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PHASE I OF MASSACHUSETTS DPU PROCEEDING ON SMART PROGRAM REVISIONS NEARS ITS CLOSE
PHASE I OF MASSACHUSETTS DPU PROCEEDING ON SMART PROGRAM REVISIONS NEARS ITS CLOSE

Phase I of the bifurcated Massachusetts Department of Public Utilities (“DPU”) proceeding on potential revisions to the Solar Massachusetts Renewable Target (“SMART”) Program is nearing its conclusion, while Phase II is likely to continue into 2022.  Both phases of the proceeding warrant attention from the solar industry.

Phase I focuses on development and approval of a revised model SMART Tariff by the electric distribution companies (“EDCs”).  The revised tariff will implement changes in the revised SMART regulations promulgated by the Massachusetts Department of Energy Resource (“DOER”) in 2020.  Phase II focuses on certain other proposed changes to the SMART Program.  These changes potentially could include the introduction of a version of net crediting (consolidated billing) for some community solar projects under the SMART Program.

Background

The SMART Program is a ground-breaking solar energy incentive program with a declining block grant incentive structure, which is paid out based on the amount of energy generated by qualified Solar Tariff Generation Units (“STGUs”).

In 2017, the Massachusetts Department of Energy Resource (“DOER”) initially promulgated the regulations (225 C.M.R. 20.00) that created the SMART Program with a program size of 1,600 MWs of capacity.  This total capacity is divided among the state’s three investor-owned EDCs.  Each EDC has established blocks of capacity with Base Compensation Rates that decline between each block.  The EDCs filed a model SMART Tariff with the DPU in September 2017.  The DPU approved the model SMART Tariff in September 2018.

As required by the SMART regulations, DOER conducted a review of the incentive rates and total SMART Program costs once 400 MWs of solar capacity had qualified for inclusion in the program (225 C.M.R. § 20.07(5)) in early 2019.  Following that review, on July 24, 2020, DOER promulgated revised SMART Regulations which include the following key changes:

  • Program size doubled from 1,600 MWs to 3,200 MWs;
  • Projects greater than 5 MWs must be co-located with an Energy Storage System;
  • Twenty percent of capacity blocks are set-aside for mid-size projects (greater than 25 kW and less than or equal to 500 kW);
  • The Greenfield Subtractor, a disincentive which is applied to the Base Compensation Rate of facilities sited on certain open spaces, is increased by 2.5x;
  • Five percent of full capacity blocks are set-aside for Low-Income projects;
  • Projects are required to demonstrate that no more than two participants will receive net metering credits in excess of those produced annually by 25 kW of nameplate capacity, and the combined share of said participants’ capacity shall not exceed 50 percent of the total capacity of the Generation Unit;
  • Creation of a Pollinator Adder which provides an additional $0.0025/kWh incentive to Pollinator-Friendly projects subject to certain qualifications; and
  • Allows for electricity or bill credits to be allocated through a municipal load aggregation program established pursuant to M.G.L. 16 c. 164, § 134, or through a Low-Income community shared solar program established and administered by an EDC.

On December 3, 2020, the EDCs submitted a joint filing to DPU in docket D.P.U. 20-145 for review and approval of proposed changes to the SMART Tariff to implement the changes set forth in DOER’s revised SMART regulations.  In addition, the EDCs proposed clarifying revisions to the SMART Tariff, and National Grid proposed a Solar Access Initiative (“SAI”) to provide billing, enrollment, default management and net crediting services to STGUs Alternative On-Bill Credit (“AOBC”) Generation Units that also operate as Community Shared Solar or Low-Income Community Shared Solar facilities.

Several parties to the proceeding argued that the clarifying revisions proposed by the EDCs should be deferred to a separate phase (“Phase II”) of the proceeding and that the DPU should expedite its approval of the proposed amendments necessary to make the model SMART Tariff consistent with DOER’s revised regulations.  Generally speaking, the proposed changes made to conform the SMART Tariff to the DOER’s regulations have not been controversial.  However, with respect to the clarifying changes, the Solar Energy Industries Association (“SEIA”) argued that: “The process of reviewing controversial or complex changes should not slow down approval of those changes that need to be approved to allow the SMART Program to function as intended and directly implement DOER’s revised regulations.”  Some of the EDCs’ proposed clarifying changes and proposals that are likely viewed as controversial by the solar developer community include:

  • Revising the definition of “AOBC Payment/Credit Form” which would (a) deem an AOBC Payment/Credit Form complete when allocations correctly total 100 percent to active and valid Customer accounts, (b) require AOBC Payment/Credit Forms to be provided prior to a final approval of a Statement of Qualification (“SOQ”) for an STGU, rather than prior to the Commercial Operation Date, and (c) permit the AOBC Payment/Credit Form to be updated two times during a calendar year, as opposed to the current practice of using a rolling 12-month period.
  • Revising Section 5.3 of the SMART Tariff to limit the ability of the customer to charge a DC-coupled energy storage system from the STGU during any period that interferes with the EDC’s ability to participate in markets or incentive programs for which the EDC is entitled to participate.
  • Adding a new Section 10.3 to the Model Tariff providing that “unused AOBCs” will: (1) carry forward from month-to-month for behind the meter (“BTM”) AOBC Generating Units; (2) not be bought out by the EDCs from BTM AOBC Generation Units and will carry forward indefinitely; and (3) no longer be transferrable if they cannot be applied, allocated, or transferred because of inaccurate information or the recipient account(s) becoming invalid or inactive.
  • Certain aspects of National Grid’s SAI proposal including (a) charging a fee ($0.00820/kWh) to perform the net crediting services; and (b) making SAI available to non-Low-Income customers.

On May 1, 2021, the DPU issued a scoping order in which it bifurcated the D.P.U. 20-145 proceeding into two phases.  Phase I is focused on reviewing the changes the EDCs have proposed to directly implement the DOER’s revised SMART regulations.  Phase II will focus on the clarifying revisions and certain proposals made by the EDCs (including those potentially controversial items identified above).  In addition, Phase II will examine a proposal made by Eversource after the D.P.U. 20-145 proceeding had commenced to implement net crediting.  The Eversource proposal differs from National Grid’s SAI in several ways, but most significantly it would only be available to Low-Income customers and the costs of providing the service would be recovered through the DPU-approved in the SMART Factor.

The briefing phase in Phase I of the proceeding concluded on August 16, 2021.  We expect the DPU to issue an order setting out its decision on Phase I and approving the EDCs’ revised model SMART tariff before the end of this year.  Discovery in Phase II is underway now and briefing in Phase II is currently scheduled to conclude in December 2021, with a DPU order likely to follow in the first half of 2022.

Current Status of SMART Program Implementation and Development

As of September 2, 2021, DOER reports that approximately 603 MWs (AC) of capacity are operational, have received a Final SOQ, and are fully enrolled in the SMART Program.  Of that amount, 60.4 percent (364 MWs) is located in National Grid’s service territory, 37.2 percent (224 MWs) is located in Eversource’s service territory, and 2.4 percent (14 MWs) is located in Unitil’s service territory.  An additional 666 MWs (AC) of capacity have received Preliminary Statements of Qualification and reservations within a Capacity Block in the original 1,600 MWs of SMART Program Capacity.

As of September 2, 2021, the status of the SMART Solar Blocks for each EDC is as follows:

 

SMART Solar Block Status Update – Original 1600 MW Capacity
Small Projects (<=25 kW AC)
EDC Accepting Applications for Block1 Current Block Size (MW)2 Total Allocated Capacity (MW)3 Total Pending Capacity (MW)4 Total Remaining Capacity5
Eversource MA East 5 of 8 20.676 96.295 2.707 47.445
Eversource MA West 1-8 Full N/A 25.029 0.000 0.000
National Grid (Massachusetts Electric) 1-8 Full 16.144 142.737 1.007 0.292
National Grid (Nantucket) 2 of 2 0.610 1.063 0.015 0.130
Until 1-4 Full N/A 3.072 0.000 0.000
TOTAL 268.195 3.729 47.868
Large Projects (>25 kW AC)
EDC Accepting Applications for Block1 Current Block Size (MW)2 Total Allocated Capacity (MW)3 Total Pending Capacity (MW)4 Total Remaining Capacity5
Eversource MA East 5 of 8 91.233 318.855 27.960 236.773
Eversource MA West 1-8 Full N/A 93.228 0.000 0.000
National Grid (Massachusetts Electric) 1-8 Full N/A 567.393 0.000 0.000
National Grid (Nantucket) 1-2 Full6 N/A 1.096 0.000 0.000
Until 1-4 Full N/A 12.444 0.000 0.000
TOTAL 993.016 27.960 236.773

 

SMART Solar Block Status Update – Expanded Capacity
Small Projects (<=25 kW AC)
EDC Accepting Applications for Block1 Current Block Size (MW)2 Total Allocated Capacity (MW)3 Total Pending Capacity (MW)4 Total Remaining Capacity5
Eversource MA East + West 9 of 16 21.339 0.013 4.059 166.637
National Grid (Massachusetts Electric) 9 of 16 TBD 0.000 13.318 131.427
National Grid (Nantucket) TBD TBD 0.000 0.000 1.288
Until 5 of 8 0.814 0.000 0.566 2.777
TOTAL 0.013 17.943 302.129
Large Projects (>25 kW AC)
EDC Accepting Applications for Block1 Current Block Size (MW)2 Total Allocated Capacity (MW)3 Total Pending Capacity (MW)4 Total Remaining Capacity5
Eversource MA East + West 9 of 16 85.355 0.000 63.825 619.015
National Grid (Massachusetts Electric) 9 of 16 72.373 0.000 67.103 520.627
National Grid (Nantucket) 3 of 4 2.575 0.000 0.522 8.366
Until 5 of 8 3.257 0.000 9.073 4.142
TOTAL 0.000 140.523 1152.151

The above tables are updated by the EDCs on a daily basis and can be accessed here.  As these tables illustrate, the capacity blocks for the original 1600 MWs of capacity in the service territories of Eversource (West), Until, and National Grid (Massachusetts Electric) are fully subscribed with approximately 48 MWs of total remaining capacity.  This high saturation rate speaks to the extraordinary success of the Massachusetts SMART Program thus far and further underscores the solar developer community’s interest in Phase I of the D.P.U. 20-145 proceeding being completed as soon as practicable.

If you have any questions about the Massachusetts SMART Program, please contact Matt Campbell at mcc@rathlaw.com or Chuck Willing at cgw@rathlaw.com.

Notes:

Note 1: Assuming that all the Pending Capacity is approved, this is the estimated Block where new applications will be assigned.

Note 2: The Block Size MW values are estimated using the minimum Small Block set-aside percentage (20%) of the total capacity available for each block, per DOER regulations. Up to 35% can be allocated to small systems for any given block. Therefore, depending upon the makeup of project types, small project Capacity Block sizes may be adjusted upward and large project Capacity Block sizes may be adjusted downward.

Note 3: Allocated Capacity (MW) is the total of Applicants that have been issued an SOQ.

Note 4: Pending Capacity (MW) is the total applications assigned to a capacity block that have not been issued a SOQ.

Note 5: Remaining Capacity (MW) represents the total amount of MW that remain available in all Capacity Blocks, inclusive of all set aside capacities.

Note 6: Nantucket Block 2 is accepting apps for Large projects that are >25KW<=500KW or Low Income projects only.

 

 

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