Published on October 27th, 2016 | by Carolyn Fortuna
Massachusetts Solar — History & Policy
Massachusetts ranks 4th in the nation in terms of cumulative installed solar capacity, according to MassSolar. The state, which has grown from 10 megawatts in 2009 to more than 1,050 megawatts in 2016, has enacted public policies and multiple pathways for solar’s success and permanence. The journey toward Massachusetts solar energy initiatives to replace reliance on fossil fuels, however, has been long, deliberate, and sometimes contentious.
Renewable Energy as a Response to the 1970s Oil Crisis
In 1973, the U.S. supported Israel’s war with Egypt and Syria, prompting Arab oil producers to cut off exports to the U.S. The result of the oil crisis, according to an NPR retrospective, caused soaring U.S. gas prices, long lines at filling stations, and a major economic downturn in the U.S. economy. “The oil crisis set off an upheaval in global politics and the world economy. It also challenged America’s position in the world, polarized its politics at home, and shook the country’s confidence,” author and oil analyst Daniel Yergin wrote in an op-ed in The Wall Street Journal.
Over 50 years later, the U.S. continues to focus significant resources on the Middle East. But changes in the world energy market also have created shifts to a more sustainable domestic energy production, including renewable energy. Indeed, less than 10% of U.S. oil today comes from the Middle East.
In the late 1970s, Massachusetts enacted a suite of tax policies in order to encourage solar and wind energy as part of a response. These tax policies include:
- (1) Excise Tax Deduction of 1976 (M.G.L. c. 63, § 38H);
- (2) Renewable Energy Equipment Sales Tax Exemption of 1977 (M.G.L. c. 64H, § 6(dd));
- (3) Residential Renewable Energy Income Tax Credit of 1979 (M.G.L. c. 62, § 6(d)); and
- (4) Alternative Energy and Energy Conservation Patent Exemption of 1979 (M.G.L. c. 62, § 2(a)(2)(G)).
These tax policies remain in place today and are largely unchanged.
Net Metering Comes to Massachusetts
In the early 1970s, customers who wanted to install a renewable energy system could only do so with direct permission from the electric utility. In 1978, Congress passed the Public Utilities Regulatory Policy Act (PURPA), which was a set of rules for certain renewable energy facilities (known as Qualifying Facilities or “QFs”). Solar energy was one of those renewables. The electric utility requirements were to:
- (a) interconnect QFs to the grid;
- (b) buy the electricity they generated; and,
- (c) sell electricity to customers with on-site QFs.
Massachusetts had to decide the “avoided cost,” or the price electric utilities would have otherwise incurred to generate the same amount of electricity. The MA Department of Public Utilities determined by 1981 that the avoided cost for QFs 30 kilowatts (kW) and smaller was the retail electricity rate, which spurred net metering in Massachusetts.
This means that customers could run their meters backwards every time they exported electricity to the grid. Customers then, unlike today, were not allowed to carry over net excess generation.
Laying the Groundwork for the Massachusetts Solar Industry
Restructuring the domain of the electric utility meant prohibiting the utilities from owning any generation companies and, instead, to delivering electricity to customers. As distribution companies, they were obligated to maintain wires and equipment. Restructuring impacted renewable energy because it expanded the size of systems eligible for avoided cost compensation at the retail rate, from 30 kW to 60 kW.
The Renewable Energy Trust Fund was created to support Massachusetts renewable energy technology growth. One program administered a rebate program for solar and provided an incentive to customers in the form of a $/kW payment once a solar facility was built. The Fund was transferred to the Massachusetts Clean Energy Center (MassCEC) after it was formed in 2009 and now seeks to accelerate the success of clean energy technologies, companies, and projects in Massachusetts.
Programs that Helped to Kickstart Massachusetts Solar Energy Initiatives
In April 2007, there were about 3 megawatts (MW) of solar in Massachusetts. Then Governor Deval Patrick announced a goal of 250 MW of Massachusetts solar by 2017. Three laws ushered in the future of solar policy in Massachusetts as it is now understood.
- The Green Communities Act: While the GCA significantly expanded net metering and enabled virtual net metering, it also limited the amount of solar that was eligible for net metering. 2016 legislation amended the net metering laws by:
- (a) directing distribution companies to calculate Market Net Metering Credits after a specified time frame;
- (b) updating the net metering capacity limits; and,
- (c) defining the process for distribution companies to submit proposals for adding a monthly minimum reliability contribution to electric bills for customers receiving net metering credits.
- The Global Warming Solutions Act: The GWSA set out ways to collaborate with other state agencies to reduce greenhouse gas emissions to achieve the greenhouse gas emission limits. The Act required monitoring and regulating emissions of greenhouse gases with the goal of reducing those emissions. It also looked to project what the emissions level would be in calendar year 2020 and to adopt a 2020 statewide greenhouse gas emissions limit. Feasibility studies were generated to ascertain the impacts of electric generating facility aggregate limits, direct emissions reduction measures from other sectors of the economy, alternative compliance mechanisms, market-based compliance mechanisms, and potential monetary and nonmonetary incentives to facilitate the achievement of reductions of greenhouse gas emissions limits.
- The Green Jobs Act: The Massachusetts Alternative and Clean Energy Investment Trust Fund was formed with this Act to stimulate increased financing for the expansion of state-of-the-art clean energy research and development facilities. To do so, it needed to:
- (1) leverage private financing for the construction or expansion of the targeted facilities;
- (2) provide grants to state educational institutions to develop a curriculum relative to clean energy and clean energy technology;
- (3) make targeted investments in clean energy research and to promote manufacturing activities for new or existing advanced clean energy technologies;
- (4) make matching grants to institutions to induce grant-funding sources to fund the expansion of research and development in clean energy; and,
- (5) provide bridge financing to institutions in anticipation of the receipt of grants;
- (6) promote programs and investments that lead to pathways towards economic self-sufficiency for low and moderate-income communities in the clean energy industry.
These programs fostered such positive impacts that the original 250 MW goal was met 4 years early. Subsequent Massachusetts solar energy programs included the:
- Renewable Portfolio Standard to further encourage development of on-site/ distributed generation, which lead to creation of the Solar renewable energy certificates. The first solar carve-out program, SREC I, began in January 2010 and was closed to new solar projects in April of 2014. The second solar carve-out program, SREC II, was finalized in 2014. Among other things, SREC II was designed to help the Commonwealth achieve its 1600 MW solar target.
- Solar rebates once encouraged homeowners to install solar. As the solar market and policies have evolved, these rebates have declined and given way to the Residential Solar Loan Program, which closed on January 20, 2015 after committing all of its available funding. The successor program to Commonwealth Solar is the Mass Solar Loan Program, which, when launched, will direct $30 million to connect homeowners with low-interest loans to help finance the installation of PV systems.
Legislation around Massachusetts Solar Energy: A Start with More Work Ahead
In April 2016, the legislature passed a solar bill which included a net metering cap relief of 3% for both private and public sector projects, small solar systems and municipal solar retail net metering, and a successor solar incentive program.
While the cap increase is good, it’s not enough. Also, retail net metering for low-income solar projects was not preserved, and new solar projects will receive net metering rates that are 60% of retail rates. Finally, a minimum bill provision allows utilities to ask for a minimum bill on all solar projects. This is important because existing Massachusetts solar projects can be exempted from a minimum bill until 2020, and projects serving low-income ratepayers can be entirely exempted from a minimum bill. According to MassSolar, the net effect of this policy change is that these types of solar systems will effectively be forced to give 40% of their electricity away for free.
In 2015, Massachusetts produced 9.4% of its electricity using renewable energy resources, with about two-thirds of that from solar, wind, and biomass. Massachusetts has a total solar capacity of 1,199 MW, of which 309 MW can be found in residential installations, 811 MW in commercial installations, and 78 MW in utility-scale investments. Massachusetts solar capacity can supply 191,000 homes with renewable energy, and this number will expand with a proposed increase in capacity of 2,430 MW. This is more than 3 times the amount of solar installed over the last 5 years. Part of the reason for this dramatic rise in solar capability is the low cost of solar installations which have dropped significantly in the past 5 years, according to the Solar Energy Industries Association.
- Massachusetts surpassed its goal to install a total of 250 MW of photovoltaic capacity by 2017 four years yearly.
- Massachusetts ranks 6th nationally for solar electric capacity installed in 2012 (129 MW total).
- There were over 2,000 solar power installations which made up for 250 megawatts (MW) of electricity produced within the state.
- Solar installations quadrupled in Massachusetts in 2012, bolstered by strong solar energy incentives.
- There are close to 252 solar companies in Massachusetts, employing 4,500 workers.
- There is enough solar energy installed in the state to power 32,074 homes.
- Photovoltaic system prices in Massachusetts continue to fall.
- Electricity Price Rank: 7th most expensive state in the U.S.
- Net Metering Policy: Rated A
- Interconnection Policy: Rated A
- Renewal Portfolio Standard target: 22.1% by 2020
- RPS carve-out target: 400 MW by 2020
Shout out to “History of Solar in Massachusetts.”