As Massachusetts solar growth lags, stakeholders debate changes to state incentives

As Massachusetts solar growth lags, stakeholders debate changes to state incentives

Climate advocates, public officials, and the solar industry are asking Massachusetts to update its solar incentive program to reignite slowing growth in the sector while making the system fairer and more effective. 

The Solar Massachusetts Renewable Target (SMART) program hit its fifth anniversary in late 2023, and the state has launched a review to determine how to adapt the system to current economic realities and environmental priorities. While most agree it has been an effective system for supporting the growth of solar, stakeholders would also like to see changes that would better respond to fluctuating market conditions and encourage development on the most suitable sites.

These recommendations come at a time when the Massachusetts solar industry is losing some momentum, despite the incentives the state provides. The state’s clean energy and climate plan estimates Massachusetts will need some 27 gigawatts of solar capacity by 2050 to meet the goal of going carbon neutral by that year. But current development is not keeping pace. In 2021, the state’s new solar installations topped 600 megawatts, according to data from the Solar Energy Industries Association. In 2022 and 2023, installations dropped to roughly half that level.

“SMART has done a good job of continuing the deployment of solar in the commonwealth and there are a number of really good components to it,” said Mark Sylvia, chief of staff at Blue Wave Solar. “Now we’re at an important inflection point.”

Real-world rate changes

SMART works by paying the owners of solar installations a set rate per kilowatt-hour of power they produce. The base rate is determined by the project’s size and location; so-called “adders” increase the rate for projects that serve low-income households, are located on rooftops, or have other features the state wants to encourage. The system was designed on the assumption that the cost of building solar would keep dropping as demand grew, reducing the need for subsidies. Thus, SMART rates get lower as more solar capacity is built. 

Many stakeholders have raised concerns about continuing this declining rate model. In recent years, costs have not continued falling as expected. Instead, supply chain problems during the COVID pandemic and changes to steel tariffs drove up equipment prices. Costs to interconnect to the grid and to acquire land for solar developments have risen as well. 

Industry players and environmental advocates have suggested replacing the declining rate approach with a mechanism that would adjust rates according to market conditions once or twice a year.

“There’s this across-the-board issue around SMART rates being lower than they need to be to drive the market,” said Nick D’Arbeloff, president of the Solar Energy Business Association of New England. “SMART as a whole has to rethink how it can better incent projects.”

Policy priorities

Additional rate adjustments could also be used to push specific policy priorities more effectively, said many. 

Several pointed to the issue of solar canopies, panels mounted high enough above the ground to provide shade and shelter from rain, usually in parking lots. A report released by the state in July found that the state’s parking lots had the technical potential to support some 14 gigawatts of capacity on solar canopies. However, material and equipment costs make building canopies particularly pricey right now. 

SMART already includes an adder for canopies of 6 cents per kilowatt-hour, but it isn’t enough to cover the additional costs. Strategically increasing the adder would make canopies more financially feasible and could help capture some of the untapped potential parking lots offer, supporters said.

Tweaks to the program could also help more low-income households realize the financial and environmental advantages of solar power, said Ben Underwood, co-chief executive and co-founder of Resonant Energy, a Boston-based solar development company focused on projects that benefit low-income communities. 

The program currently incentivizes these developments in a few ways. It offers adders for projects on low-income properties and for community solar facilities that allocate more than half of their production to low-income customers, and provides higher base rates for projects smaller than 25 kilowatts on low-income households. 

However, these nudges have had little effect so far. Just 4% of the small systems using SMART qualify for the low-income base rate, though Underwood estimates roughly one-third of Massachusetts households could qualify. 

“The rates are not leading to adoption in a way that’s proportionate,” he said.

To jumpstart more development in this sector, Underwood would like to see the compensation rates for low-income projects returned to at least their original starting points — between 35 cents and 39 cents per kilowatt-hour, depending on utility — and be exempted from decreases over time. 

“There’s really not a risk of having deployment be too fast at this point, so long as sufficient consumer protections are in place, because there’s so much ground that needs to be made up,” he said. 

Siting selection

As interest in solar has expanded, siting has been an ongoing controversy in Massachusetts. Some advocates object to the use of previously undeveloped lands for solar projects, arguing that cutting down trees and disturbing habitats for the sake of renewable energy does more harm than good. Others contend that the state’s ambitious solar goals can’t be reached without using at least some so-called “greenfields.”

“It is the industry’s belief that we’re going to have a very hard time reaching the goals Massachusetts has set for itself if we suddenly cease using available land for solar,” D’Arbeloff said.

Many commenters have suggested there are ways to bridge this divide. 

The current rules subtract a fraction of a cent per kilowatt-hour from the compensation rate for projects on greenfield land. However, the state should also consider looking more carefully at the parcels included in this definition, said Jessica Robertson, director of policy and business development for New England at solar developer New Leaf Energy. 

Now, a large parcel might be subject to the lower rate even though only a small portion of the land within it is considered unsuitable for development. In other cases the data used to classify the land is very out-of-date. Robertson pointed to one case in which a piece of land occupied by a gravel pit was classified as agricultural using soil samples from decades prior. She would like to see a process that more easily allows for the assessment of individual parcels as they are proposed for potential development, rather than just relying on existing lists. 

“The regulations in the last round painted with a very broad brush,” she said. “We hope that the next round will take that more nuanced approach.”

The Nature Conservancy proposes a zoning system that would code potential sites as green, yellow, or red, depending on their suitability for development and the potential for negative environmental impact. Mass Audubon suggests eliminating support for solar projects on land identified as high-biodiversity, while boosting or creating funds for development on landfills, residential and commercial rooftops, and parking lots. 

The state closed its public comment period on February 9, and will now develop a straw proposal incorporating the feedback it received. While the details are yet unknown, there is wide agreement among stakeholders that the Healey administration is serious about supporting solar.

“She has chosen a veritable dream team to manage energy for the commonwealth, and I am confident they are going to find their way forward to some good solid solutions,” D’Arbeloff said. “But it is complicated and challenging.”

As Massachusetts solar growth lags, stakeholders debate changes to state incentives is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

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