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Dec 30, 2019

Community Solar in Massachusetts: Virtual Net Metering and the SMART Program

Across the country, Massachusetts is respected as a leader in clean energy; part of this is due to the state’s solar incentives and programs, which are considered to be some of the best in the nation.

One key policy that has helped Massachusetts emerge as a solar leader is net metering, which allows electric customers of the state’s three regulated utilities to offset their energy use with their own energy generation. For owners or lessors of residential solar systems, energy produced, but not used on-site is sent to the electric grid in exchange for credits that can be applied to future utility bills. The owners/lessors continue to receive electricity from their local utility grid and their monthly electric bill is based on the difference between their system’s solar generation and their own electricity usage.

So, how does net metering work for community solar?

Massachusetts’ net metering rules allow customers to receive bill credits for electricity generated on-site or off-site. In other words, where Massachusetts residents and businesses can generate net metering credits from solar power generated on their rooftops, community solar customers generate “virtual” net metering credits for electricity produced somewhere other than where they consume their electricity. This allows Nexamp’s community solar customers to subscribe to a portion of a solar farm located somewhere in their community and benefit from the net metering credits their shares of the farm produce. Just like net metering credits from rooftop systems, these credits then offset the community solar subscriber’s electricity utility charges. Nexamp in turn bills its subscribers for the credits generated by their solar farm share.

To learn more, watch Nexamp’s guide to community solar

In addition to allowing customers to generate their own electricity, Massachusetts has adopted other policies to accelerate development of clean energy. Following the passage of the Green Communities Act in 2008, the state’s Department of Energy Resources (DOER) created a specific carve-out in the state’s renewable portfolio standard (RPS) called SREC I. The carve-out required the state’s regulated utilities and competitive electric suppliers to procure a set amount of electricity from solar generation. Eligible solar projects generated Solar Renewable Energy Certificate (SRECs), which could then be traded in a market.

While SREC I was initially designed to meet the state’s goal of 400MW of distributed solar, the carve-out program exceeded expectations and supported nearly 600 MW of new solar development in Massachusetts.

Following the success of the SREC I program, the DOER opened SREC II, with an initial goal of incentivizing an additional 1000MW of PV solar. SREC II was an incredibly successful solar program and the DOER twice extended and expanded SREC II as it worked to develop a successor for the program.

The Solar Massachusetts Renewable Target program, also known as SMART, is the latest solar incentive program created by the state, and it replaces the state’s successful SREC II program. SMART’s initial design was intended to support 1600 MW of new solar development. While SREC I and SREC II functioned by generating tradable SRECs for solar project owners, SMART is a tariff-based incentive program where solar owners (residential and businesses) receive payment for the solar power generated by their projects based on a rate that is fixed for the life of the tariff—10 years for systems under 25 kW, 20 years for systems over 25 kW. Project owners are eligible to receive additional compensation through compensation rate adders that further incentivize development of specific project types, including community solar projects.

While today, community solar represents a relatively small portion of Massachusetts solar development, close to 70% of SMART program applications to-date were for community solar projects, highlighting the coming growth of community solar in the Bay State.

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