Back to top

Massachusetts (SMART) Solar Feed-in Tariff Program

SMART introduced a market-based incentive mechanism that incentivizes the development of solar energy by providing long-term revenue certainty for solar projects.

Keys to Success

  1. Carve Out Funds for LMI Programs

  2. Energy Funds as a Construction Source

  3. Ensure Funding Awards are Flexible, Easy to Use, and Large Enough to Change Behavior for Affordable Multifamily Properties

  4. Streamline Application Processes and Compliance

Program Overview

Massachusetts Department of Energy Resources (DOER) develops and implements policies and programs to ensure the adequacy, security, diversity, and cost-effectiveness of the state’s energy supply. The Solar Massachusetts Renewable Target (SMART) Program is a tariff-based incentive paid directly by utility companies to solar power system owners. This incentive program, established to boost solar development in Massachusetts, includes adder incentives for solar power generation in, by, and for low-income communities.

Feed-in tariff-based incentive programs are common in Germany and several other European countries. They work by requiring utilities to pay specific rates, which can be higher or lower than the “retail rate” of electricity, directly to solar system owners for the power that they provide to the utility grid. This differs from net metering, which pays solar producers a rate equal to the “retail rate” of electricity. The incentive rate is determined by the state agency when a solar generation unit is approved for operation and participation in the program. The program establishes a base rate for projects, with adders that improve the rate for projects in and serving LMI communities.

Program Snapshot

  • Program Size: Original goal to support the installation of 1,600 MW of solar in Massachusetts. Goal updated in April of 2020 to support installation of 3,200 MW of solar throughout the state.

  • Program Objective: Foster the development of solar power generation in Massachusetts, encourage prioritization of projects serving LMI Communities.

  • Funding Source: Utility rate-payer dollars

  • Financing Type: Set dollar per kilowatt hour price required for the utility to purchase all power generated by a given solar system for 10 to 20 years, depending on the system size. The average electric price for utility power in MA is 17.6 ¢/kWh for commercial electricity and 22.79 ¢/kWh for residential energy. The average cost per watt of solar power in MA is between $3 to $5. Community solar projects that serve half of their energy produced to LMI are awarded additional 6 ¢ per/kWh. LMI community solar projects under 25 kW receive 230% of base compensation rate, based on utility service territory.

  • Key Players:

  • Implementation Agency: Massachusetts Dept of Energy Resources (DOER)

  • Funder: Investor-owned utilities collect rate-payer dollars to fund the program

  • Independent Verifiers

  • LMI Solar Generation Owners

  • Eligible Applicants: Receiving additional incentives for servicing low-in- come end users requires the generation unit’s owner to demonstrate either all of the unit’s power is provided to a low-income customer or that at least 15% of the unit’s output is allocated to a low-income customer in the form of electricity or bill credits at no cost to the customer.

  • Eligible Uses: Solar installations

Demonstrating Keys to Success

  1. Carve Out Funds for LMI Programs: SMART offers a baseline incentive for all solar projects that apply for the program in Massachusetts, as well as an additional incentive for projects serving LMI. This boost is carved out to acknowledge the importance of serving LMI communities and the challenges and additional costs associated with reaching LMI communities.

  2. Energy Funds as a Construction Source: The long-term commitment provided by SMART is structured to be used as a source of operating income to support and secure loan payments.

  3. Ensure Funding Awards are Flexible, Easy to Use, and Large Enough to Change Behavior for Affordable Multifamily Properties: Solar developers have noted that the LMI incentive boost is significant enough that it has encouraged them to switch their projects over from serving market- rate to LMI customers. The program structure strongly encourages projects to prioritize LMI projects over market-rate.

  4. Streamline Application Processes and Compliance: Feed-in tariffs provide an upfront fixed price per unit for solar power for a fixed term, which offers owners clarity and consistency. The simplicity of feed-in tariffs makes it easy for solar owners to apply and comply with incentives and has driven massive growth in LMI solar in Massachusetts.

Program Strengths and Market Transformation

SMART includes key features that effectively serve LMI communities. First, the LMI boost incentive is sized to incentivize solar developers to serve LMI communities rather than market-rate. Furthermore, 5% of each block in the program’s pay schedule is reserved for disbursement to low-income community servicing projects, guaranteeing a share of the benefits allocate to LMIs.

To keep the program streamlined, solar owners apply once upfront and receive set terms of 10 to 20 years, depending on the project size. Applicants need not reapply or pay for additional monitoring, as traditional net metering works to calculate electricity sent back to the grid, which will be used with the project’s assigned compensation rate to calculate a unit’s monthly payout. Application, monitoring, and payout are all streamlined to boost participation.

Back to top