Massachusetts SMART program explained
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The Solar Massachusetts Renewable Target (SMART) program offers some great benefits to Massachusetts residents who install solar panels on their homes.
In this article, we’ll break down this unique solar incentive program, explore how it differs from Masschusetts' previous solar rebates, and how it impacts the payback time of your solar installation.
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.
Massachusetts’ SMART program can be a little confusing to understand at first, so let’s break it down.
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, and 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.
The SMART incentive rate you will receive depends on three things:
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 January 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|
|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.
The SMART program also offers ‘adders’ that will earn you more money if your system has certain characteristics.
For instance, installing a battery storage system with your panels can qualify you for the energy storage adder, which will give you additional savings per kWh. Installing a system on a brownfield will also qualify you for an adder.
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.
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.
Remember, the Block Compensation Rate includes the cost of electricity. To figure out how much you save with the SMART program, you subtract the cost of electricity, which in this case is about $0.15735 per kWh, from the Capacity Block Compensation Rate.
So, that means that the SMART program is really paying you an extra $0.120373 per kWh of solar energy you produce.
If your panels produce 12,000 kWh in one year, the SMART program will save you an additional $1,445 in one year on top of what you save through net metering.
When you include the net metering credits, you would then save $3,609.72 per year. That means over the course of 10 years, you would save $36,097.20 with the SMART program and net metering.
SMART program savings for 2023 may be much lower because of high electricity prices.
Check out our free solar calculator to see an accurate estimate of what the solar payback period would be for your home.
The SMART program can greatly cut down on your solar payback period time.
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.
The payback period may differ from this example. How long it will actually take to payback your system depends on:
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.
For every megawatt-hour of solar energy produced, homeowners would receive one SREC. 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?
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!