The Nickel Report

The Commonwealth of Massachusetts is pursuing various regulatory actions to implement state policy to reduce greenhouse gas emissions from electric generation resources. As we previously reported, the Commonwealth is planning to implement a Clean Peak Standard (“CPS”) program this summer, which is designed to have renewable electricity generation resources “show up at the right time” on the grid to coincide with times of peak demand. In a complementary action, the Commonwealth has now doubled the size of its Solar Massachusetts Renewable Target (“SMART”) incentive program, along with new  performance standards for the siting of these renewable generating resources. While these changes to the SMART program were adopted as emergency regulations—making them effective immediately—the Commonwealth will go through the notice and comment rulemaking process over the next few months to provide for continued input from stakeholders on the new regulations and associated guidance.

Background

The Massachusetts Department of Energy Resources (“DOER”) adopted the SMART program in 2018. The SMART program began as a 1,600 megawatts (“MW”) declining block voluntary incentive program for solar projects. Eligible solar projects are capped at no larger than five MW and must be interconnected with the systems of one of three investor-owned electric distribution utility companies in Massachusetts. The SMART program is voluntary, insofar as no solar project proponent is required to participate. See generally, 225 CMR §§ 20.00, et seq.

April 2020 Modifications to the SMART Program

On the heels of a review that the DOER commenced when the SMART program reached 400 MWs of subscribed projects, the DOER filed emergency regulations on April 14, 2020, that made several fundamental changes to the SMART program. Key changes to the program include the following:

• The size of the program’s incentive target has been doubled from 1,600 MW to 3,200 MW of new solar generation capacity. 225 CMR § 20.05(1).
• “Energy Storage Systems” are now generally required to be co-located with all solar projects over 500 kW in size, with limited exceptions. 225 CMR § 20.05(5)(k). An Energy Storage System is any “…commercially available technology that is capable of absorbing energy, storing it for a period of time and thereafter dispatching the energy.” 225 CMR § 20.02. The Energy Storage System must also be eligible for the program’s “Energy Storage Adder,” which, in turn, includes criteria for: (1) nominal rated power capacity, (2) nominal useful energy capacity, (3) minimum efficiency, (4) performance data, (5) operational requirements, and (6) other metering and reporting requirements. 225 CMR § 20.06(1)(e). Ultimately, the change appears consistent with the anticipated arrival of the CPS program this summer. Conceptually, the requirement for these relatively larger solar facilities to have on-site Energy Storage Systems should facilitate the CPS goal to have the generated solar power available at times of peak demand.
• The siting of solar projects on undeveloped or limited development lands has been further discouraged by increasing the applicable “Greenfield Subtractor” by 2.5 times its current amount. 225 CMR § 20.07(4)(g). As the name suggests, the Greenfield Subtractor works to provide less of an incentive for projects sited in certain areas (g., previously undeveloped property or open space). Historically, application of these criteria involved a fact-specific inquiry, and the changes underscore that this fact specific-inquiry will continue. Stakeholders and project proponents need to carefully review the categories of land use and siting criteria, and the associated potential exemptions, which now apply to projects looking to enroll in the SMART program after the publication date of the regulations. 225 CMR § 20.05(5)(e).
• The Commonwealth builds upon its changes to the siting and land use criteria by expanding the program’s “ineligible land use areas” to include “Priority Habitat,” “Core Habitat” and “Critical Natural Landscape,” subject to limited exceptions. 225 CMR § 20.05(5)(e)(7)(c). Core Habitat and Critical Natural Landscape are mapped areas established through the Massachusetts Natural Heritage and Endangered Species Program BioMap 2 guide, while Priority Habitat is an established term and standard defined under the Massachusetts Endangered Species Act, M.G.L. c. 131A (“MESA”), and its implementing regulations. These terms are now included or cross- referenced in the SMART regulations. 225 CMR § 20.02 and 321 CMR § 10.02. Accordingly, understanding the eligibility of land use for the SMART program requires a careful crosswalk to MESA and its implementing regulations. 321 CMR §§ 10.00, et seq.
• The eligibility criteria for low-income customers was expanded by including “Low Income Eligible Areas.” A Low Income Eligible Area includes: “[a] neighborhood, as identified through American Community Survey data, that has household income equal to or less than 65 percent of the statewide median income for Massachusetts.” 225 CMR § 20.02. Accordingly, customers no longer need to be on an electric distribution company low-income discount rate, but may now be eligible for the SMART program if they are located in a Low Income Eligible Area.
• The definition of “Public Entity Projects” was expanded, and its applicable incentive “adder” was increased. The applicable definition of “Public Entity Solar Tariff Generation Unit” previously limited these types of units to those sited on property owned or operated by a municipality or other governmental entity. Now, the definition accommodates siting on private property, as long as it is either “(i) owned or operated by the Municipality in which the Solar Tariff Generation Unit is sited; or (ii) the Owner has assigned 100% of its output to the Municipality or Other Governmental Entities in the Municipality in which the Solar Tariff Generation Unit is sited.” 225 CMR § 20.02. The incentive adder for these types of units was increased from $0.02 to $0.04 per kWh.
• Additional provisions for low-income projects and midsize projects that are between 25 kW and 500 kW were also incorporated. 225 CMR § 20.05(3)(c)-(d). These changes are designed to reserve a certain percentage of the SMART program’s capacity blocks for projects in these categories.
• Finally, there are further modifications made to the SMART program’s implementing “Guidelines,” including those established for Land Use Siting and Project Segmentation, as well as Statement of Qualification requirements. These Guidelines are an important set of clarifications, interpretations, and procedures, including forms, developed by the DOER to implement the SMART program.

In addition to this list of key changes, all of the most recent changes to the SMART regulations and changes to the Guidelines bear close scrutiny by interested stakeholders. In particular, since many of the changes reflect the Commonwealth’s energy mix and other policy considerations, the fine contours of the SMART program, as now revised, may bear little resemblance to solar incentives offered in other state jurisdictions.

Procedural Next Steps

Because the changes to the SMART regulations were adopted on an emergency basis, the changes are effective for a period of 90 days. For the changes to become permanent, the DOER must proceed through the notice and comment rulemaking process during this 90-day window. Accordingly, the DOER simultaneously announced that, due to the COVID-19 pandemic, it will hold a virtual public hearing on May 22, 2020. The DOER is also accepting written comments on the modifications to the SMART regulations and Guidelines through that date. More information regarding this process is available on the DOER website.