The SMART Program
On January 11th, the Massachusetts Department of Energy Resources (DOER) released the final regulations for its Solar Massachusetts Renewable Target (SMART), the state’s new solar incentive program. SMART eliminates and replaces the Solar Renewable Energy Credits (SREC) program, which allows investors to trade credits for their clean power on an open market. SREC reached its capacity target of 1,600 MW of installed solar in Massachusetts in February of 2016. Since then, there have been several ‘step-down’ extensions of SREC that have enabled solar development until the implementation of SMART. While both programs provide lucrative incentives for solar investors, there are several important differences between SREC and SMART:
SREC
Provides two streams of income throughout the course of the incentive
Income derived from the electricity created
Income derived from the sale of SRECs on the open market
Is a 10-year program
SMART
Provides a fixed incentive payment per kilowatt hour
is a 20-year contractual commitment for systems larger than 25kW AC
SMART- The fixed incentive payment is comprised of a base rate, a series of adders/kWh associated with project type, and a multiplier associated with project size (capacity).
Through a competitive auction on November 13, 2017, utilities established the baseline rate for their respective service areas. Adders provide additional compensation for specific project types. For example, a 300-kW roof-mounted system in National Grid territory will receive a baseline rate (Figure 1) of $0.19454/kWh with a $0.02 adder (Figure 2) totaling to $0.21454/kWh for the 20-year term. It is important to note that each major utility in Massachusetts has determined its own baseline rate for this program and that the figures below do not depict all program guidelines. (For a complete list of base rates and adder values, click here)
Figure 1
Figure 2
Similar to the SREC program, SMART is designed to benefit early adopters of the policy. As capacity blocks are filled over time, both baseline rates and adder values will be decreased. Unlike SREC, however, SMART’s contractual longevity reduces financial risk by providing long-term revenue certainty for the solar developer. By extending contract times, Massachusetts hopes to broaden the market of solar investors for the next 1,600-MW program capacity block.
While incentive programs can be difficult to understand, FireFlower Alternative Energy is here to help you navigate your solar investment process. With nearly 10.5 MW of projects either developed or underway, our team will ensure profitable investments for our clients. For more information about FireFlower Alternative Energy, visit https://www.fireflower-alternative-energy.com/
