Business

Major solar incentive runs out in Mass., surprising many

A solar panel farm along the Massachusetts Turnpike in Natick.

Joanne Rathe/Globe Staff/File

A solar panel farm along the Massachusetts Turnpike in Natick.

Solar energy in Massachusetts faces an uncertain future as two state programs that helped fuel a boom in solar installations are on hold, awaiting action by state officials.

On Friday, a generous incentive for the industry quietly evaporated, as subsidies that have helped finance solar power projects reached the limit set by the state. Another program, which allows homeowners and businesses to sell excess solar power to utilities, hit its limit in a large part of the state last year, and the Legislature has yet to lift the cap on the amount of power that utilities must buy from these sources at retail rates.

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Now the question is: What’s next?

“The industry’s on hold, basically,” said John DeVillars, managing principal at Boston solar developer BlueWave Capital. “Until there’s clarity on the next incentive program, very little activity will take place.”

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These two programs have been critical to the expansion of solar power in Massachusetts, which has more than doubled its generating capacity since 2013, according to the state Department of Energy Resources. Massachusetts is among the top 10 states in installed solar generation, according to Solar Energy Industries Association, a trade group in Washington.

The solar subsidies are called solar renewable energy certificates, which solar panel owners sell to utilities that use the certificates to meet state rules requiring utilities to provide certain amounts of clean energy.

The cap is hit when the amount of installed solar capacity reaches 1,600 megawatts statewide. About 1,000 megawatts of solar panels are installed, but the state encourages developers to reserve the incentives ahead of time. More than enough developers filed plans in recent weeks to use up the remaining balance.

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The other program is called net metering. Homeowners or businesses with solar panels producing more power than they can use during certain times can sell electricity back to utilities, thus lowering their bills. The state has caps for net metering as well, and those limits were reached last year in National Grid’s service area.

Legislative leaders failed last fall to resolve differences on net metering that would lift those limits, and the issue now remains mired in negotiations between the House and Senate. The House supports a bill that’s friendlier to utilities, while the Senate wants a more generous system championed by solar advocates.

“I would say Massachusetts has more uncertainty than any of the other large solar markets in the US right now,” said Mike Hall, chief executive of California-based Borrego Solar.

Senator Benjamin Downing, cochairman of the Legislature’s energy committee, said it’s possible that the issue could be resolved soon. But it’s also possible that the solar issues could get wrapped up into the debate over a broader energy bill. That would mean a final decision might not happen until July, the last month of the Legislature’s formal session.

The solar certificates are far more lucrative than net metering — often twice as valuable — in terms of their value to solar power owners. Even solar supporters have been talking about replacing them with less expensive incentives.

For now, the state has set aside more than enough capacity to allow small, home-sized projects to continue to benefit from these solar certificates. Similarly sized residential projects are also exempt from the net metering caps.

Peter Lorenz, a spokesman for the state Department of Energy Resources, said Governor Charlie Baker’s administration is committed to smoothly managing the end of the solar certificate program and working with lawmakers to develop an alternative solar program.

Supporters say that solar power improves the grid’s reliability and reduces the need to run older polluting plants, and that the costs per solar panel are dropping as the industry matures. With dozens of projects stalled, they say, thousands of construction and installation jobs could be at stake.

But the state’s biggest utilities — Eversource Energy and National Grid — and Associated Industries of Massachusetts argue that these incentives unfairly drive up electricity costs in the state for people and businesses who don’t use solar power.

Last week, AIM circulated an ad claiming that the average homeowner paid an extra $83 a year to support solar power in the state in 2015, and that the typical manufacturer paid $750,000.

Eversource and National Grid say that they support solar power, but that it’s time to rework incentives to ensure they are sustainable and affordable.

Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.
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