Harmonizing the Commonwealth’s Approach to Solar

By Cynthia A. Arcate 7 July, 2014

PowerOptions urges the passage of House Bill 4185, An Act Relative to Net Metering and Solar Power, which will uncap solar net metering and create new opportunities for renewable energy and jobs in Massachusetts. This legislation, if passed, would provide benefits for consumers, the solar development community, the environment, and even utilities. This legislation replaces a bill proposed earlier in the year and supported by utilities to eliminate the net metering credit and solar renewable credits (SREC) regimes in the state and move to a utility driven competitive procurement model for solar. We opposed that approach because it removed the customer from the equation and provided no benefits to consumers who would have to allow facilities to be built on their premises. We also questioned whether it would, in fact, result in lower costs for solar development in the state.

H. 4185 replaces the SREC regime with a Declining Block Incentive which reflects the value of both the SREC credit and the net metering credit in a way that harmonizes the need for the financial support currently provided through both mechanisms. This legislation recognizes the importance of eliminating the caps. It will lift the current constricting limits – “caps” – on net metering, which have slowed development for many institutions over the past few years. While there have been adjustments, most recently in 2012 legislation, to increase the net metering cap as development increased and constraints were anticipated, the adjustments have not moved in lock step with the SREC market incentive programs. This has created disjointed and discouraging development schedules. PowerOptions members such as colleges, housing authorities, and regional public school districts are among many in the National Grid territory, for example, that have had projects stuck in neutral for months because of the net metering caps. This legislation eliminates the need to periodically revisit the caps and allows for an increase of regulatory certainty in the marketplace. Unfortunately, without enacting this legislation or raising the net metering caps, many projects would likely stop altogether.

Harmonizing the state’s SREC incentive and the net metering credits program will result in lower consumer cost impacts while providing sufficient, fixed revenues to the developer and financial benefits to the host of solar projects. The Bill’s proposed Declining Block Incentive (DBI) framework is innovative because it sets a fixed incentive level (solar incentive plus net metering credit) for a block of solar capacity so financial windfalls are not possible and consumers are protected. At the same time, the DBI structure assists project developers because the incentive payment is a known, fixed payment for 15 years, eliminating the volatile, uncertain SREC market incentive. The DBI framework in the legislation aims to periodically lower the incentive payments until the incentives reach the level of other renewable sources (e.g. wind) that are supported by the non-premium Class I Renewable Energy Credit (REC) market. This reduces consumer costs and eventually puts all forms of renewable energy on a level playing field. By harmonizing the incentive structure, net metering project opportunities are preserved and will continue to be available for public entities, including low income housing authorities and municipalities. This solar net metering option is essential for customers that want to take part in solar development but lack adequate space for on-site, behind the meter, solar projects.

This bill represents an innovative and progressive compromise between utilities, who think the current incentives are too costly, and solar providers. For these reasons, we have urged the Legislature to enact H.4185 before the end of formal sessions.

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