The Hon. Kathleen Theoharides (Kathleen.Theoharides@state.ma.us)
Executive Office of Energy & Environmental Affairs
100 Cambridge Street, Suite 900
Boston, MA 02114
The Hon. Judith Judson (Judith.Judson@state.ma.us)
Massachusetts Department of Energy Resources
100 Cambridge Street, Suite 1020
Boston, MA 02114
Dear Secretary Theoharides and Commissioner Judson:
Consistent affirmative acts of the legislature to promote renewable energy combined with excellent fiscal and legal administration of the solar programs by DOER are the prime reasons why confidence in investing in Massachusetts solar projects is so strong. This investment confidence is in spite of the choppy, on-again, off-again nature of Massachusetts solar policy. This is because large investors simply move to other states that are open for business, leaving smaller Massachusetts-based firms taking the brunt of the effects of choppy solar policy. Despite the SMART program being one of the best legally constructed solar programs in the country, the SMART Program 400 MW Review as presented seems bent on growth control, constraining program size, and returning to the same choppy solar policy implementation that has always existed. The Baker Administration, while starting to work on electrifying our transportation, residential and commercial heating sectors,1 appears to have made the selective choice to ignore the facts that electrification of these sectors will “need to produce twice as much electricity in 2050 to meet all demand than it does today.”2 For many reasons described below, we hope that DOER will consider increasing the existing SMART program by 3,200 MW in order to meet the Commonwealth’s clean energy deployment goals under the Renewable Portfolio Standard3 while creating a clear longer-term policy path for developers, employers, ISO-NE, and the utilities and students seeking career opportunities in renewable energy.
We fully appreciate the fact that DOER intended the 400 MW Review to consist of minor adjustments to the SMART program. However well intended, if the SMART program is years ahead of its declining block schedule, why continue with a bad policy design that will only result in continued choppy policy implementation that will mostly effect Massachusetts-based firms? If DOER is constrained for structural reasons as to what it can do in the next two months, DOER should commit itself to commencing a larger program review in six months and concluding that review and promulgation of those regulations in the following seven months. If required, D.P.U. would commence a dualtrack tariff revision as soon as the revised SMART regulations have been posted. There should be no program constraint mechanisms as the 400 MW Review extension will only be a stopgap to allow the larger successor SMART program to be promulgated.
3,200 MW SMART Expansion:
Implementing a 3,200 MW SMART expansion will send clear market and policy signals that will benefit the following constituent issues:
1) DOER will send a clear market and policy statement that solar will be a significant contributor to meeting Massachusetts Renewable Portfolio Standard compliance obligations.
2) DOER will be able to expand the block sizes, administratively reset base and adder compensation rates, and provide a clear, transparent path for development for years. Solar companies could develop businesses here in Massachusetts as opposed to coming in to take advantage of opportunities only when the policy window opens up for business.
3) DOER will send a clear signal to 70,1944 annually enrolled Massachusetts high school seniors that there are good-paying, fulfilling careers in renewable energy. DOER has questioned how we will get all of these solar projects built with the existing labor force. Clear signals of job opportunities present non-college and college-bound students with options not otherwise available.
4) EEA directing DOER to adopt a 3,200 MW SMART expansion will provide a clear policy path that D.P.U and DEP can use to further implement compliance obligations.
5) DOER and EEA will send a clear signal to ISO-NE that while the first Area and Group Studies are ongoing currently, the recognition that we need to double our electric capacity by 2050 starts now.
6) DOER will give clear notice to the utilities and to the current D.P.U 19-55 Interconnection process that doubling our electrical capacity as we approach 2050 starts now and that the interconnection of solar and distributed generation is an integral part of our approach to achieving 80% reduction in GHG emissions by 2050.
At a recent D.P.U technical session, Tim Roughan of National Grid was asked, beyond baseline conditions in the Area Study, what National Grid was doing in their planning process to accommodate additional DG based upon existing legislation and (court ordered) commitments. His response was, in essence,“Well, that is the real question, isn’t it?”
The executive management of the utilities has not accepted the fact that the reality of the compliance path to 2050 is going to require enormous change. This is due in part because their interest is not aligned with the installation of distributed generation renewable resources. Solar interconnection is a compliance obligation and not something their stockholders receive direct quarterly benefit. Until the utilities benefit from interconnecting distributed energy resources as indicated in HB 3667 by TUE Chair Tom Golden, there will be lack of alignment of interest when it comes to the interconnection of solar.
Until that time, the distributed generation interconnection queue will continue to experience what Eversource is arbitrarily imposing on the solar industry where they study (fully paid) Impact Studies in series, taking a year or two to be completed. We have one such project in Westport that is now approaching one year with no notice of when the Impact Study will commence, nor what the results of prior studies have yielded about information on the substation.
The Unintended Consequences of Inaction:
Will SMART projects be investment grade instruments or junk bonds?
Without affirmative policy direction, unexpected events like the Area and Cluster Studies being conducted by National Grid where Interconnection Service Agreements are executed, and fees are paid but projects are not allowed to interconnect, create severe financial consequences that reduce confidence in doing business in Massachusetts.
As of yesterday, our investors were speaking with a huge name-brand solar investment company that has invested in MA solar projects since the SREC program inception, and they were looking to discount their MA projects within the Area or Cluster studies because their cost of money and the delay caused by the studies has eroded the IRR on these projects. The projects no longer meet their investment criteria. If this kind of unexpected chain of events continue, it will crush an otherwise well-designed SMART program, as investors do not like uncertainty or political or beyond regulatory risk.
Set Aside Category for Under 500 kW Solar Systems:
DOER desires to encourage behind-the-meter (BTM) and smaller building, canopy or roof-mounted systems. The development/sales cycle of this kind of product is different than a ground-mount system. The cost of customer acquisition takes personnel, outreach, follow-up, more customer contact, and financial interactions where dependable numbers matter, particularly if privately funded by local banks. Selling a rooftop, canopy
or other building-mounted system where financial viability starts out in Block 1 or 2 and is in Block 8 in a week, is a waste time, credibility and relationships. If DOER set aside 15%-20% of the SMART program towards this less than 500 kW sector, solar developers could hire staff to focus on this selling into sector.
Existing DOER Program Expansion Proposal:
800 MW Lasting Seven Years with Declining Values: Absent more compelling legislation, if these criteria remain in place and Eversource remains as difficult to do business with tomorrow as they are today, DOER is effectively saying to most solar companies who build greater than 500 kW, “In 18-24 months, go do business
somewhere else.”
With declining base, community solar, and storage adder compensation, it will take
DOER six months to discover a significant drop-off in development activity due to lack of
project economic viability and another nine months to promulgate new regulations,
assuming DOER considers solar PV an RPS-contributing asset.
Land Use:
Listening to the volunteer municipal stakeholders at the Amherst, MA Listening Session conducted by DOER, I was struck by the amount of misinformation that surrounded their ability to regulate their own land use in a manner that would be in total conformance with Chapter 40A, Sec 3 if reasonably applied.
The volunteer planning board members felt two things: 1) that they have been told that Chapter 40A Section 3 overrode their local zoning, and 2) that they did not have the financial recourses to update their zoning ordinances. Commissioner Judson indicated that there were resources at DOER that could help them.
Perhaps through the Environmental Bond Bill that codifies certain aspects of Executive Order 5695 that establishes and integrated climate change strategy, professional planners could be engaged to assist local municipalities in addition to a regional planning circuit rider advisor program.
If DOER wants to make the 800 MW SMART expansion last seven years, then penalizing ground-mount solar is the only way to kill large-scale solar as the SMART program by its design will attract investment.
Right now, under the current 800 MW proposal, greater than 500 kW solar projects will first run out of economic viability due to declining base compensation in conjunction with the subtractors and high interconnection cost in National Grid and Unitil territories.
Adders: If the base compensation rate is adjusted, we support the Category 1 Land Use Adders without declining values.
Adders Storage: Please consider restoring the storage adder to its original Block 1 level.
If DOER establishes the 3,200 MW expansion and western Massachusetts cities and towns have assistance in creating zoning for solar, then the issue of subtractors should no longer be part of solar policy as larger-scale ground-mount solar + storage should be encouraged to meet our environmental and strategic resiliency goals. If DOER gets the overall solar policy right, there are no need for subtractors.
Community Solar and Low Income:
At a recent D.P.U. technical session, I met a someone from National Grid whose job it is to engage in changing people’s behavior to effect energy efficiency goals. Community Solar is a huge entry point for customers of all income levels for education, familiarization, and engagement in the renewable conservation economy. Changing behaviors is all about education, awareness, and access.
We have high expectations for Community Solar providers. We expect salespersons to be specifically trained to conduct themselves in an ethical, honest, and straightforward manner. This requires properly trained management actively engaged in supervision. We expect them to fill the Community Solar tranche for the specific project in a timely fashion and to actively and concurrently maintain and service that list of community solar customers.
Reaching the low-moderate income and environmental justice communities will take more work, more cost, and potentially a different skill set dealing directly with the utilities on an Alternative On-Bill Credit basis.
All of the above requires compensation for the Community Solar providers and compensation to the developer that assist in the financial enabling of a specific solar project. If Community Solar does not add something to enable a solar project economically, why would a developer complicate its contractual obligation that could end up costing money over 20 years. Accordingly, we ask DOER to return the Community Solar adder to its previously stated value of $0.05 per kWh.
Public Entities:
We support the adder of $0.04 and the set-aside reservation period for municipal projects.
Public entities should have the ability to acquire solar generation on projects inside and outside of municipal boundaries but within the same ISO zone using the Alternative On- Bill Credit mechanism. Public entities would be a Category 1 Land Use and not subject to subtractors.
Preferred Interconnection Adder / Subtractors:
We agree with adders for preferred locations but disagree with subtractors, as this may stifle market ingenuity to solve problems. For example, if there were land uses that allowed solar + storage to be installed and a number of developers got together to pay for substation upgrades, and these upgrades enabled new grid benefits that otherwise did not exist, why would DOER not encourage that kind of investment?
Agricultural Solar:
Thank you for removing the 61A and Prime Farmland soils as a requirement. We request that you consider the maximum size to be 5 MW AC or 6 MW DC due to economic issues surrounding family estate planning and transition issues. Without exception, every farm we have spoken to has both farming and non-farming members. Agricultural Solar will assist the farming member to stay in business and allows the nonfarming
members to receive revenue from a farm that could otherwise not provide economic benefit to them.
As a 35-year-old heir-apparent said to me at a meeting when I told him about the solar program being under review, he said right away, “It (the land) is going to be used for solar or housing one way or the other.” He was referring to treed, non-productive land to be used for solar or housing; he did not want Agricultural Solar on his most productive land.
Agricultural Solar Guidelines: Please allow a provision for DOER to make letter
approvals of plans that demonstrate an innovative use of the land or installed system.
Pollinator Adder:
We support the pollinator adder and hope the compliance obligation is not too cumbersome to regularly implement.
One of the reasons for the past success of the Massachusetts solar program is the consistent manner DOER has handled the public stakeholder process. So, thank you for your consideration of these issues.
Best Regards,
Doug Pope
President
At Pope Energy, we provide system owners, landowners, and business with complete development, engineering, procurement, construction and operations and maintenance services for commercial and large-scale solar photovoltaic power projects. Contact Pope Energy at 855-767-3363 to find out more about how we can help you reduce your energy costs and help the environment become greener and more efficient!