SREC-II program to completed and qualified projects until January 8, 2017. These two policy changes, made less than a week apart, are a huge lift to the solar industry and its thousands of potential customers who have been in limbo during legislative inaction.
Net Metering Regulations: Resolved through An Act Relative to Solar Energy
Net Metering is the mechanism through which solar array owners are fairly compensated for the excess electricity generated by their array and then put into the grid. Utilities in Massachusetts are only required to compensate solar producers for a limited portion of total energy generation; a capped percentage of peak energy demand. The first of these caps was hit in National Grid territories over a year ago. Soon after, the caps were hit in the remaining utility territories throughout Massachusetts. The capped incentive prevented thousands of solar projects from moving forward, as the lack of net metering significantly changed the economic viability of solar projects for potential customers.
After months of review and deliberation, the net metering issue came to a conclusion this week after Governor Baker signed into law solar legislation which addresses the net metering caps that have been hindering the solar industry. The Massachusetts House and Senate enacted the compromise bill at the end of last week and Governor Baker swiftly signed it into law yesterday
The bill increases the Net Metering caps by 3% statewide, effective immediately. The bill also instructs the DOER to begin formulating a new SREC program (SREC III) to replace the over-subscribed SREC-II program. Finally, the bill outlines two new measures that will be enacted once the state achieves the Renewable Portfolio Standard (RPS) goal of 1,600 MW nameplate solar capacity; a 40% reduction in the net metering credit value for private solar installations over 25 kW in size, and authority for utility companies to charge customers a minimum fee each month regardless of excess net metering credits. For more details, see our full legislative analysis of this bill.
SREC-II: Resolved through emergency regulations announced by the DOER.
The SREC-II program, instituted in 2014 as an extension of the original Massachusetts SREC-I program, was designed to incentivize solar development to reach the Commonwealth’s goal of installing 1,600 megawatts (MW) of solar energy by 2020. The program issues Solar Renewable Energy Certificates (SRECs), which are financial incentives based on the amount of solar energy a system generates.
On Friday, Feb 5th, the DOER announced that the SREC-II program had been fully subscribed, causing solar development in the state to come to a screeching halt, as both Massachusetts incentive programs had now hit their limits.
The sudden end of SREC-II took the Massachusetts solar industry completely off guard. Unlike the end of the SREC-I program, there was no advance notice, and no bridge program in place when the incentive ran out. Layoffs took place throughout the solar industry, while thousands of others were at risk to lose their jobs. The solar industry all but stopped in the state, and it appeared as though the sun was quickly setting on solar in Massachusetts.
To the relief of many, on Friday, April 8, the DOER released emergency regulations to “address market uncertainty and establish a smooth transition from SREC II to the next incentive program.” Essentially a bridge program, and a tool to address the enormous number of applications for the SREC II program, the DOER will grant SREC-II incentives to any project that is completed (constructed and having received certificate of completion) and granted authority to connect by January 8, 2017. This announcement singlehandedly put megawatts of solar projects back on track in the Commonwealth, allowing businesses to go solar knowing that doing so is a financially sound business decision. The full text of the announcement can be found here.
What does this mean for the industry and its customers moving forward?
While the state government has displayed its support for the industry, ensuring the sun will shine on the solar industry for at least the next 9 months, the recent extensions of the current incentive programs are short-term fixes. Both announcements point to the fact that after their expiration, a long-term plan for solar development is essential, despite the strong likelihood that incentives will be reduced. It is clear that solar incentives in Massachusetts are at their peak, and there is a limited timeline for those who wish to take advantage of these programs.
But make no mistake – the solar industry is here to stay. It’s estimated that roughly 20,000 MW of solar capacity is expected to come online over the next two years, doubling the country’s existing solar capacity, while in Massachusetts alone solar installations have grown 200 times since 2006.
A few short months ago, the federal government reinforced its faith in the solar industry by extending the Investment Tax Credit through 2022. The success of solar in Massachusetts and across the country suggests only an upward trajectory for solar growth; however, we know that current state incentives will likely decline in value as solar becomes more widespread and the state reaches its renewable energy goals.
Solar companies statewide are looking at the nine-month “Solar racetrack,” ready to install and ensure customers benefit from current net metering and SREC-II incentives. If you are looking to go solar, there will never be a better time.
Call us today to secure your installation date - because while these incentive extensions are a breath of fresh air to the solar industry and its thousands of customers, the clock is ticking before the sun sets on current incentives.