Massachusetts incentives

The new Solar Massachusetts Renewable Target (SMART) program offers some great benefits to Massachusetts residents and their solar installations.

As the program is relatively new, let’s review its features, how it differs from the old programs, and how its different method of compensation may affect the payback time of your solar installation.

What is the SMART solar incentive program?

The SMART program is Massachusetts’ latest initiative to support solar development throughout the state. Broadly, the program aims to help increase Massachusetts’ use of clean, renewable energy by incentivizing citizens to invest in solar tech.

More specifically, the SMART program will provide payments to residential solar users based on a fixed rate per kilowatt-hour (kWh). This is a type of incentive that will pay homeowners for the excess solar energy they produce, splitting users up into “blocks” to determine how much money they’ll get back (more on that in a moment).

The program launched in January 2017 and has since been hailed as one of the most open, equitable, and accessible solar incentive programs in the whole country. As we’ll discuss, it’s a great new program that can provide you with some great benefits if you’re considering a solar installation in Massachusetts.

And if you’re a Massachusetts resident considering solar, we recommend starting here for a quick breakdown of solar panel costs.

How does the SMART program work?

Here’s what you’ll expect to see in the new SMART program. The Massachusetts Department of Energy Resources (DOER) splits up participants into blocks, based on the size of their solar systems. These blocks will determine how much they receive in financial compensation for their solar usage. This figure is known as your Capacity Block Compensation Rate.

How much will I get paid?

While the SMART program covers systems of all sizes (from small, residential systems to 10-megawatt utility systems), most residential users won’t need to worry about the details of the higher capacity blocks. For reference, the Capacity Block Compensation Rates are broken down like this:

  • Less than or equal to 25 kW (low-income) – $0.322 per kWh

  • Less than or equal to 25 kW – $0.28 per kWh

  • 25 kW to 250 kW – $0.21 per kWh

  • 250 kW to 500 kW – $0.175 per kWh

  • 500 kW to 1,000 kW – $0.154 per kWh

  • 1,000 kW to 2,000 kW – $0.14 per kWh

Which “block” you fall into is determined by how much solar power you produce. This, in turn, determines what level of compensation you’ll receive. As you can see, the higher the block, the lower the compensation rate. However, note that these higher blocks are mostly reserved for commercial solar applications and utility providers—no residential homeowner could produce solar energy at these rates

Remember, the average size of a residential solar installation is between 5kW and 6kW. This means that all residential SMART program participants will fall into one of the first two blocks, depending on their income level. Keep in mind that the above rates are merely bids—estimations—of how much compensation users will receive. The actual amounts will depend on which utility company is used and are likely to change over time.

To ensure you get the most up-to-date information for your solar estimation, contact us and we can give you a hand with the details.

Is this different than the old solar incentive program?

The SMART program is quite different than the existing solar programs in Massachusetts. The old programs, Solar Renewable Energy Certificates (SREC) I and II, involved homeowners receiving, and reselling, energy credits based on their solar energy production. For every megawatt-hour of solar energy produced, homeowners would receive one SREC. These certificates could then be “traded in” for discounts on their utility bills.

The key difference here is that SREC credits are traded on the market—and thus, their value varies based on market conditions. In periods of high demand, they may be worth more, but they can just as easily be worth less. Compare this with the SMART method, which provides a fixed discount on a homeowner’s utility bill, regardless of the energy market.

How will the SMART program affect my solar payback time?

House sitting on money

Naturally, you might be wondering whether this new program can provide better benefits to your utility bill—and thus, bring down your solar payback time.

We’ll review the details, but note that comparing the two programs can be tricky. The long-term value of each program can be made only with estimations, as several factors (such as utility company rates and SREC value) change over time. For more in-depth information about the cost of solar installations, check out our free solar calculator here.

How much do I save with SREC II?

Let’s start with SREC II. Massachusetts is one of the best states in the country for SREC compensation, with a 2018 estimate of $257 per SREC used. Under normal conditions, the average homeowner can expect to generate about 10 SREC credits per year. This means that they would have close to $2,570 knocked off of their utility bill under SREC II.

Keep in mind that SREC credits typically decline in value each year, so at most, you can expect to save $25,700 over the 10-year life of your solar investment.

How much do I save with SMART?

Conversely, SMART pays at a flat rate. Based on our above data, let’s assume a rate of $0.28/kWh. For 10 MW of power produced over the year (the output that would create 10 SREC credits), this would save $2,800 per year—or $28,000 over 10 years.

However, net metering credits need to be factored into this calculation as well. While these calculations get more complex, it’s generally accepted that SERC II still provides homeowners with the bigger cost-saving benefits.

Will one program offer better returns over the life of my solar investment?

Overall, both SREC II and SMART offer great benefits to Massachusetts residents. At this point in time, residents can still save more by opting to go with SREC II, although things may change a few years down the line. Overall, both SREC II and SMART offer great benefits to Massachusetts residents. At this point in time, residents can still save more by opting to go with SREC II, although things will be changing shortly. Eligibility for SREC II will be ending on the 26th of November 2018, when the new SMART program officially launches.

But as of now, a switch to the SMART program won’t offer appreciable reductions to your payoff time. We’ll need to wait and see how the market reacts to this new program over the coming years—through the rest of 2018, and beyond.

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