THE BAKER ADMINISTRATION is preparing to roll out the draft of a new solar incentive program on Friday that sets a ceiling on subsidies and is expected to reduce their overall cost.
The new incentive program is emerging at a time when solar power has become a divisive issue on Beacon Hill, with House leaders pushing for lower subsidies for solar and Senate officials favoring more support for clean energy in general. All sides agree that the cost of generating solar power is coming down as the industry matures, but there is disagreement on how fast subsidies should be reduced.
Administration officials were tight-lipped about their proposal, but individuals briefed on the initiative provided some information. They cautioned that the proposal was still in draft form and subject to revision based on feedback from the industry.
Currently there are two types of solar incentives. One allows solar power generators to sell electricity into the grid and receive as compensation the retail price of electricity, which is roughly 18 cents a kilowatt hour. The other incentive is a solar renewable energy credit. Solar developers receive the credits for the power they generate and then sell them through an auction process to companies selling electricity in Massachusetts. The companies are required to purchase credits equal to a percentage of the power they sell.
The draft proposal prepared by the state Division of Energy Resources calls for the development of 1,600 megawatts of solar with a so-called declining-block pricing structure. What that means is that a fixed-price tariff would be paid for the first 200 megawatts of solar power and then the size of the tariff would be reduced for each subsequent 200-megawatt block of power.
Net metering would continue under the new proposal, but a project with access to net metering payments would have those deducted from the subsidy provided by the main incentive program. A solar project without access to net metering payments would receive the full amount of the subsidy.
According to two people briefed on the proposal, there would also be pricing differentials for projects depending on where they are located. Solar power projects on roofs or landfills, for example, might receive incentives because those types of project locations are preferred.
One source said the draft proposal may include a fixed charge on the utility bills of those utility customers who generate more solar power than they use, but another source said he was not told about the utility charge.
One source said the overall cost of the proposed incentive program would be half as much as the existing program, but that estimate could not be independently confirmed.
Officials with Associated Industries of Massachusetts said it appeared the proposal is “headed in the right direction,” but added that they would like to see it tweaked to add competitive solicitations for solar power in a bid to drive down costs even more. One solar developer also said the proposal seemed to be moving in the right direction, but he said many details of the program need to be worked out. He said the fixed-price aspect of the new incentive could be an improvement over the existing auction-based program, where incentive prices are unknown at the time a deal is being put together.