225 CMR, § 20.07

Current through Register 1533, October 25, 2024

Section 20.07 - Compensation Rates

(1)Length of Compensation Rate Terms. All Solar Tariff Generation Units with capacities larger than 25 kW AC will be eligible to receive compensation under 225 CMR 20.00 for 20 years from the Solar Tariff Generation Unit's RPS Effective Date. All Solar Tariff Generation Units with capacities less than or equal to 25 kW AC will be eligible to receive compensation under 225 CMR 20.00 for ten years from the Solar Tariff Generation Unit's RPS Effective Date.

(2)Schedule of Base Compensation Rates and Compensation Rate Adders. Following the first Capacity Block, all Base Compensation Rates will decline by 4% per Capacity Block, with Base Compensation Rates in each Capacity Block being established at exactly 4% less than the Base Compensation Rate in the previous Capacity Block. After April 14, 2020 Base Compensation Rates in each Capacity Block will decline by 2% per Capacity Block for Behind-the-Meter Solar Tariff Generation Units.

The Department shall establish in a Guideline the specific Capacity Block in each Distribution Company service territory in which the Behind-the-Meter Solar Tariff Generation Unit Base Compensation Rates shall decline by 2%. With the exception of Location Based Adders, Compensation Rate Adders will decline by 4% for every tranche of capacity established by the Department. The first tranche of capacity available to each adder shall be 80 MW, with the Department establishing the sizes of additional tranches as they are filled. Compensation Rate Adders in each additional tranche will be exactly 4% less than the Compensation Rate Adder available in the previous tranche. A schedule of such rates and the progress towards filling Capacity Blocks and reductions in Compensation Rate Adders shall be published on the Department's and Solar Program Administrator's websites. If a Distribution Company is eligible to have fewer Capacity Blocks and elects to do so, it may also establish a steeper rate of decline for Base Compensation Rates, which must be approved by the Department and shall yield a similar overall rate of decline as if the Distribution Company had elected to have 16 Capacity Blocks.

(3)Base Compensation Rates. Initial Base Compensation Rates shall be established as follows:

(a) One-time Competitive Procurement for Proposed Solar Tariff Generation Units sized between 1 MW AC and 5 MW AC. Each Distribution Company shall concurrently issue competitive solicitations of Solar Tariff Generation Units sized 1 MW to 5 MW, collectively seeking approximately 100 MW statewide. The Distribution Companies will individually procure energy, RPS Class I Renewable Generation Attributes, and any Environmental Attributes associated with the solar photovoltaic generation produced by the Solar Tariff Generation Units; provided, however, that compensation for energy will be established and paid pursuant to tariffs approved by the DPU under 220 CMR 8.00: Sales of Electricity by Qualifying Facilities and On-site Generating Facilities to Distribution Companies, and Sales of Electricity by Distribution Companies to Qualifying Facilities and On-site Generating Facilities.

1.Schedule for Procurement. A request for proposals to conduct the competitive procurement must be developed by the Distribution Companies, in consultation with the Department, subject to DPU approval, if necessary, no later than October 24, 2017. Once issued by the Distribution Companies, the request for proposals shall remain open for 15 Business Days and proposals submitted by Owners or their Authorized Agents shall be reviewed in consultation with the Department. A bidder conference to address any questions surrounding the request for proposals shall be held by the Distribution Companies no later than ten Business Days before the deadline to submit proposals. Final decisions on proposal selection shall be made within 25 Business Days of the close of the request for proposals.

2.Eligibility Criteria. Solar Tariff Generation Units that participate in the procurement shall:

a. seek a Base Compensation Rate not to exceed the Ceiling Prices established in 225 CMR 20.07(3)(a)4.;

b. not be eligible to receive Compensation Rate Adders under 225 CMR 20.07(4);

c. be a Non-net Metered Generation Unit;

d. provide an executed Interconnection Service Agreement, as tendered by the Distribution Company;

e. demonstrate a sufficient interest in real estate or other contractual right to construct the Generation Unit at the location specified in the Interconnection Service Agreement;

f. provide all necessary governmental permits and approvals to construct the Solar Tariff Generation Unit, with the exception of ministerial permits, such as a building permit, and notwithstanding any pending legal challenge(s) to one or more permits or approvals;

g. meet all other applicable eligibility criteria in 225 CMR 20.00;

h. certify that if selected, they will not be eligible to withdraw their proposal and reapply under a Capacity Block until 800 MW of Solar Tariff Generation Units have received a Statement of Qualification under 225 CMR 20.00;

i. provide a performance guarantee deposit at the time of bid submittal to the Distribution Company or the Solar Program Administrator, the amount and parameters of which shall be established in consultation with the Department, but which shall not exceed $25 per kW of capacity.

Any Generation Unit that is not selected or declines an award shall have its deposit refunded. Additionally, any Solar Tariff Generation Unit that is selected and chooses to move forward shall have its deposit refunded provided it is constructed within 12 months of the SMART Program Effective Date;

j. certify that the Solar Tariff Generation Unit is bidding independently and has no knowledge of nonpublic information associated with a proposal being submitted by another party in response to the request for proposals other than a response submitted by an affiliate of that bidder or for a project in which that bidder is also a project proponent or participant; and

k. comply with other price and non-price eligibility threshold criteria as required by the Distribution Companies in their request for proposals, developed in consultation with the Department.

3.Review Criteria. All proposals must demonstrate that the Solar Tariff Generation Unit(s) will meet all eligibility criteria to receive a Statement of Qualification under 225 CMR 20.05(5)(a) and (e) and meet the eligibility criteria set forth in 225 CMR 20.07(3)(a)2.

4.Ceiling Prices. Proposals submitted by Owners or their Authorized Agents under the request for proposals shall not be considered eligible for consideration if they request a Base Compensation Rate higher than the Ceiling Price for their applicable size category. For Solar Tariff Generation Units with a capacity between 1 MW and 5 MW, the Ceiling Price shall be $0.17 per kWh.

5.Selection Process. Proposals that meet the eligibility criteria in 225 CMR 20.07(3)(a)2. shall be ranked by requested Base Compensation Rate, with proposals requesting lower Base Compensation Rates being given preference over those requesting higher Base Compensation Rates. After proposals have been ranked by price, each Distribution Company shall select any eligible proposals up to the amount of MW being solicited by the Distribution Company, which will be eligible to receive a Base Compensation Rate equal to the Clearing Price.

6.Greenfield Subtractors. A Solar Tariff Generation Unit selected under the procurement will have a Greenfield Subtractor, as established in 225 CMR 20.07(4)(g), applied to its Base Compensation Rate, if applicable.

7.Post Selection Requirements. In order to be eligible to receive compensation following the procurement, Solar Tariff Generation Units with selected proposals that were previously qualified as Solar Carve-out II Renewable Generation Units must notify the Department of the Solar Carve-out II Renewable Generation Unit's forfeiture of its RPS Class I Statement of Qualification within 15 days of selection.

8.Clearing Price. The Clearing Price for Solar Tariff Generation Units with capacities between 1 MW and 5 MW shall be equal to the highest requested Base Compensation Rate among the selected proposals and shall be established separately for each Distribution Company. A Clearing Price may not exceed the Ceiling Prices established in 225 CMR 20.07(3)(a)4.

9.Proportional Allotment. Each Distribution Company shall solicit for an amount of capacity up to or equal to one half of its first Capacity Block, as established pursuant to 225 CMR 20.05(3).

10.Confidentiality. The Distribution Company and the Department, to the extent authorized by law, will treat all proposals received from prospective Solar Tariff Generation Units in a confidential manner and will use reasonable efforts, except as required by law, not to disclose such information to any third party or use such information for any purpose other than in connection with the evaluation of a Solar Tariff Generation Unit's participation in the procurement process described in 225 CMR 20.07(3).

11.Payment and Cost Recovery. All Solar Tariff Generation Units selected via the procurement process shall only be eligible to receive compensation from the Distribution Companies subject to DPU and any other appropriate jurisdictional regulatory bodies' approval of a tariff.

12.Termination of Solicitation. If the Department, in consultation with the Distribution Companies, determines that reasonable proposals were not received or that the solicitation was not competitive, the Department may terminate the solicitation, and may require additional solicitations or administratively set a clearing price and initial Base Compensation Rate to fulfill the requirements of 225 CMR 20.07(3)(a).

13.Additional Solicitation Parameters. If the Department terminates the solicitation and chooses to issue a new solicitation, pursuant to 225 CMR 20.07(3)(a)12., any subsequent solicitation may rank proposals using a different methodology and establish a clearing price and weighted average clearing price differently than the processes outlined in 225 CMR 20.07(3)(a)8. and 20.07(3)(b). Such methodologies shall be included in any subsequent request for proposals issued by the Distribution Companies, in consultation with the Department.

14.Unallocated Capacity. Should a Distribution Company not procure the full amount of capacity it must solicit, as described in 225 CMR 20.07(3)(a)9., the Department may allocate any remaining capacity to a future Capacity Block.

15.Miscellaneous. Other requirements, procedures, and eligibility criteria may be specified by the Distribution Companies in their requests for proposals, as developed in consultation with the Department.

(b)Block 1 Base Compensation Rates. For the purposes of establishing Base Compensation Rates for each Distribution Company under the Capacity Blocks established in 225 CMR 20.05(3), the Department shall calculate the mean price of all proposals selected in a Distribution Company's service territory under the competitive procurement process in 225 CMR 20.07(3)(a). This average price shall be the Base Compensation Rate for all projects that receive a Statement of Qualification under the first Capacity Block in a Distribution Company's service territory. If a Distribution Company receives insufficient bids for the Department to calculate a mean price for its service territory, the Department may require additional solicitations or administratively set the Base Compensation Rate for its first Capacity Block.

(c) Indices for Solar Tariff Generation Units equal to or less than one MW AC. Initial Base Compensation Rates for Solar Tariff Generation Units with capacities equal to or less than one MW AC will be established by multiplying the Block 1 Base Compensation Rate established under 225 CMR 20.07(3)(b) by the percentages in the following table:

Generation Unit Capacity	Base Compensation Rate Factor (% of Block 1 Base Compensation Rate)
Low Income Solar Tariff Generation Units less than or equal to 25 kW AC	230%
Less than or equal to 25 kW AC	200%
Greater than 25 kW AC to 250 kW AC	150%
Greater than 250 kW AC to 500 kW AC	125%
Greater than 500 kW AC to 1,000 kW AC	110%

(4)Compensation Rate Adders.

(a)Location Based Adders. Initial Location Based Adder Rates shall be established as follows:

Generation Unit Type	Adder Value ($/kWh)
Building Mounted Solar Tariff Generation Unit	$0.02
Floating Solar Tariff Generation Unit	$0.03
Solar Tariff Generation Unit on a Brownfield	$0.03
Solar Tariff Generation Unit on an Eligible Landfill	$0.04
Canopy Solar Tariff Generation Unit	$0.06
Agricultural Solar Tariff Generation Unit	$0.06

(b)Off-taker Based Adders. Initial Off-taker Based Adder Rates shall be established as follows:

Generation Unit Type	Adder Value ($/kWh)
Community Shared Solar Tariff Generation Unit	$0.05
Low Income Property Solar Tariff Generation Unit	$0.03
Low Income Community Shared Solar Tariff Generation Unit	$0.06
Public Entity Solar Tariff Generation Unit	$0.02

(c)Energy Storage Adder. A Solar Tariff Generation Unit that co-locates with an Energy Storage System shall be eligible to receive a variable adder to its Base Compensation Rate.

1.Energy Storage Adder Multiplier. The energy storage adder multiplier shall be $0.045/kWh and shall decline pursuant to 225 CMR 20.07(2).

2.Energy Storage Adder Formula. The variable energy storage adder for Solar Tariff Generation Units paired with Energy Storage Systems that meet the requirements of 225 CMR 20.06(1)(e) will be calculated using the following formula:

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The Department shall publish a Guideline on Energy Storage that provides an Energy Storage Adder calculator and explains the parameters of 225 CMR 20.07(4)(c) and the formula in 225 CMR 20.07(4)(c)2.

(d)Solar Tracking Adder. A Solar Tariff Generation Unit that follows the path of the sun to maximize the solar radiation incident on the PV surface with a one or two-axis array that points the system directly at the sun at all times and is designed to maximize possible daily energy shall be eligible to receive an additional $0.01/kWh Compensation Rate Adder.

(e)Pollinator Adder. A Solar Tariff Generation Unit that obtains and maintains at least a silver certification from the University of Massachusetts Clean Energy Extension Pollinator-Friendly Certification Program, or other equivalent certification as determined by the Department, shall be eligible to receive an additional $0.0025/kWh Compensation Rate Adder.

(f)Combining Base Compensation Rates and Compensation Rate Adders.

1. A Solar Tariff Generation Unit with a capacity of 25 kW AC or less may only combine its Base Compensation Rate with the Energy Storage Adder, provided it meets the eligibility criteria in 225 CMR 20.06(1)(e). A Solar Tariff Generation Unit with a capacity larger than 25 kW AC can combine its Base Compensation Rate with no more than one Compensation Rate Adder from each of the five categories listed in 225 CMR 20.07(4)(a) through (e), provided it meets the eligibility criteria to qualify for each of the Compensation Rate Adders.

2. For Solar Tariff Generation Units with a capacity of greater than 25 kW AC, no combination of a Base Compensation Rate and Compensation Rate Adders can exceed the Base Compensation Rate for Low Income Solar Tariff Generation Units less than or equal to 25 kW AC established under 225 CMR 20.07(3)(b).

(g)Greenfield Subtractors. A Solar Tariff Generation Unit that is classified as Category 2 Land Use or Category 3 Land Use, as prescribed in 225 CMR 20.05(5)(e)2. or 3., shall have value subtracted from its Base Compensation Rate as follows:

1.Category 2 Land Use Solar Tariff Generation Units. A Solar Tariff Generation Unit that is classified as a Category 2 Land Use, as prescribed in 225 CMR 20.05(5)(e)3. or that meets the exception established in 225 CMR 20.05(5)(e)1.c, shall have its Base Compensation Rate reduced by a Greenfield Subtractor of $0.0005/kWh per acre of land that the Solar Tariff Generation Unit occupies.

2.Post Publication Date Category 2 Land Use Solar Tariff Generation Units. A Solar Tariff Generation Unit that is classified as a Category 2 Land Use, as prescribed in 225 CMR 20.05(5)(e)3. and 7.b., after April 14, 2020 shall have its Base Compensation Rate reduced by a Greenfield Subtractor of $0.00125/kWh per acre of land that the Solar Tariff Generation Unit occupies.

3.Category 3 Land Use Solar Tariff Generation Units. A Solar Tariff Generation Unit that is classified as a Category 3 Land Use, as prescribed in 225 CMR 20.05(5)(e)4., or that meets the exception established in 225 CMR 20.05(5)(e)1.c., shall have its Base Compensation Rate reduced by a Greenfield Subtractor of $0.001/kWh per acre of land that the Solar Tariff Generation Unit occupies.

4.Post Publication Date Category 3 Land Use Solar Tariff Generation Units. A Solar Tariff Generation Unit that is classified as a Category 3 Land Use, as prescribed in 225 CMR 20.05(5)(e)4. after the Publication Date shall have its Base Compensation Rate reduced by a Greenfield Subtractor of $0.0025/kWh per acre of land that the Solar Tariff Generation Unit occupies.

5.Exceptions to Greenfield Subtractors. A Solar Tariff Generation Unit that is classified as Category 2 Land Use or Category 3 Land Use, as prescribed in 225 CMR 20.05(5)(e)3. or 4., or 7. shall not have its Base Compensation Rate reduced by a Greenfield Subtractor, as prescribed in 225 CMR 20.07(4)(g), if it can demonstrate to the Department's satisfaction that:

a. documentation required to meet the criteria set forth in 225 CMR 20.06(1)(c) was obtained prior to June 5, 2017; or

b. it should be granted an exception to the provisions of 225 CMR 20.07(4)(g) for good cause.

6.Determination of Acreage of Land Occupied. For the purposes of 225 CMR 20.07(4)(g)1. through 4., the acreage of land that a Solar Tariff Generation Unit occupies shall be determined by calculating the square footage occupied by the solar photovoltaic modules that are part of the Solar Tariff Generation Unit.

(5)Review of Compensation Rates. Upon issuing Statements of Qualification for 400 MW of Solar Tariff Generation Units, the Department will conduct a review of the Base Compensation Rates, Compensation Rate Adders, and overall cost impact to ratepayers to determine if any revisions to the SMART Program are necessary. The Department may conduct additional review(s) of these factors at its sole discretion to determine if any additional revisions to the SMART Program are necessary.