Capitalizing on the New Solar+Storage Incentives Available Through Massachusetts' SMART Program
For energy providers, delivering electricity becomes more costly and complex as demand on the grid increases. A number of grid dynamics are structured to help alleviate that problem. Demand charges based on a facility’s contribution to peak demand levels on the grid help recoup the cost of delivering power at these times, while demand response programs provide incentive for customers to reduce their demand when the grid is under duress.
Still, the Massachusetts electric grid struggles with the financial and environmental impacts of system peak events. According to the state’s Department of Energy Resources (DOER), 40% of electricity spend in the state stems from the top 10% of hours of energy consumption. Much of this cost can be attributed to a reliance on natural gas generation to accommodate these demand peaks, which is not only expensive but threatens to prevent Massachusetts from reaching its 2050 goal of reducing greenhouse gas (GHG) emissions 80% from 1990 levels.
This is where behind-the-meter solar photovoltaics (PV) and energy storage can be valuable to the Massachusetts grid. If large energy consumers are able to self-generate and store their own clean power, they can deploy that power when demand is high—helping alleviate the financial and environmental challenges of peak demand events, while reducing energy spend and increasing demand response payments for the end user.
However, solar-plus-storage still faces a number of barriers to adoption. The technology is still relatively expensive and complex to integrate and manage, and many large energy users are reluctant to invest in and take responsibility for these assets without the internal expertise or resources to do so.
To help encourage the adoption of solar-plus-storage to help the grid, Massachusetts DOER is moving ahead with the Solar Massachusetts Renewable Target (SMART), which offers compensation for solar PV capacity up to 5MW and additional incentives for those that also incorporate energy storage.
The fixed rate offered through the SMART program makes it easier for solar-plus-storage project developers to provide flexible financing agreements with the end users that will consume the power. This enables end users to outsource the integration and operation of these assets to a third party that can maximize their value through reduced energy spend and increased DR earnings without committing to an upfront investment.