Dive Brief:

• National Grid and Northeast Utilities have reached an agreement with the Solar Energy Industries Association on compromise Massachusetts legislation that would keep the state’s net energy metering (NEM) incentive for solar in place, but with crucial changes, and begin a transition away from the state’s present solar renewable energy credit (SREC) system.
• If passed by Massachusetts legislators, (1) the revamped NEM system’s present cap would be removed but solar owners would be required to pay a bill charge to cover transmission and distribution infrastructure charges that utilities argue are not now being covered and (2) the revamped SREC trading would be replaced by something like California’s tiered rebate system.
• The changes were necessary because continued incentives are considered vital for Massachusetts to meet Governor Deval Patrick’s 1,600 megawatt solar installed capacity target for 2020 but NEM was hitting a previously established cap and the REC system was falling short due to supply-demand fluctuations in the REC value. 

Dive Insight:

The utilities wanted a more market-based procurement system for solar and solar developers wanted a more certain set of incentives.

The uncapped NEM incentive guarantees a retail rate for the solar energy-generated electricity the systems send to the grid and state regulators will set the rebate amounts, relieving the uncertainty associated with SRECs. 

If all of a system’s electricity is used at the site, the owner qualifies for the fixed rebate but if some of the electricity is sent to the grid, the owner qualifies for NEM and a subsidy and as one increases, the other drops so that the total amount of incentive is unchanged.

Regulators will determine the fixed bill charge assessed to ratepayers who generate more electricity than they consume. 

The proposed tiered rebates, like those in California and New York, would decline as the state’s installed capacity increases and economies of scale drive the price of solar down, with the goal of eliminating state supports for solar by 2020.