After months of stalled negotiations and a big push from solar advocates, Massachusetts legislators have finally reached a compromise to lift the state’s net energy metering (NEM) cap. As with most compromises, though, the resultant legislation has some good and some less-good parts to it.
According to the Solar Energy Industries Association (SEIA), utility National Grid reached its allotted NEM cap a year ago, and other power companies in the state hit theirs more recently.
In 2015, the state House of Representatives and Senate each passed a bill to raise the NEM limit. However, the House version proposed changing the value of NEM credits for projects from retail rates to wholesale ones, which are much lower.
A conference committee was tasked with reconciling the differences between the two bills, but the members failed to negotiate a deal for several months. In March, solar advocates and local officials publicly called on the committee to both lift the NEM cap and reject the potential rate cuts.
In a joint letter, about 100 representatives wrote that after passing the House bill in November, “our offices have been contacted by constituents, municipalities and businesses that are concerned this legislation will lead to job losses, jeopardize environmental progress and raise electricity bills.”
Separately, a group of Massachusetts mayors and town leaders issued a letter in support of lifting the NEM cap, and solar stakeholders worked hard to get the message out about the price of the state’s policy inaction. For example, SEIA and Vote Solar issued a report saying that the impasse “stopped construction of more than 500 solar projects valued at $617 million, which is costing cities and towns $3.2 million in annual tax revenues.”
It appears the committee leaders got the message.
The compromise legislation will raise the cap by 3%, which is more than the 2% increase both the Senate and House versions had originally called for.
According to the Massachusetts Office of Energy and Environmental Affairs website, the state NEM program allots caps to each utility based on a specific percentage of the company’s “highest historical peak load.” The caps have stood at 4% for private installations and 5% for public projects.
According to Sean Galligher, SEIA’s vice president of state affairs, the 3% rise is expected to lead to 650 MW more of solar.
Furthermore, the legislation will continue offering retail NEM rates for residential, small commercial and municipal solar projects, and all existing projects in the state will be grandfathered in under the retail rates.
Now for the less-good part: New community and large commercial projects will receive wholesale prices, which are estimated to be about 40% lower than retail rates.
Rhone Resch, president and CEO of the SEIA, has welcomed the long-awaited compromise.
“Massachusetts has been one of the leading solar energy markets in the U.S. for the last decade,” he says in a press release. “By raising the caps, the commonwealth is showing it values the well-paying local jobs that solar provides and the energy independence of its residents. Bay Staters have made it abundantly clear they want access to clean, affordable, reliable renewable power.”
Resch adds, “While the compromise … includes cuts to the rates at which some customers are credited for solar power, it gets the industry moving again.”
Sean Garren, Vote Solar’s northeast regional manager, agrees, saying the legislation “will put solar workers back on the job and enable more families and communities to save with solar.”
Nonetheless, he says Vote Solar is worried about “the tough choices in this short-term compromise and hope[s] to remedy them in future sessions.”
“With the bill’s three percent increase to the program cap, we expect to address net metering again next year in order to avoid endangering solar jobs yet again,” explains Garren. “As part of that conversation, we hope to chart a long-term policy path that creates sustained opportunities for solar growth and consumer energy choice.”
Shortly after the committee released its compromise bill, the legislature took action. On Wednesday, the House passed it in an almost-unanimous vote of 152 to 1, and the Senate approved it unanimously on Thursday. The legislation now goes to Gov. Charlie Baker, who is expected to sign it into law.