Massachusetts issued emergency revisions to its main solar support program last month to help an industry struggling with the coronavirus lockdown. But developers say the changes will have opposite their intended effect, causing the cancellation of hundreds of megawatts of distributed solar projects.
Solar companies had sought an increase to the size of the popular Solar Massachusetts Renewable Target Program, or SMART, for almost as long as the program has existed. And when the state's Department of Energy Resources (DOER) expanded the program in April, the industry initially offered halting praise — Vote Solar recognized the changes as "incremental improvements," and the Solar Energy Industries Association said they would help "stabilize" the industry in a trying time.
Now, developers in the state have expressed serious concerns. Solar companies working in Massachusetts claim portions of the new guidelines that restrict land use will actually curtail the state’s landmark distributed solar program even as its overall capacity has doubled.
Analysts agree. The state’s distributed solar market is facing an “existential risk,” said Austin Perea, a senior solar analyst at Wood Mackenzie Power & Renewables.
The changes come at a time when Massachusetts’ distributed solar industry is already struggling with lengthy interconnection studies and the potential for high transmission upgrade costs, which have pushed out project deadlines or canceled projects altogether. Stretched timelines mean many projects will fall under the new regulations even if they've been in development for some time.
“The net effect is going to be a major deceleration in the rate of deployment,” said Ilan Gutherz, vice president of policy and strategy at Borrego Solar, which expects 130 megawatts' worth of its projects — all paired with storage — to be canceled under the new regulations.
The uncertainty threatens the state’s environmental goals, the solar industry argues. Massachusetts has an overall mandate to reach 35 percent renewables by 2030 and reduce greenhouse gas emissions by 80 percent below 1990 levels by midcentury.
Offshore wind will play a big role in getting the state there: Massachusetts has committed to 3.2 gigawatts of offshore wind by 2035 and already has two 800-megawatt projects in the works, including one backed by Shell. But the U.S. offshore wind industry is nascent compared to distributed solar; Massachusetts ranks in the top 10 residential solar markets and has the second-largest community solar market.
The SMART program now makes up 3.2 gigawatts of Massachusetts’ wider climate ambitions. Without some changes, solar developers expect the newly expanded program to be difficult to fill, even though capacity is in high demand and SMART was originally flooded with an excess of applications when it opened in 2018.
How Massachusetts copes may offer guidance — or a cautionary example — for other states balancing high levels of distributed renewables, climate goals and land constraints.
Solar vs. conservation?
The industry has criticized several elements of the new SMART regulations, but developers told Greentech Media the most damaging are the additional restrictions placed on what land is available for solar development in the state.
In its emergency rules, the Massachusetts DOER restricted solar installations on land designated majority “priority habitat, core habitat or critical natural landscape,” in the interest of protecting more of the state's land for conservation. DOER hoped to encourage solar development on already-developed lands, such as parking lot structures and landfills. The state added incentives for those types of projects as well as those that included pollinator habitat or were integrated with farming. DOER also multiplied the program’s “greenfield subtractor,” which lowers a project’s incentive compensation if it’s located on previously undeveloped land.
While the industry “appreciates those concerns” about conservation, Erika Niedowski, Northeast director at the Coalition for Community Solar Access, argues the regulations go too far.
“What is a very legitimate goal was reached through [an] overly restrictive response,” Niedowski told Greentech Media.
DOER declined to comment directly on the industry’s concerns with the changes but said in a statement that the new regulations “will be able to support twice as much solar capacity, increase protections for natural resources and reduce greenhouse gas emissions.”
The areas newly closed off to development, plus areas of the state already unavailable, mark up to 90 percent of the state’s land as off-limits for ground-mounted solar development, according to an analysis from Borrego and the Coalition for Community Solar Access. The protected areas also overwhelmingly overlap with the western and southeastern portions of the state, where available land is most plentiful.
“These new [restrictions] would basically make, in our case, 80 percent of our pipeline ineligible for the program overnight,” said Gutherz. “That’s, in my view, a pretty extreme approach to adjusting some legitimate concerns about land use.”
The Solar Energy Industries Association, in public testimony on the changes, said the new restrictions would halt at least 477 megawatts of solar development in Massachusetts, almost one-third of the original program’s total.
The regulations are expected to be finalized in July.
The new land restrictions exacerbate what was already a challenging environment in the state, according to several solar companies, with projects held up in ongoing studies on the interconnection of distributed projects.
The studies, which have snagged some projects for over a year, have created a “black hole of interconnection” that has put a significant portion of the state’s projects in limbo, said Gutherz at Borrego. If those studies had moved along more quickly, he added, some of the projects now at risk of cancellation would likely already be operating rather than “sitting in this purgatory.”
Even if the concerns with SMART are alleviated, developers still have to weather the interconnection uncertainty and hazy timelines on when studies will reach completion. Though Massachusetts has established significant incentives for distributed generation, it’s unclear if developers can shoulder the transmission-level costs that may be required to add those projects to the grid and who will ultimately foot those bills.
Boston-based developer Nexamp has several projects at risk of cancellation due to the new land-use restrictions, including an estimated 20 percent of those planned to enter construction this year. The company had already been battling other headwinds, including slow interconnection and the tangle of required studies, said Kelly Friend, the company’s vice president of policy and regulatory affairs.
“To take that land off the table doesn’t make sense to us when we’re already in a constrained development environment,” she told GTM.
The coronavirus pandemic has added yet another element of uncertainty, halting or slowing work in the state. Though DOER extended timeline requirements by six months to accommodate the disruption, developers are hoping for more security because of existing interconnection-related delays.
The industry is looking for “commonsense grandfathering” that allows projects well on their way in development to use the pre-emergency regulations, said Patrick Jackson, senior vice president of business development at SunRaise Investments, a commercial solar owner and operator based in New Hampshire.
As the state wrestles with these questions, others with significant distributed generation goals — including Maine and New York — are watching the outcomes.
“This is very much the future of what a high-DG-penetration grid is going to look like,” said WoodMac’s Perea. “Massachusetts is testing the limits of the extent to which distributed generation can play a significant role in achieving state climate targets.”