July 31, 2020 Update: On July 10, 2020, the DOER filed the final version of the modified SMART program regulations, adjusting key provisions after receiving substantial stakeholder input and comments on the emergency regulations filed April 15, 2020. DOER also posted a redlined version highlighting the changes made. The updated regulations reflect many of the edits proposed in the comments filed by Klavens Law Group.
Reflecting the high demand for the program, the final version of the modified SMART regulations includes the increase of program capacity by an additional 1,600 MW AC, bringing the total capacity to 3,200 MW AC. Projects on the waiting list in territories that are at capacity will retain their queue position when the second wave of blocks becomes available.
Although many provisions of the final SMART regulations reflect the changes proposed in the emergency regulations, the final version does make some changes. The most significant adjustments relate to ineligible land uses.
As part of its proposed changes to the program, the emergency regulations excluded projects sited on land designated as priority habitat, core habitat, or critical natural landscape. DOER revised the regulations such that now projects sited on land designated as critical natural landscape are still eligible to participate in the SMART program so long as the project qualifies under the first 1,600 MW of the program’s capacity (which is generally relevant to projects in Eversource East territory). In addition, the new land use and siting requirements will not apply to projects that have a SMART Statement of Qualification by the Publication Date (April 15, 2020), or to any project where the applicant can demonstrate to DOER’s satisfaction that it (1) had site control as of the Publication Date, and (2) either submits an executed interconnection service agreement within 6 months of the Publication Date (i.e., by October 15, 2020) or demonstrates that it had submitted a complete interconnection application not less than 135 business days prior to the Publication Date (i.e., by September 25, 2019). These revisions are also reflected in the updated Guideline Regarding Land Use, Siting, and Project Segmentation, which DOER issued in final form on July 14, 2020.
Even though the prohibitions on projects on core habitat and priority habitat land are maintained for some projects, the modification included in the final regulations will help support solar projects that were in development prior to the issuance of the new land use restrictions.
Additionally, the final regulations modify the methodology used for calculating incentive payments for behind the meter generation with different value of energy formulas for net metering and non-net metering (either qualifying facilities or alternative on-bill credit units).
The final regulations went into effect on July 24, 2020 upon publication in the Massachusetts Register. The next step in the process will be the EDCs’ filing of a revised SMART tariff with the Department of Public Utilities.
In the meantime, the comment period on the proposed SMART guidelines has closed. While the above-referenced Land Use Guideline as well as the Statement of Qualification Application Guideline have been finalized, DOER is expected to issue final versions of the remaining guidelines in the near future.
For the most up to date information related to the SMART program regulations and guidelines, please heck the DOER website.
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On April 15, 2020, the Massachusetts Department of Energy Resources (“DOER”) released emergency regulations for the Solar Massachusetts Renewable Target (“SMART”) program setting forth new rules for the second phase of the program. DOER also released some updated guidelines for the program extension regarding land use and siting, the statement of qualification application, and compensation rate calculation.
The SMART program provides financial incentives for solar projects up to 5 MW. (All MW and kW references here are to AC generating capacity.) The first phase of the program is made up of declining blocks totaling 1600 MW distributed among the electric distribution company (“EDC”) territories, with portions of each block set aside for large (>25 kW) and small (≤25 kW) projects. The available incentive rate declines with each block and is increased or decreased based on other characteristics of a project, such as the implementation of energy storage or dual solar and agricultural use.
The first phase of SMART began with acceptance of applications on November 26, 2018. During the first week of the program, 2,500 applications were submitted, available capacity was filled for two of the large project EDC territories (WMECO and Unitil), and capacity of a third territory (National Grid) was nearly filled. DOER was required to complete a review of the program after issuing statements of qualification for 400 MW (one quarter of the program capacity). However, DOER ended up completing its required review of the program in September 2019, when the capacity for large projects in most territories was full or nearly full and over 11,300 applications had been filed.
Reflecting the high demand for the program, the SMART emergency regulations increase the program capacity by an additional 1600 MW. Projects on the waiting list in territories that are at capacity will retain their queue position when the second wave of blocks becomes available. DOER estimates that the SMART application portal will reopen on May 18, 2020, once updated to reflect the requirements of the emergency regulations.
Aside from the increase in capacity, the SMART emergency regulations change many other details of the program.
Ineligible Land Use Areas. Existing ineligible land use types, such as protected open spaces or wetland resources areas, are preserved. The SMART emergency regulations create the following additional restrictions:
- Eligible projects may not be sited on land designated as priority habitat, core habitat, or critical natural landscape, as identified by the Massachusetts Division of Fisheries and Wildlife.
- Eligible projects may not be sited on a parcel with more than half of the land designated as priority habitat, core habitat, or critical natural landscape, as identified by the Massachusetts Division of Fisheries and Wildlife.
Pollinator Adder. The SMART emergency regulations include a brand new compensation adder for projects that obtain and maintain a certificate for being pollinator-friendly.
Greenfield Subtractor. Any portion of a project site that does not qualify for Category 1 land use (e.g., agricultural, floating, and building mounted facilities) is subject to a “greenfield” compensation subtractor. Under the SMART emergency regulations, the subtractor rate will be increased by two and a half times, further discouraging the development of large ground mounted facilities on previously undeveloped land. It is also worth noting that projects permitted under zoning bylaws that explicitly address solar use will be classified as Category 2 rather than Category 1.
Energy Storage. Projects greater than 500 kW are required to be paired with an energy storage system (“ESS”). Although KLG strongly supports the implementation of ESS in Massachusetts, this broad requirement may pose significant challenges unforeseen by DOER. This requirement will particularly disadvantage projects with space constraints, such as building-mounted projects or dual solar and agricultural projects (“dual use” or “agrivoltaic” projects), or projects with interconnection challenges.
Public Facility. The definition for a public facility no longer requires the project to be located on public land. Public facilities may be located on privately owned property, provided that the governmental entity at issue either owns and operates the facility or is located within the same municipality as the facility and is assigned all of the electric output. The compensation adder for a public entity facility is doubled from $0.02 to $0.04.
Set-Aside Capacity.
- Low-Income Customers – At least 5% of each block is reserved for projects that serve only low- or moderate-income housing customers or community solar projects with at least 50% low-income customers. Additionally, the definition of a low-income customer has been expanded to include any resident of a low-income area. Low-income areas are defined as neighborhoods identified by the American Community Survey within the federal Census Bureau as having income 65 percent or less than the statewide median.
- Small and Medium-sized Projects – At least one fifth of each block will now be carved out for medium-sized projects (25-500 kW). Each block will continue to have twenty to thirty-five percent of its capacity set aside for projects under 25 kW, leaving a maximum of sixty percent of each block remaining for projects over 500 kW.
Declining Incentive Rate. Incentive rates for projects in front of the meter will continue to decline by 4% each block. For behind-the-meter projects, project compensation will only decline by 2% each block under the revised regulations.
Consumer Protection. The SMART emergency regulations include additional protections for community solar project customers, including DOER’s ability to audit and issue warnings related to customer disclosure forms. KLG anticipates that the forthcoming community shared solar guidelines will contain consumer protection elements beyond those laid out in the regulations.
Some projects, including those that have already received a SMART statement of qualification, are exempt from the revised regulations to ease the transition to the new rules. A project under development that is over 500 kW and has an executed interconnection service agreement, all non-ministerial permits, and evidence of site control is exempt from the ESS requirement. In addition, a project that receives an interconnection service agreement within six months of April 15, 2020 is exempt from the program’s revised land use and siting criteria.
The SMART emergency regulations became effective upon the date DOER established within the regulations themselves, defining it as the “Publication Date,” which is April 15, 2020. DOER has three months from this date to finalize the emergency regulations. According to DOER's SMART emergency regulations webpage, the regulations will be open to public comment until May 22, 2020, which is the same date as the virtual public hearing. Many of the provisions of the SMART emergency regulations have already been the subject of extensive discussion as DOER had a significant stakeholder engagement process as part of its 400 MW review and straw proposal. As a result, it is unlikely that DOER will be receptive to significant changes. That being said, there are some new concepts in the regulations, such as the ESS requirement and ineligible land use areas, that may warrant additional comment. We encourage interested parties to submit comments to DOER and testify at the public hearing on any issue they believe deserves additional consideration or clarification. Please contact us with any questions related to the revised regulations or this rulemaking process.
This program extension cannot come fast enough as a beacon of hope in Massachusetts while the solar industry weathers the impacts of COVID-19. In recognition of these impacts, for applications submitted prior to July 1, 2020, DOER has also voluntarily provided a six-month extension of SMART statement of qualification end dates.
FURTHER INFORMATION
For further information about these matters, please contact Courtney Feeley Karp at cfeeleykarp@klavenslawgroup.com or 617-502-6284, Betsy Mason at emason@klavenslawgroup.com or 617-502-6286, or Jonathan Klavens at jklavens@klavenslawgroup.com or 617-502-6281.
ACKNOWLEDGMENTS
We wish to acknowledge the valuable contributions of Lexi Stacy and Samantha Mundell in the research for and drafting of this article.
DISCLAIMER
This document, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Klavens Law Group, P.C. or its attorneys. Please seek the services of a competent professional if you need legal or other professional assistance.
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