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:

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:

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)
EDCAccepting Applications for Block1Current Block Size (MW)2Total Allocated Capacity (MW)3Total Pending Capacity (MW)4Total Remaining Capacity5
Large Projects (>25 kW AC)
EDCAccepting Applications for Block1Current Block Size (MW)2Total Allocated Capacity (MW)3Total Pending Capacity (MW)4Total Remaining Capacity5
Eversource MA East5 of 820.67696.2952.70747.445
Eversource MA West1-8 FullN/A25.0290.0000.000
National Grid (Massachusetts Electric)1-8 Full16.144142.7371.0070.292
National Grid (Nantucket)2 of 20.6101.0630.0150.130
Until1-4 FullN/A3.0720.0000.000
TOTAL268.1953.72947.868
Eversource MA East5 of 891.233318.85527.960236.773
Eversource MA West1-8 FullN/A93.2280.0000.000
National Grid (Massachusetts Electric)1-8 FullN/A567.3930.0000.000
National Grid (Nantucket)1-2 Full6N/A1.0960.0000.000
Until1-4 FullN/A12.4440.0000.000
TOTAL993.01627.960236.773
SMART Solar Block Status Update – Original 1600 MW Capacity
Small Projects (<=25 kW AC)
EDCAccepting Applications for Block1Current Block Size (MW)2Total Allocated Capacity (MW)3Total Pending Capacity (MW)4Total Remaining Capacity5
Large Projects (>25 kW AC)
EDCAccepting Applications for Block1Current Block Size (MW)2Total Allocated Capacity (MW)3Total Pending Capacity (MW)4Total Remaining Capacity5
Eversource MA East5 of 820.67696.2952.70747.445
Eversource MA West1-8 FullN/A25.0290.0000.000
National Grid (Massachusetts Electric)1-8 Full16.144142.7371.0070.292
National Grid (Nantucket)2 of 20.6101.0630.0150.130
Until1-4 FullN/A3.0720.0000.000
TOTAL268.1953.72947.868
Eversource MA East5 of 891.233318.85527.960236.773
Eversource MA West1-8 FullN/A93.2280.0000.000
National Grid (Massachusetts Electric)1-8 FullN/A567.3930.0000.000
National Grid (Nantucket)1-2 Full6N/A1.0960.0000.000
Until1-4 FullN/A12.4440.0000.000
TOTAL993.01627.960236.773
SMART Solar Block Status Update – Expanded Capacity
Small Projects (<=25 kW AC)
EDCAccepting Applications for Block1Current Block Size (MW)2Total Allocated Capacity (MW)3Total Pending Capacity (MW)4Total Remaining Capacity5
Large Projects (>25 kW AC)
EDCAccepting Applications for Block1Current Block Size (MW)2Total Allocated Capacity (MW)3Total Pending Capacity (MW)4Total Remaining Capacity5
Eversource MA East + West9 of 1621.3390.0134.059166.637
National Grid (Massachusetts Electric)9 of 16TBD0.00013.318131.427
National Grid (Nantucket)TBDTBD0.0000.0001.288
Until5 of 80.8140.0000.5662.777
TOTAL0.01317.943302.129
Eversource MA East + West9 of 1685.3550.00063.825619.015
National Grid (Massachusetts Electric)9 of 1672.3730.00067.103520.627
National Grid (Nantucket)3 of 42.5750.0000.5228.366
Until5 of 83.2570.0009.0734.142
TOTAL0.000140.5231152.151

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.