Massachusetts SMART and Clean Peak Overview
Camelot Energy Group
Bespoke technical and strategic advisory for a better world
Massachusetts continues to establish itself as a leader in state-level clean energy programs, and Camelot is staying closely aligned on the latest developments in the region. Developers and other players take note: Through the Solar Massachusetts Renewable Target (SMART) Program and the Clean Peak Energy Standard, the state has introduced dynamic frameworks designed to accelerate renewable energy adoption while addressing grid reliability and peak demand challenges. Here, in part 1 of our two-part series on the Massachusetts programs, we’ll set the scene with what you need to know about the programs, and will dive more deeply into the key financial implications in part 2.
Massachusetts SMART Program Overview
The Solar Massachusetts Renewable Target (SMART) Program is a pioneering initiative aimed at promoting solar energy adoption across the state. Managed by the Massachusetts Department of Energy Resources (DOER), the program provides long-term incentives for solar photovoltaic (PV) projects, encouraging residential, commercial and small utility scale installations up to 5MW AC. Here’s an in-depth look at its objectives, structure, and benefits.
The SMART program is a feed-in-tariff program that assigns a unique energy rate to different qualifying solar projects based on system size, system type, system location, offtaker type, and associated energy storage system size. The SMART program has a total capacity of 3,200 MW AC, which is distributed among Massachusetts' three investor-owned electric distribution companies: National Grid , Eversource Energy , and Unitil . The capacity assigned to each utility is proportional to the number of customers in their service area. Generally, sites serviced by municipally-owned electric utilities are not eligible for the SMART program.
Each utility’s allocated capacity is further divided into two categories: one for systems larger than 25kW AC and one for systems smaller than 25kW AC. ?These categories are then subdivided into 16 "capacity blocks." As SMART applications are approved, these blocks gradually fill up. Once a block is fully subscribed, it is considered at capacity, and the program advances to the next block. The incentive rate for the new block is lower than that of the previous one, declining by 4% each block.
SMART Capacity Block updates are posted at www.masmartsolar.com for each utility company
To determine the exact SMART tariff rate that a project is granted, the DOER determines a base compensation rate based on the system size and the current utility capacity block. Then adders are applied based on system location, off-taker type, energy storage and racking (see Figure 1). Similar to the declining capacity blocks, the adders have declining “tranches”, and as each tranche is filled at the state level, the incentive rate declines by 4%. However, the adder rates for the Agricultural, Brownfield, Canopy, Floating and Landfill Adders will be locked in at their Tranche 1 rates for the duration of the SMART program and the adder rate for the Building Mounted Adder will be locked in at the Tranche 2 rate for the duration of the SMART program as modified by order 20-145-B released by the Department of Public Utilities on 12/30/2021.
*Significant adjustments to this table are proposed in the Straw proposal:
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SMART and Energy Storage
Under the current SMART regulations, all projects over 500kW must be coupled with an Energy Storage System (ESS).* SMART projects coupled with ESS are provided with an “energy storage adder” that ranges between 0.025 – 0.077 $/kWh. The exact adder value is dependent on the max power output of the ESS and the duration, with the maximum adder being granted to projects with 100% of the max power of the PV system and 6 hours duration and the minimum adder being granted to projects with max 25% of max PV power and 2 hour duration. The incentive of the Energy Storage adder is applied to all power generated by the system, independent of the use case of the ESS. There is a requirement that each year the ESS must be cycled a minimum of 52 times to maintain eligibility for this adder.**
* The new straw proposal published 7/29/24 specifies only projects over 1MW AC will require ESS
** The new straw proposal published 7/29/24 increases this requirement to 156 cycles per year and adds the requirement that the ESS is online and able to discharge 85% of the time during summer and winter months.
Massachusetts Clean Peak Energy Program Overview
The Massachusetts Clean Peak Energy Standard (CPS) is a first-of-its-kind program designed to encourage the use of clean energy during peak electricity demand periods. Managed by the Massachusetts DOER, the program incentivizes renewable energy systems and energy storage solutions that contribute to grid stability and reduce reliance on fossil fuel-based power during high-demand hours.
How the Program Works
1 - Clean Peak Energy Certificates (CPECs):
2 - Eligible Resources:
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3 - Defined Peak Periods:
4 - Market-Driven Prices:
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Things To Note
CPEC revenues are designed to incentivize clean energy generation during peak demand periods and can apply to projects that include solar paired with energy storage systems (solar + storage), as these systems are particularly effective at delivering energy during peak periods.
Standalone solar projects can still qualify for CPEC revenues, but their ability to maximize these revenues is typically limited compared to solar-plus-storage systems, which offers greater flexibility in aligning energy delivery with peak periods because storage enhances the ability to participate in the Clean Peak Standard (CPS) program. By storing solar energy and dispatching it during peak demand hours, hybrid systems can generate additional CPEC revenues, making them a financially attractive option.
The DOER has implemented significant updates to the Alternative Compliance Payment (ACP) rate as part of its emergency rulemaking. The ACP rate will remain at $45/MWh through Compliance Year 2025. However, starting in 2026, the rate will increase to $65/MWh and stay at this level until 2032. After 2032, the ACP will return to $45/MWh, where it will remain through 2050. This marks a major departure from the original regulations, which planned for a declining ACP rate, dropping to $4.96 by the end of the policy period. While the higher ACP rate is expected to boost market prices, there is still a risk of steep price drops if surpluses exceed the banking limits of load-serving entities.
DOER has also introduced a new NTRM under the CPS. The NTRM will provide a 2x multiplier on CPECs for up to 50 MW of qualified energy storage systems for a duration of 10 years. To qualify, the QESS must be a standalone, front-of-the-meter system interconnected to the distribution system, with a commercial operation date between January 1, 2019, and January 1, 2027. Additionally, it must not have received a Statement of Qualification before January 1, 2025, or the Distribution Credit Multiplier. Ownership is restricted to prevent any single entity from controlling more than 50% (25 MW) of the program’s capacity.
DOER released the NTRM application on January 7, 2025[SS3]?. Applications submitted by January 21, 2025, will be prioritized based on interconnection service agreement dates. Any applications received after this deadline will be reviewed on a first-come, first-served basis. These updates aim to encourage the development of energy storage systems while addressing previous concerns about market pricing and resource deployment under the CPS.
Conclusions
Looking forward, Massachusetts aims to expand and refine the SMART & Clean Peak Program to adapt to emerging technologies and evolving market conditions. By integrating solar energy with battery storage and enhancing equitable access, the program continues to serve as a model for other states aiming to transition to a clean energy future. For those considering solar or hybrid projects in the state, the program offers a valuable opportunity to contribute to sustainability while enjoying financial benefits.
Stay tuned for Part 2, where we will discuss the revenue stack for hybrid projects, containing a combination of the SMART Program & Clean Peak Program.
If you're interested in assessing solar, energy storage, and/or hybrid projects in ISO-NE’s MA SMART Program, feel free to reach out to us at [email protected].
About
Camelot Energy Group is a technical and strategic advisor to owners and investors in clean energy and energy storage projects, programs, and infrastructure. Guided by our core values of courage, empathy, integrity, and service we seek to support the energy needs of a just, sustainable, and equitable future. Our team has experience in supporting 7+GW of solar PV and 10+ GWh of energy storage and offers expertise in technology, codes and standards, engineering, public programs, project finance, installation methods, quality assurance, safety, contract negotiation, and related topics. Our services are tailored to a providing a different kind of consulting experience that emphasizes the humanity of our clients and team members, resulting in a high-quality bespoke service, delivered with focus, attention, and purpose. Key services include: -Technical due diligence of projects and technologies -Owner’s representative and engineer support -Strategic planning -Training and coaching -Codes and standards consulting -Contract negotiation and support.