Making solar incentives work for low-income Bay Staters
The solar incentive program in Massachusetts, the Solar Massachusetts Renewable Target (SMART) program, is tapped out, putting potential clean energy projects on hold. The SMART program served the equivalent of 265,000 residential customers through its 1,600 megawatt (MW) program, which is consistent with the size of previous solar incentive programs, such as the solar renewable energy certificate programs. 1,600 MW may sound like a lot of solar, but for larger projects in some parts of the Commonwealth the SMART program was fully subscribed shortly after the SMART program started… in November 2018. Many projects have been stalled for years waiting for the SMART program to be updated. We’re working to restart clean energy progress in the Bay State, while addressing existing inequities.
The Massachusetts Department of Energy Resources (DOER) went through a lengthy review process of the SMART program, starting in early 2019. That process involved several updates to the program, and an expansion of the program by an additional 1,600 MW (for a total of 3,200 MW). That process ultimately resulted in a revision to the SMART program regulations, which were finalized on July 10, 2020. There were a variety of changes to the program in addition to expanding the size, including more restrictive land-use provisions, changes to the definition of low-income customers, and reserving some of the SMART program for low-income customers and small commercial customers.
However, while DOER revised their regulations which govern the SMART program, the update to the program is not yet complete. The SMART program provides incentives to solar customers via the electric utilities, and the electric utilities are regulated by a different agency- the Massachusetts Department of Public Utilities (DPU). In order for the SMART program to be fully updated – including the expansion of the incentive program – the DPU must review the rules the electric utilities need to follow while implementing the SMART program (a.k.a., the “SMART tariff”). The DPU has opened a docket (D.P.U. 20-145) to review the SMART tariff, and Vote Solar is working with other solar advocates in the docket to get the details correct on the revisions. Until the DPU approves the revisions to the SMART tariff, many of the changes to the SMART program will not become effective- including the expansion of the program.
There are many aspects under review in docket D.P.U. 20-145, but one stands out: the opportunities (or lack thereof) for low-income Bay Staters. To date, only a few percent of the SMART program has been developed to serve low-income families, which is far below the percentage of low-income customers in the Commonwealth (which is over 30 percent). Simply stated, the SMART program is not currently working for many of our under-resourced neighbors. Unfortunately, this outcome was entirely foreseeable when the program was created, even though low-income customers have the most to gain from the benefits of solar, which include reducing energy bills.
Low-income families face multiple barriers in the adoption of solar, including monetary barriers and non-monetary barriers. The monetary barriers, like a lack of financial resources to pay for a solar system or access to loans, are likely not a surprise. The non-monetary barriers range from language access, to a distrust in energy marketing materials (low-income customers have a history of being targeted by scams to save them money on their energy bills), to a lack of exposure (whole communities remain “solar deserts,” where there is little to no solar adoption). The SMART program currently tries to overcome the monetary barriers by providing a greater incentive for income-qualified solar projects. However, the SMART program does nothing to address the non-monetary barriers. The end result is very low adoption of solar by low-income families in the SMART program.
In 2015, BlueHub Capital (formerly known as Boston Community Capital) started thinking about better ways to serve low-income customers with community solar in the Commonwealth. The current community solar framework involves the solar developer allocating monetary benefits from the community solar facility to recipient customers, and then the customers pay for a portion of that monetary benefit. For example, say a $100 community solar credit is applied to a customer’s electric bill, that customer may have to pay the solar developer $90 for that credit, which means that the customer saves $10 on their electric bill. This framework does save customers money, but it also requires the customer to pay the solar developer. BlueHub Capital started exploring the idea of providing the net benefit – the $10 – to income-qualified customers and completely eliminating the requirement for them to pay for the benefit. Logistically, this idea can be difficult to implement, but the end-result for low-income families is simple and elegant. BlueHub Capital worked on this idea – sometimes referred to as net crediting – and eventually proposed it to DOER and DPU. Neither agency adopted the proposal in the SMART program even though BlueHub Capital clearly identified and solved for this problem.
Vote Solar has continued to work with BlueHub Capital on the idea, and over the years the net crediting concept has gained traction with solar advocates, low-income advocates, and electric utilities. In the docket to revise the SMART program, National Grid has actually proposed a variation of the net crediting idea for community solar customers (including low-income families). Vote Solar has concerns with National Grid’s proposal that we’ll be exploring in the docket, but there is a real opportunity to get net crediting implemented in the Commonwealth for low-income customers.
There are still a lot of details to work out, including how income-qualified customers sign up for participation, but we will be working hard in docket D.P.U. 20-145 to make the SMART program work for low-income families. Net crediting could provide a real opportunity to increase low-income customer adoption in the SMART program, and we look forward to making that a reality. Stay tuned!