Renewable Energy: MA Announces SMART Program will Replace SREC-II - A Business Blog Article from KLR

Business Blog

Renewable Energy: MA Announces SMART Program will Replace SREC-II

posted Feb 17, 2017 by John E. Surrette, Jr., CPA, CFE in the Business Blog

  • LinkedIn
  • Google+

The Massachusetts Department of Energy Resources (DOER) recently released a design of the next solar incentive program which will be the long-term replacement for SREC II Program (Solar Renewable Energy Credits Program). This proposal is poised to be much more successful than the SREC II program.

What is the SREC II Program and why is it being replaced?

The SREC II program is the current solar rebate program intended to drive solar growth in the state of Massachusetts. Since its inception in April 2014, the program has led MA to more than 1,600 megawatts of solar development and supported thousands of local jobs, economic investments and a healthier, more energy-efficient environment for businesses and families in the state.
Solar energy experts realized back in January 2016 that MA was nearing its capacity limit for SREC II. Thus a transition to a new program was necessary.

New Program (SMART)

The new proposed program, called Solar Massachusetts Renewable Target, SMART for short, is the long-term replacement for SREC II. The SMART program aims to develop an additional 1,600 MW of solar power in MA—doubling the current amount in the state.

Benefits:

  • Cost reduction for rate payers
  • Better rates on projects that are built on low-income properties and public land.
  • More certainty to the market - State energy officials say the new structure will provide more market certainty by making sure developers know how much of an incentive they will get for their projects (depending on the type of project) over a 10 or 20 year period.
  • Fixed nature of the payments - Under the SMART program, state officials would set a price for the first 200 megawatts of projects based on the market, and each succeeding block of 200 megawatts would be subject to a 4% decline on the subsidy. So....as more solar power is built, the technology becomes more cost-efficient and building costs drop as well.
  • Preferred location benefits - The value of the subsidy increases if the project is built in ‘preferred locations’ –on rooftops, brownfields, landfills or solar canopies.
  • Bankability of the new program - The new program is expected to be hugely profitable for the state of MA. The switch from SREC II is expected to cut the yearly cost of solar installations (to energy ratepayers) in half. Energy officials in MA say that the old program cost between $400 and $500 million, and the new program will cost roughly $200-$250 million per year.

How long will SREC II continue?

SREC II will continue until for currently qualified projects that have been granted a construction deadline extension until the new program is fully implemented; however the current SREC program will continue with slightly lower incentives because of the extensive state approval process it must go through. The revised incentives are expected to be finalized by the end of February 2017

SREC Factors

The proposed SREC factors are shown in the table below (courtesy of mass.gov)

Market Sector Generation Unity Type SREC Factor Modified Factor
A 1. Generation Units with a capacity of <=25 kW DC
2. Solar Canopy Generation Units
3. Emergency Power Generation Units
4. Community Shared Solar Generation Units
5. Low or Moderate Income Housing Generation Units
1.0 0.7
B 1. Building Mounted Generation Units
2. Ground mounted Generation Units with a capacity > 25 kW DC with 67% or more of the electric output on an annual basis used by an on-site load
0.9 0.6
C 1. Generation Units sited on Eligible Landfills
2. Generation Units sited on Brownfields
3. Ground mounted Generation Units with a capacity of <= 650 kW with less than 67% of the electrical output on an annual basis used by an on-site load.
0.8 0.55
Managed Growth Unit that does not meet the criteria of Market Sector A, B, or C. 0.7 0.5

This project will be hugely beneficial for the economy of Massachusetts. Stay tuned for more on the SMART program as it rolls out in the coming months.

Questions on the SMART Program? Interested in going solar? Contact me or any member of our Renewable Energy Services Group.