In 2013 Massachusetts was ranked 4th for most solar installed, behind California, Arizona, and New Jersey. Despite this success, legislation, officially known as H.4185 (an act relative to net metering), is pending at the Massachusetts State House that could drastically change the direction of the Massachusetts solar industry.
Touted in the media as successful compromise between regulated utilities and the solar industry, H.4185 might be more of a step back than a step forward. The bill could pass in both the Massachusetts House and Senate before the end of the legislative session on July 31st, despite the opposition of many solar owners, installers, and representatives of the community solar movement.
What Is H.4185 and How Did We Get Here?
Currently there are limits on how much Massachusetts solar capacity can qualify for net metering in each utility territory. These limits, which only apply to larger solar facilities, are nearly maxed out for each utility and prevent the Commonwealth from meeting Governor Deval Patrick’s 1,600 MW by 2020 solar goal. H.4185 would remove the net metering limits and put in statute Governor Patrick’s 1,600 MW target in exchange for a radical adjustment in the structure of Massachusetts solar policy. The primary adjustments are:
- The removal of annual capacity restrictions on large “solar farm” projects
- The creation of yet-to-be defined minimum electric bills for all ratepayers
- The reduction of the virtual net metering rate from compensation at the retail rate to the wholesale rate of electricity
- A limit on the size of behind-the-meter projects to 100% of the on-site load
- A transition away from the successful market-based SREC program to an unknown program managed by the Department of Public Utilities
- Transfer of all of the “environmental” attributes of solar arrays to the utilities
In translation, H.4185, a bill that is ostensibly about net metering would remove or weaken most of the policies that have made the Massachusetts solar industry so successful. It is a bill that exchanges a set of known, highly successful policies, for a new set of untested policies.
The bill has not yet passed and many stakeholders are calling amendment language that would remove most of the major policy language in exchange for an incremental increase in the net metering caps and a formal commission to be convened next year to review the more contentious aspects of the legislation. This more cautious approach would stabilize an already jittery Massachusetts solar industry and ensure that all stakeholders are at the table the next time net metering limits need to be addressed.
How Will This Impact Solar?
- Anybody working to do community solar will be negatively impacted because the VNM credit will reduce
- H.4185 removes the protections in place under the SREC-II program for incentivizing distributed/ rooftop/ carports/ general behind-the-meter projects
- The declining block incentive program will be set at the DPU, rather than at the DOER. This means that installers will need to lawyer up and deal with the regulated utility lawyers in order to argue for favorable incentive targets. Solar in Massachusetts goes from a decentralized system, where everyone and anyone can participate in the rule making process to a system where the big player have the negotiating advantage
- The utilities receive all of the attributes of the solar, including the RECs and will be able to lead the discussion on monitoring and other equipment requirements. This reduces the possibility for innovation in the solar space regarding capacity markets, battery storage, voltage regulation etc
- The minimum bill imposition will hurt anyone with a low electric bill, which means smaller projects will be most affected by the minimum bill
- Anybody doing business in Muni territory is left out. Currently the SREC program covers Munis
- Above all else this just adds more complication to the system. We just spent a year implementing SREC-II and now we have to work on implementing another program for which installers will need to fight to be part of the process for negotiating the declining block targets and minimum bill. This just adds more uncertainty, which is bad when you are trying to mature an industry.
Food for Thought
Everyone is talking about lowering customer acquisitions costs and soft costs, and community solar has the potential to instantly drop acquisition costs by 50 to 80 percent for solar companies offering roof mounted and community solar projects. Why? It’s simple math.
If you had 100 solar leads, a good conversion rate of leads to customers would be 10 percent. This equals 10 customers. Here’s the thing, in order to find 10 customers that want to invest in solar and have a good roof, you must bump into three to four people that want solar but don’t have the roof space. If those three to four people could become community solar customers, then the conversion rate of those 100 leads would become 30 to 40 percent instead of 10 percent. This would then drop the acquisition costs because you’re getting more customers with the same marketing spend.
Want To Help?
Contact Sam here, and he’ll figure out how you can help.
Massachusetts voters are encouraged to research this bill further and to contact their state legislators. Here is a link to a site that makes legislators searchable by zip code.
Lead image: Massachusetts flag via Shutterstock