Renova Partners/Brightfields Development
The state’s Department of Energy Resources received more than 2,500 applications in the first week alone.
Solar developers are flocking to new solar incentives that launched in Massachusetts late last month, according to initial numbers released last week. Industry insiders expect the program to spur a rebound in solar employment and make renewable energy available to a wider range of users.
“It was very positive to get a program rolled out that our customers could look at and understand the economics in a simple way,” said Craig Huntley, co-founder of Solect Energy, a solar development company based in Hopkinton, Massachusetts.
The Solar Massachusetts Renewable Target (SMART) program pays solar generators a fixed rate per kilowatt-hour of power, an approach used by only a few other states. So-called “adders” increase this rate for projects that are built on brownfields, serve low-income communities, are installed on rooftops, or include other features the state would like to promote. Under the previous program, solar generators received solar renewable energy credits, or SRECs, which they then sold at fluctuating market prices, a more common incentive.
SMART was authorized by legislation passed in 2016. The final details, however, weren’t in place until this fall, months after the original target for launching the program. Many commercial projects that were counting on the new incentives were forced into a holding pattern. The result, when SMART opened for submissions, was a flood of applications from projects that had been waiting in the wings.
“All the companies that service larger industrial companies have been preparing with SMART in mind,” said Dave Gahl, northeast director of state affairs for the Solar Energy Industries Association. “A lot of these projects have been theoretical for the better part of a year and now they’re very concrete.”
In the first week the program was open, the Department of Energy Resources received more than 2,500 applications. Two weeks in, the department had applications for more than 600 megawatts of installations, nearly 40 percent of the total capacity the program calls for.
The first 200 MW approved will earn the highest base rates; each block of 200 MW installed thereafter will receive lower incentives, up to a total of 1600 MW. This declining compensation structure means developers are eager to get applications in as soon as possible.
With so many applicants in line for approval, developers cannot yet be sure what block they will be part of — and therefore what rate they will receive.
“The challenge we’ve had is how popular it’s been,” Huntley said. “We’ve tried to model in a conservative way for our customers with a fair idea what they’ll receive.”
The fixed rate system should make solar more accessible to more commercial customers, said Matt Rudey, CEO of Safari Energy, a New York-based commercial solar developer that operates in Massachusetts. SMART offers a predictable, stable return that is attractive to lenders, he said. Under the SREC program, on the other hand, the volatile value of the credits could make it difficult for businesses without stellar credit to get financing for an installation.
“It really left out all of the small and medium-sized businesses that may not have had strong credit,” Rudey said. “SMART really enables a much broader subset of the market to participate.”
Even if SMART does create opportunities for more businesses to go solar, however, those that take advantage may not be making as much money as those with SRECs have realized historically.
“SMART will be more predictable, but maybe not as lucrative,” Huntley said.
The launch of SMART is also expected to help stabilize an industry that has been in flux for the last two years. During the transition from the SREC program, solar industry employment fell in the state, according to the Solar Foundation. Many attributed this phenomenon to uncertainty about where the incentive program was going.
Now that the program is open for business, hiring should follow, Gahl said.
“They are moving to finalize those projects and that turns into construction jobs,” he said. “Sometime next year we’re going to see a ramp up.”
The initial surge of submissions includes a high percentage of plans for conventional land-mounted installations. The most common adders included are energy storage and community solar, according to information from the Department of Energy Resources. More applications have been filed for projects in the western part of the state than in the east.
The state is expected to begin approving SMART applications as early as this week. Once projects totaling 400 MW have been qualified, the department will review the data and make any tweaks deemed necessary to ensure approved projects have the desired diversity, geographically and functionally. If applications continue to be dominated by plans for land-mounted installations, for example, the department may look at ways to encourage more rooftop developments.
Regardless of the small changes that may come, developers are encouraged by the solar course Massachusetts is charting.
“This is something that has been evolving,” Rudey said. “Massachusetts is on the forefront.”