Net Metering, SRECs, and What’s Happening To Solar In Massachusetts

Ten years ago, solar energy was about to get big. The federal government rolled out a 30% tax break for home solar arrays while several states, including my home state of Massachusetts, started SREC programs. In case you’re not familiar with the lingo, SREC stands for Solar Renewable Energy Credits. You can earn these with your home solar panels, and then swap them, cap and trade style, with energy companies that then use them to pay fees. The system worked, and for a while, it made perfect sense to buy solar panels. Solar farms popped up along highways. Solar appeared on rooftops. As the price of arrays dropped, the industry looked set to boom.

Then, something changed. Even though the cost of home solar installations dropped by 55% since 2015, large-scale solar projects stalled. In a state where 49% of houses could have been generating power, only a tiny percentage actually featured rooftop arrays. Even though solar was more feasible than ever, solar companies weren’t thriving. Why?

I sat down with Jeff Cohen, solar guru of Salem, Massachusetts and vice-chair of Salem’s Sustainability, Energy and Resiliency Committee, to learn why solar hasn’t taken over Massachusetts yet. I found out that there are several big roadblocks to mass solar adoption right now, but also even greater hope for the future of renewable power.

Incentives expiring

Workers installing solar panels

First of all, the federal incentive for residential solar panels is expiring. In fact, it was supposed to disappear in 2016, but the Obama administration was able to extend it for a couple years more. According to Jeff, any resident who installs solar by the end of next year will still get that sweet 30% tax break. (There’s a plain English explanation of that program at Wholesale Solar.) After 2019, the break will drop by a few percentage points every year. This isn’t necessarily a huge deal, because the cost of solar panels is dropping fast. The incentive was never supposed to be permanent. But the incentives specific to Massachusetts have changed, too.

The SREC program was a wonderful tool for getting homeowners into solar energy. Solar experts considered it one of the best state-level incentive programs in the country. During an array’s first ten years of life, its owner earned one SREC for every megawatt of energy their panels produced. The average home solar array could produce about 6 SRECs per year, which could then be sold back to utilities. This was guaranteed money in the pockets of anybody who got solar panels between 2008 and 2018. EnergySage has a good rundown of exactly how this worked and explains some of the finer details of the program.

Unfortunately, SREC expired in January 2018. Its replacement, the SMART program, isn’t as good a deal. However, many people who bought solar panels during SREC continue to earn credits. They’re grandfathered in for the first ten years of their array’s life. Still, without SREC, there’s less incentive for residents to get solar panels.

Municipal power

person using a light bulb on the sun in front of a city landscape

There are about 41 municipalities in Massachusetts that own their own power generation facilities. They include Marblehead and Peabody, which border Salem, and the upshot is that their power bills tend to be lower than those for, say, National Grid. However, a municipally owned power supply isn’t always a good deal for solar power.
First of all, many towns aren’t necessarily interested in going solar. Salem recently installed panels atop a school on Witchcraft Heights, but Salem’s also fairly well-off and doesn’t engage in municipal power generation. A town without resources won’t necessarily want to invest in a technology that involves significant up-front expense, especially if a legacy system is already working well for them.

That’s why municipalities aren’t necessarily converting to solar power in a central way. The reason that municipal power discourages home rooftop solar is that municipalities are not required to match the value of excess energy that a home might produce. This gets to the heart Massachusett’s biggest issue with solar power right now. According to Jeff, it’s the reason that solar power expansion has argely stalled out in the state. Think of it as the biggest solar secret that you’ve never heard of.

Net metering and the cap

electricity meter

Net metering is the practice of making solar energy worthwhile for the average homeowner. Think of it as a give and take. Sometimes, your home solar array will make more than enough electricity to power your house. The extra power might flow over to a neighbor’s home, in which case, the energy that your neighbor is getting was actually generated by you. The power company that runs the grid – which could be National Grid, Eversource, or Unitil, depending on where you live in Massachusetts – still charges your neighbor for that power. However, they have to buy it from you first, and they’re legally obligated to pay you as much for the electricity as they would have charged you if you didn’t have solar panels. This payment comes in credits, which cover the cost of power for your house at times when your house can’t make its own power. In the summer, you may build up enough energy credits with your home array to see you through the winter with minimal charge for power.

The problem is that the power companies don’t like this setup. They themselves can’t own solar farms because that would turn them into vertical monopolies, which are illegal. They’d much rather maintain the fossil fuel status quo than shake up their current business situation and deal with the headache of net metering thousands of solar residents…and worse, big solar farms.

That’s why they’ve successfully gotten the Massachusetts state government to impose caps on the amount of solar power that can be generated in the state. Caps are determined by load zone, which are areas of electrical service delivery that coincide with municipal lines. A cap is the percentage of the company’s total energy delivery that can be met through solar generation. In 2016, this was about 8% for the public and 7% for private companies, according to the Massachusetts Net Metering guide. Jeff tells me that this has risen a few percentage points each year, but not fast enough to allow community solar to flourish. Once the annual cap has been reached, the utility will no longer participate in net metering. That means that, in addition to paying for a solar array, an owner would need to pay full price for electricity in the winter and at night. Suddenly, solar is no longer as attractive, especially for a big solar farm or community array.

The problem with big projects is that they can cause their utility to hit the cap fast. Solar farms, community solar projects, and even schools that want to have solar panels on their roofs run into this problem. Lack of net metering compounds the expense of setting up large-scale solar and makes it less feasible in general. In turn, this stymies the growth of all solar use and business expansion. Since many Massachusetts residents rent, community solar is critical to getting the state off of fossil fuels. Renters don’t have the choice of buying solar panels; their only opportunity to get green power is to buy into renewable energy. If sources don’t exist, apartment-dwellers can’t opt for them.

There are a lot of politics at play here, of course. Utility companies are some of the most powerful businesses in Massachusetts, and they easily outspend advocacy and solar groups in their lobbying efforts. While the Massachusetts legislature has increased the caps in the past, they’ve recently slowed this activity down, possibly due to pressure from National Grid and Eversource.

What’s the solution?

man holding bulb in his right hand

Jeff tells me that there’s one way to make Massachusetts go solar: everybody needs to insist. There’s essentially no way to outspend Eversource and National Grid in lobbying, so consumers need to start making demands of their representatives. If you’re nervous about getting into the fray, then see my previous post on how to become politically active even if you loathe politics.

Most of all, Jeff tells me that buying solar is still a great option for your home. Going off the grid may seem attractive in concept, but even though battery technology is improving, leaving the system still so expensive that only the very wealthy could afford it. Restricting activism to people with that kind of privilege won’t result in meaningful change – in other words, we do this together or it doesn’t happen. That means sticking with the system and the grid, and working together to change them both.

As solar gets cheaper and people like Jeff work for green power options, it becomes clear that the energy giants of Massachusetts are just delaying the inevitable. Ultimately, although the fight will be difficult, solar is going to win.

Many thanks to Jeff Cohen for giving me an awesome interview for this article! Be sure to check out his direct action network on Facebook. If you’re doing research to buy your own solar array in Massachusetts, check out Solar Power Rocks, where a free strategy guide can start you on the path toward making your own power and saving the world.