Net Metering

Eligibility and Availability

In Massachusetts, the state's investor-owned utilities are required to offer net metering. Municipal utilities are not obligated to offer net metering, but they may do so voluntarily. (There are no electric cooperatives in Massachusetts.) 

Massachusetts has three categories of net metering facilities:

• Class I Facilities: any type of generating systems up to 60 kilowatts (kW) in capacity. 
• Class II Facilities: systems greater than 60 kW and up to 1 megawatt (MW) in capacity that generate electricity from agricultural products, solar energy, or wind energy. 
• Class III Facilities: systems greater than 1 MW and up to 2 MW in capacity that generate electricity from agricultural products, solar energy, or wind energy. 

Legislation in 2010 introduced an additional definition for "a net metering facility of a municipality or other governmental entity.” This type of net-metered facility must be either Class II or Class III, as defined above, and owned by a municipality or governmental entity or the entity must use all of the facility's output. Facilities owned by a municipality or other governmental entity up to 10 MW are eligible for net metering. 

Aggregate Capacity Limit

In aggregate, municipal or governmental facilities may not exceed 8% of the distribution company's peak load. Private facilities may not exceed 7% of the distribution company's peak load. Systems 10 kW and under on a single-phase circuit and systems 25 kW and under on a three-phase circuit are exempt from the private aggregate capacity limit. Massachusetts requires that the utilities report on their aggregate capacity of net-metered facilities regularly, since in some instances utilities may be approaching the caps.

Because there are aggregate capacity limits in place, the Department of Public Utilities (DPU) passed a "System of Assurance of Net Metering Eligibility" in May 2012 for customers of investor-owned utilities. This serves as a net metering queue to help potential net metering customers know in advance if their system will be allowed to net meter or not. All investor-owned utility customers subject to the state's aggregate caps that wish to net meter must apply for a "cap allocation" online via the Massachusetts Application for Cap Allocations website. There is a $100 application fee, and the applicant must have an Interconnection Service Agreement from the utility.

Neighborhood Net Metering

Massachusetts allows “neighborhood net metering” (also known as aggregate or virtual net metering) for neighborhood-based Class I, II, or III facilities that are owned by (or serve the energy needs of) a group of 10 or more residential customers in a single neighborhood and served by a single utility. The neighborhood facility may also serve additional customers (including commercial) as long as the base requirements are met. All net-metered facilities must be behind a customer’s meter, but only a minimal amount of load located on-site is required.

Net Excess Generation

The treatment of customer net excess generation (NEG) varies by facility class and customer type. In all cases, NEG is monetized and net metering credits are calculated based on the excess kilowatt-hours (kWh) produced. The value of the net metering credits at the end of a billing period is slightly less than the utility’s full retail rate for Class I solar and wind facilities, Class II facilities, and Class III facilities used by government customers as they would receive credit for the default service, distribution, transmission, and transition charge. Net metering credits for Class III facilities and neighborhood facilities that are used by customers other than government entities differ only in that they do not receive credit for the distribution component. 

Any new Class I, Class II, and Class III solar net metering facilities (except those exempt from the state's aggregate capacity limits) submitting an Application for Cap Allocation after September 26, 2016 at 2:00 pm will receive "market net metering credits" for NEG. Market net metering credits are equal to slightly less than the utility's full retail rate for facilities of governmental entities, but are equal to 60% of this rate for all other solar facilities, including neighborhood net metering facilities.

Credits may be carried forward to the next month indefinitely, and credits from net metering facilities may be transferred to another customer of the same utility as long as they are within the same service territory and ISO-NE load zone. If a neighborhood facility has NEG at the end of a billing period, the credits are awarded to designated neighborhood customers. The amount of NEG attributed to each such customer is determined by the allocation provided by the neighborhood net metering facility.

Third-Party Ownership

Third-party owned systems may be net metered. 

Renewable Energy Certificate Ownership

Utilities are not granted the renewable energy certificates or environmental attributes generated by a net-metered facility.

Capacity Rights

The DPU issued an order in February 2019 determining that ISO-New England Forward Capacity Market rights of Class II and III net metering facilities transfer to the utility when enrolled in net metering and that the utility is obligated to participate in the forward capacity market with the facilities. The utility will not have capacity rights for Class I net metering facilities, small hydro projects, or energy storage paired with net metering facilities. The order also declares that the capacity rights of systems participating in the SMART program's Alternative On-Bill Credit mechanism transfer to the utility. 

Monthly Minimum Reliability Contribution

S.B. 1979, enacted in April 2016, authorizes utilities to adopt a monthly minimum reliability contribution (MMRC) for net-metered customers, subject to DPU approval, once the state reaches 1,600 MW in aggregate solar capacity. The DPU may exempt or modify these requirements for low-income ratepayers. H.B. 4857, enacted in August 2018, amended the MMRC requirements so that a demand charge may not be included unless it is based on the system peak during peak hours of system demand and affected customers are regulatory informed about how the charge is assessed and ways to manage and reduce demand.

Energy Storage

The DPU issued an order in February 2019 authorizing eligible net metering facilities that are paired with energy storage systems to net meter under the three following configurations: (1) the storage system charges only from the net metering facility and cannot export, (2) the storage system charges only from the net metering facility and can export, and (3) the storage system charges from either the grid or the net metering facility and cannot export. 

History

• 1982: Net metering was originally authorized for renewable energy systems and combined heat and power (CHP) facilities with a generating capacity up to 30 kW by the DPU.
• 1997: The maximum individual system capacity was raised to 60 kW, and customers were permitted to carry any NEG - credited at the "average monthly market price of generation" - to their next bill. 
• July 2008: Net metering was significantly expanded by the Green Communities Act (S.B. 2768), and the DPU adopted rules implementing the law in June 2009. This Act enabled neighborhood net metering and increased the eligible system size to 2 MW.
• August 2009: The DPU issued its model net metering tariff. New utility net metering tariffs for the state's investor-owned utilities became effective in December 2009. 
• 2010: The law was amended again (H.B. 5028), and new rules promulgated in February 2012. A new model tariff and utility tariffs were finalized in July 2012.
• November 2014: Aggregate capacity limits were increased to 4% (private) and 5% (public).
• April 2016: S.B. 1979 increased aggregate capacity limits to 7% (private) and 8% (public). The NEG credit rate was reduced for most privately owned solar systems, beginning once the state reaches 1,600 MW in aggregate capacity.
• February 2019: The DPU issued orders regarding the net metering eligibility of systems paired with energy storage and the forward capacity market rights of net metering projects.