IMPORTANT NOTE: If you are already in the SREC I or SREC II program, nothing changes. You will continue to earn SRECs for the remainder of your 10-year period. People signing up for SRECs and going solar in the next few months also get 10 years of SRECs. People signing up for solar after March 2018 will not get SRECs; they will be eligible for the SMART program instead.
As stated in one of my previous blogs, for the past seven years, Massachusetts solar owners have been able to earn Solar Renewable Energy Certificates (SRECs) for the energy produced by their solar energy systems. Sadly, this program is coming to an end. The replacement program will provide much lower “green income” to those going solar.
The positive take is that solar incentives were always designed to decline over time.
What’s replacing SRECs? The Solar Massachusetts Renewable Target program.
How SMART Works
SMART in short. The SMART Program is designed to support the development of an additional 1,600 MW of solar. It pivots from the Solar Renewable Energy Credit (also known as SREC) framework to a declining block compensation mechanism.
Program details are not final, but my understanding is that the numbers are unlikely to change.
Step 1. The SMART incentive will be set through an auction. Large solar installers will bid to do solar farm projects in the Commonwealth. However, they won’t bid on the project cost, they will bid for the incentive. The lowest bid wins. The incentive starts at $0.15 per kWh. But say an installer of large commercial arrays thinks they can be successful getting paid at $0.13 per kWh. Then that’s what they bid. Another installer thinks they can be successful at $0.11 per kWh so they bid that. All the bids are collected and the winner is the installer with the lowest bid.
Step 2. The program dictates that residential programs will receive 2 times (or 2.3 times, for low-income households) the incentive that the large commercial projects settled at, in the process described in Step 1.
If commercial projects settle at $0.15 per kWh, the residential incentive is $0.30 (or $0.35 for a low-income household). This does not mean you get $0.30 above and beyond your net metering (as the SREC does now). Instead, you receive $0.30 for every kWh you produce minus the volumetric distribution + transmission + transition charges and the 3-year average basic service rate. Simple, right? For a typical National Grid customer, that number is about $0.18 per kWh. Therefore, every kWh your solar system produces is worth $0.30 minus $0.18, or about $0.12 per kWh.
The SMART incentive is low compared to the SREC program. The SMART solar incentive is worth less than half what the current SREC incentive is worth.
Oh, and by the way, once we reach 200 megawatts of solar in the first SMART block, the process starts over but 4% lower. Again I say: If you are a Massachusetts Homeowner thinking about going solar, and saving money is important to you, now is really the time.
Sign up soon to get into the SREC program before it goes away. As long as you sign up in time, you will get 10 full years of SREC green income, worth on average $19,000. Contact us today to learn more.