Thinking that waiting a few months to begin a solar project doesn’t matter? Think again. In Massachusetts, the solar incentives from the Solar Massachusetts Renewable Target (SMART) program significantly impacts the financial return of a solar project.
For the second year in a row, an anticipated increase in the value of energy (VoE) means the SMART rate could decrease at the end of this year – possibly even to zero.
How VoE Impacts the SMART Incentive
To understand the effect of the VoE on the SMART incentive, it helps to know the terminology:
- Base compensation rate – A fixed amount of money paid to solar system owners for each kilowatt-hour (kWh) of energy that their system produces
- SMART Adders – Bonus incentives for projects meeting specific conditions like installing solar canopies, using energy storage, or locating in low income areas
- VoE – Utility’s cost of electricity influenced by variables like fuel prices, grid maintenance, and demand for electricity
The SMART incentive rate is calculated as follows:
SMART Rate = Base Compensation + Adders − VoE
It’s straightforward: if the VoE goes up; the SMART rate goes down.
Timing Really Does Matter
The clock stops ticking on the day you apply for the SMART incentive, not when you receive the SMART award. Since the VoE is projected to increase in 2024, projects that apply for the SMART incentive after December 31, 2023 will receive less financial benefit than those that apply for it before the end of the year.
Three Silver Linings for Public Entities
Here’s the good news for public entities like municipalities, schools, and nonprofit organizations:
- You can apply for the SMART program without having an Interconnection Agreement from the utility. This allows you to quickly lock in the more lucrative incentive rate.
- The PowerOptions Solar and Storage Program removes the cost and complexity of doing a solar project, simplifying your path. The program includes:
- A pre-negotiated power purchase agreement (PPA) with a fixed per kWh price locked in for twenty years
- Zero upfront costs with all available state and federal incentives reflected in the low PPA rate
- No individual procurement requirement for public entities (MGL Chap. 164, Sec. 137).
- Solect Energy manages everything – project design, financing, construction, and ongoing monitoring and maintenance. That includes submitting your SMART application before the VoE increases.
Would you like to have a conversation about how this might benefit your organization? Reach out today: email info@solect.com, phone 855-800-4211 (press 1), or use the “Let’s Connect” button below. A member of our team will be in touch within one business day.
October 2, 2023