Massachusetts SMART program explained

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Massachusetts SMART program explained

 

The Massachusetts SMART program is a solar incentive that provides solar homeowners with additional compensation for the solar energy they generate. The SMART program was designed to replace the state’s Solar Renewable Energy Credit market to provide predictable solar savings. 

With the SMART Program, solar energy is valued at a price higher than the retail rate of electricity because of its positive environmental attributes. The exact SMART program rate varies between utility companies, but it’s generally between $0.22 and $0.26 per kilowatt-hour. 

However, electricity prices in Massachusetts have increased substantially, so most solar homeowners are now only seeing slight additional savings through the SMART program. The high electricity prices alone are enough to make Massachusetts the best home solar state in the entire country. 

Find out if going solar in Massachusetts is right for you

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    What is the SMART solar incentive program?

    In November 2018, the Massachusetts Department of Energy Resources (DOER) officially opened the Massachusetts SMART program in order to support solar development throughout the state.

    The program was designed to replace the state’s solar renewable energy credit (SREC) program. 

    Originally, the goal of Massachusetts’ SMART program was to support the installation of 1,600 megawatts (MW) of solar in the state. In April 2020, the program was doubled to support the installation of 3,200 MW of solar. 

    These changes to the SMART regulations were put into place to help the solar industry recover from the COVID-19 pandemic and get Massachusetts to reach its renewable portfolio standard (RPS) goals while continuing the fight against climate change.

    If you qualify for the SMART program, your utility will pay you a fixed rate-per-kilowatt-hour (kWh) of solar energy your solar panels produce for 10 years. 

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

    Find out if going solar is worth it where you live

    How does the SMART program work?

    Massachusetts’ SMART program can be a little confusing to understand at first, so let’s break it down. 

    diagram depicting how massachusetts smart program works

    As we said earlier, the SMART program has a capacity of 3,200 MW of solar installations. This capacity is divided among the three investor-owned electric distribution companies in Massachusetts: 

    • Eversource
    • National Grid
    • Unitil

    The capacity amount assigned to each utility company is based on how many customers are in the utility’s service territory. For example, Massachusetts Electric (AKA National Grid) services the largest number of customers, giving them a larger portion of the SMART program budget.

    From there, the total capacity that is allocated for each utility is divided into different categories, based on system characteristics. For example, low-income community solar projects will receive a different incentive rate than residential projects.

    These categories are divided further into ‘capacity blocks’. As more SMART applications are approved, these blocks fill up. When a block is full, that means the block has reached capacity and the program will move to the next block. The new block will have a lower incentive rate than the previous block.

    So, how do you get started?

    With the Massachusetts SMART program, there are a few steps to the process.

    You must start by filling out all the proper paperwork, gathering any required documentation, which will include a signed contract for a small (residential) solar project. You must then apply in an online portal from one of the three electric providers. If all the paperwork passes and your application goes through, you’ll receive a preliminary statement outlining your qualifications.

    Then comes the fun part. After the paperwork part is taken care of, you can then install and interconnect your system, submit your claim confirming your interconnection approval and application, and then finally – start receiving those incentive payments.

    How much will I get paid through the SMART program?

    The SMART incentive rate you will receive depends on three things: 

    1. The size of your system
    2. Your utility
    3. What block the program is in

    Because the average residential solar system is 6 kilowatts (kW) in size, we’re only going to focus on the incentive rates offered for solar panel systems that are less than 25 kW. 

    The full list of incentive payments can be found in the program’s Value of Energy Workbook.

    The following table outlines the incentive rate, also called the Capacity Block Compensation Rate, that is offered by each utility for solar panels systems that are less than or equal to 25 kW in size as of May 2023.

    Utility Current Block Capacity Block Compensation Rate
    Eversource East 9 of 16 $0.25038 / kWh
    Eversource West 9 of 16 $0.21044 / kWh
    National Grid (Massachusetts Electric) 10 of 16 $0.22463 / kWh
    National Grid (Nantucket) 3 of 4 $0.25704 / kWh
    Unitil 5 of 8 $0.22619 / kWh

    It’s important to note that the Capacity Block Compensation Rate includes the cost of electricity, so it rolls the value of net metering and the value of the SMART program incentive into one. 

    If you want to know exactly how much you are getting from the SMART program alone, you have to subtract the cost of electricity from the Capacity Block Compensation Rate. 

    You might not get an incentive payment. Higher than ever electricity rates and the declining block structure means you might not receive an incentive payment. You can read more about this in DOER’s statement. If you are a homeowner who will receive no or lower payments, you can ask your installer about participating directly in the SREC market.

    What are "adders"?

    The SMART program also offers ‘adders’ that will earn you more money if your system has certain characteristics. It’s like an extra gift on top of the money you’re already earning. You can be eligible for ‘adders’ if your system features some kind of energy storage, you are income-qualified, or meet some sort of location-based qualification.

    For example, adding a battery storage system with your solar panels can add an extra amount up to $0.0487 per kWh to what you’re already earning for your block. Or, if you’re considered a low-income property owner, you can earn an extra $0.03 per kWh.

    These adders encourage those who are making the switch to solar power to consider installing certain types of systems in order to receive a larger incentive payment. 

    See how much the SMART program can save you

    How much will I save with the SMART program?

    The best way to understand how much a solar system owner will save with the SMART program is with an example. 

    Let’s say you are an Eversource East customer and you install a 6 kW solar panel system on your roof that produces 12,000 kWh of electricity a year. You get approved for the SMART program and receive the Block 6 Capacity Block Compensation Rate of $0.277723 per kWh of solar energy your panels produce. 

    house-sitting-on-money

    Remember, the Block Compensation Rate includes the cost of electricity.

    In order to calculate how much you can save with the SMART program, you subtract the average cost of electricity ($0.1591 per kWh) from the Capacity Block Compensation Rate.

    So, subtract that from the block 6 rate, you’re left with $0.118623 per kWh of solar energy you produce.

    Remember that you’re still entitled to net metering on top of the SMART program, so if your panels produce 12,000 kWh in one year, you’ll save an additional $1,423 in one year on top of what you’re already saving.

    When you include the net metering credits, you would then save $3,587.72 per year. That means over the course of 10 years, you would save $35,877.20 with the SMART program and net metering.

    Please keep in mind that when electric prices rise, your savings will go down. These numbers are calculated using the average price of electricity as of July 2023.

    Curious about solar being right for your home? Check out our free solar calculator to see an accurate estimate of what the solar payback period would be for your home.

    How will the SMART program affect my solar payback time?

    If your application is accepted and you’re able to land a spot in a block with a decent compensation rate, your savings can greatly cut down your solar payback period.

    If you consider the example above, the payback period for a 6 kW solar system in Massachusetts with net metering and the federal tax credit would be almost 9 years.

    When you add the SMART program savings on top of that, the payback period cuts itself in half to just 4 years. 

    However, this might not be the case for everyone. The payback period may differ from this example. How long it will actually take to payback your system depends on:

    • How much you paid for the system
    • How much your utility charges for electricity
    • What SMART program capacity block you qualify for 

    Is the SMART program different from the Massachusetts’ SREC program?

    Yes, the SMART program is quite different from the previous solar programs in the Commonwealth. The old programs, SREC I and SREC II, involved homeowners receiving - and reselling - energy credits based on their solar energy production. 

    One SREC is generated for every megawatt hour (1,000 kWh) of electricity your solar system generates. These SRECs could then be sold to utilities in order for them to meet their renewable portfolio standards. SRECs are traded on a market, so their value varies based on market conditions. This volatile pricing made it difficult for homeowners to determine how much savings they would really get from their system. 

    The SMART program was designed to eliminate the unpredictability of the SREC market while still paying solar customers for the clean energy they produce. When you enter the SMART program, any renewable energy credits your solar panels produce will automatically go to the utility. The utility pays you back for these credits through the additional kWh SMART payment. 

    Learn more: What is an SREC & how can I get the best SREC prices in 2023?

    Massachusetts SMART program makes solar an even smarter choice

    Programs like Massachusetts’ SMART program could begin popping up in other states throughout the US, as governments look for fair ways to compensate solar homeowners. 

    The SMART Program is an excellent way for homeowners to save extra money on their electricity bills. Plus, it eliminates the mystery that comes with the volatile market of SRECs while still giving homeowners credit for the clean energy they produce. 

    The sooner you apply for the SMART program, the better - as you ensure that you’ll get the highest possible incentive rate. You can also get extra savings if you decide to pair your solar panels with an energy storage system

    Check out our list of local solar installers to start finding out how much a solar system will save you. Going solar in Massachusetts is one of the SMART-est choices you can make! 

    The SMART program can save you big - find out how much here

    Key takeaways

    • The Massachusetts SMART program started in 2018 as a replacement for the state's SREC program.
    • The SMART incentive rate you receive will depend on the size of your system, your utility, and what step the program is in.
    • The incentive you receive, also called the Capacity Block Compensation rate, includes the price of electricity - so it rolls net metering and the SMART incentive into one.
    • The SMART program has the potential to earn you thousands of additional dollars per year, depending on the size of your system and how much electricity it produces.
     - Author of Solar Reviews

    Catherine Lane

    Written Content Manager

    Catherine is the Written Content Manager at SolarReviews, where she has been at the forefront of researching and reporting on the solar industry since 2019.

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