Massachusetts is a terrific place for businesses to go solar. Under its Department of Energy Resources (DOER), Massachusetts now offers a production incentive for solar systems known as SMART (Solar Massachusetts Renewable Target).
SMART compensation is based on a per-kilowatt-hour (kWh) fixed rate. Compensation is paid directly by the utility company to the system owner.
The per-kWh rate offered through SMART is determined by several factors. For each of the three participating utilities—Eversource, National Grid, and Unitil—there are 8 capacity “blocks.” As the capacity for each block is consumed (by solar systems coming online), new systems will be placed into the subsequent block. SMART also considers system size, with different compensation rates for systems between:
Systems between 25kW and 5MW are eligible to receive SMART payments for every kWh produced for a period of twenty years.
In addition to a system’s base compensation rate, there are also compensation rate “adders.” Adders provide additional incentive (additional cents/kWh) for solar systems that feature certain characteristics, such as systems that:
When a system qualifies for one or more adders, a system’s full compensation rate is calculated as its base compensation rate plus any rate adders, based on the current program capacity block.
A commercial roof-mounted solar system in Massachusetts with a nameplate capacity of 100kW (approximately 285 panels) will generate approximately 110,000 kWh annually. If this system is in National Grid territory (block 8), the per-kWh SMART incentive will be roughly $0.19/kWh, earning $20,900 per year and a total of $390,000 over the 20-year program. The same system in Eversource territory (block 2) would earn $0.26/kWh, equating to $28,600/year and $542,000 over 20 years.
SMART income is “net of energy value,” meaning that the incentive per kWh over the 20-year period is the entirety of what a system will receive (although behind-the-meter systems may accrue additional financial benefit from escalating utility rates).
In addition, the two federal tax benefits offered to solar systems—the investment tax credit (ITC) and accelerated depreciation (also known as MACRS)—provide substantial financial benefit to system owners over and above the SMART incentive.
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