Resonant Energy 2021 Massachusetts Climate Bill Summary
By: Isaac Baker, Ben Underwood, Ed Cabell, and Matt Connolly
Updated 4/15/21
On March 26, 2021, after significant back and forth within the legislature and a narrow miss in the prior session, Governor Baker signed the state's newest sweeping climate bill into law (full language available here). Many have hailed this bill as the most significant piece of climate legislation since the Global Warming Solutions Act signed by former Governor Patrick in 2008, and as with any piece of major legislation, there’s a lot in there.
This post is intended to summarize the key provisions that will impact Resonant Energy and our community’s areas of focus: environmental justice and equitable solar PV deployment for nonprofits, affordable multifamily, and low-income households. For other resources, you can check out the State’s Press Release, the WBUR Bill Summary, and two deep dives on solar net metering and solar tax treatment written by our colleagues at Klavens Law Group.
Section 13 Overview - Clean Energy Equity Workforce & Market Development Program
Under this new groundbreaking initiative, the Dept of Public Utilities will provide $12 million annually to fund a new set of programming aimed at broadening employment opportunities in the rapidly growing green economy. Target sectors include energy efficiency, clean energy, and clean heating and cooling (think air source heat pumps). The programming will include “workforce training, educational and professional development, job placement, startup opportunities and grants” to women and minority owned businesses, residents in environmental justice communities, and former fossil fuel industry workers.
In addition to tackling the critical jobs side of the work, this section also calls for the program to identify market barriers to the deployment of clean energy and energy efficiency technologies in environmental justice communities and to award incentives to make such installations possible to help these communities keep pace with the statewide greenhouse gas reduction targets.
$12M a year is just the beginning of what it will take to solve all of the challenges associated with the equitable distribution of jobs and consumer benefits created by MA’s growing clean energy economy. But this is a big deal and establishes an important precedent that advocates can build on in the coming years.
(Lines 193-196; page 11)
Section 31 Overview: Commercial PACE Program Updates
This section tweaks language governing MA’s Property Assessed Clean Energy (PACE) Program, which went into effect on July 28, 2020. The PACE Program is a financing mechanism for commercial buildings looking to take on renewable energy and energy efficiency improvement projects. It is run by MassDevelopment and the MA Department of Energy Resources that allows commercial building owners and nonprofits to take out loans for clean energy and efficiency improvements that go out to 20 year terms at what we anticipate will be a 5-6% interest rate (based on C-PACE programs in neighboring states). According to the agency overseeing the program, it typically makes the most sense for projects that cost $250,000 or more.
This innovative loan program allows cities and towns to guarantee the loans, enabling lenders to work with smaller and less traditionally creditworthy borrowers while also going out to longer loan terms that are often required for these types of improvements to make sense. One of the few requirements is for the project to produce more in savings over the length of the loan than the initial cost of the project. The PACE program is currently available for financing in 41 cities and towns across the Commonwealth. For a full list of PACE-eligible municipalities and more information on the Program, see MassDevelopment’s website. As of April 2021, no projects have yet been funded, but we expect this program to grow significantly in the coming years.
(Lines 301-315; pages 15-16)
Section 54 Overview: Low-Income Services Solar Grant Program Established
This provision creates a fund of $500,000 per year to make grants of up to $50k a piece for solar installations on nonprofits that offer services such as food security, homelessness, and emergency shelter. 100% of these solar systems’ energy output must benefit the host nonprofit and at least 10 grants will be issued each year.
As of April 2021, we do not know yet which agency will be responsible for this grant program or when it will begin accepting applications. We are following up with the Dept of Energy Resources and the MA Clean Energy Center on this and will post more details as they become available. Any qualifying nonprofit organization interested in the program should reach out to Ed Cabell (Ed[at]resonant.energy) for more information on how to be best positioned to apply for these funds when the program goes live.
(Lines 626-646, pages 31-32)
Section 10 & 56 Overview: Writing Environmental Justice into Law
An important first step in creating equitable policy is to define communities that have been most harmed by economic exclusion (ex. WGBH coverage of Boston’s redlining) and fossil fuel-powered industries (exemplified by MA’s 16 active trash incinerator plants, covered here by the Conservation Law Foundation). This section does just that and defines the communities that require the additional focus of resources and protection from further harm as “Environmental Justice Populations,” namely census block groups that meet the following criteria:
Annual Median Household Income (AMHI) is not more than 65% of statewide AMHI
Minorities comprise 40% of the population
25% or more of household lack English language proficiency
Minorities comprise 25% or more of the population and the AMHI of the municipality in which the neighborhood is located does not exceed 150% of the statewide AMHI
This definition comes with a set of “Environmental Justice Principles'' that aim to fairly distribute the negative impacts of industry and infrastructure, among other provisions. Section 10 earlier in the document also requires that the roadmap to reducing greenhouse gas emission be created “in a manner that protects low- and moderate-income persons and environmental justice populations.”
While again there is more work to do at the state level to direct funding to environmental justice communities, and it is not yet clear how in reality the next natural gas compressor station or incinerator plant will be equitably cited in an affluent Boston suburb instead of a gateway city, this addition to our laws is an important step toward achieving greater equity in the Commonwealth as we move toward a future with fewer polluting industries and more clean infrastructure.
Section 56 (Lines 650-693; pages 32-34)
Section 10: Subsection 6: (Lines 182-186; page 10)
Section 60 & 62L Overview: Creating an Environmental Justice Council
This section creates an Environmental Justice Council to keep the Office of Energy and Environmental Affairs accountable to the environmental justice principles. The council will consist of 9 - 15 members appointed by the Governor, who will serve without compensation. The environmental justice council will periodically conduct reviews to ensure that the definition of environmental justice population is achieving the intended objectives, and may suggest updates to the EJ definitions as needed.
While this is again an excellent step forward, a better policy would have compensated council members to ensure participation is feasible for candidates with limited resources and could have had a more democratic means of appointing candidates.
(Lines 773-797; pages 38-39)
Section 61 & 98 Overview: Clarifications on How Solar PV Systems Should be Taxed
Like many states, MA has had a property tax exemption for solar as one of the many ways it has tried to boost the solar adoption. As the industry has grown, there is increasing interest from cities and towns in taxing the largest of these systems, especially large commercial arrays installed on greenfields, while avoiding taxing smaller systems like an array on a residence or a house of worship.
To that end, this section states that a solar PV system, owned or leased, shall have a 20-year exemption from municipal property taxes if it:
is capable of producing not more than 125% of the annual electricity needs of the real property upon which it is located, including both contiguous or non-contiguous real property within the same municipality in which there is a common ownership interest (relevant for organizations with many buildings in the same town), or
is less than or equal to 25 kilowatts in capacity; may or may not be co-located with energy storage (we assume 25 kW-AC as the verification is via the system rating in the utility’s permission to operate letter. Relevant for residential and small commercial.)
has executed a PILOT agreement with the host municipality (provides assurance to developers of larger solar arrays who already negotiated a custom PILOT for a past project that this policy won’t impact them)
per Section 98 of the bill, systems determined to be exempt prior to the effective date of this act that have not executed a PILOT agreement with the host municipality shall remain exempt so long as the system produces less than 150 per cent of the annual electricity needs of the real property on which it is located (additional flexibility for previously exempt systems)
In summary, this policy upholds favorable tax treatment for many of the smaller systems we work on and all behind the meter systems designed to offset onsite usage up to the 125% limit. It also formally includes solar systems that serve nonprofit organizations, which previously had been a grey area in MA tax policy. This change is anticipated to go into effect on June 24, 2021 (90 days from when the bill was signed into law).
61: (Lines 798-827; pages 39-40)
98: (Lines 1076-1081; page 52)
Section 77 Overview: Utility-Owned Solar + Storage in Climate Vulnerable Communities
Municipalities at high risk from climate change can invite electric distribution companies (that is, utility companies, or EDCs) to submit petitions to DPU to allow the EDCs to build, own and operate solar and/or storage assets on land owned within the municipality at no cost to the municipality. These projects are eligible for cost recovery from all electricity ratepayers in the state, subject to DPU approval. They are also exempt from the legal limit on EDC-owned solar capacity, so long as total EDC-owned capacity does not exceed 10% of the total installed capacity of solar generation facilities in the commonwealth as of July 31, 2020. Projects must meet program goals “including but not limited to, job creation, peak demand reduction and system resiliency.” Municipalities with environmental justice populations shall receive a preference for participation in such projects.
An eligible municipality is defined as “a city or town that can demonstrate to the department current or future changes to its population, land use or local economy resulting from changes in climate”
This change is a win for utilities, who are always in favor of being allowed to own and rate base more infrastructure. It could also be a win for communities on the Cape who are likely to be first in line here to add utility-scale solar + storage systems to reduce the impact of outages that will become more frequent in the coming years. That said, although EJ communities are given precedence for participating in the program, the legislation does not set any clear provisions for how projects will directly benefit residents of the communities in question, nor does it set any threshold for the amount of benefit that must go to residents.
(Lines 891-939; pages 43-45)
Section 84 Overview: Net Metering Credit Transfer Rule Change
While previously net metering credits for excess generation in a given month at a site could only be transferred within a given utility load zone (see our load zone map here), this statute now allows credits to be transferred to other accounts of any distribution company located in the Commonwealth.
The primary beneficiaries of this policy is likely to be larger community solar facilities in western MA looking to transfer credits to customers in the more populous eastern part of the state, as the market out west is already fairly saturated. So, for example, this change would allow a resident of Boston to purchase discounted solar net metering credits from solar farms located on agricultural land near Greenfield.
As noted by our colleagues at Klavens Law group, this change is still subject to the Dept of Public Utility’s implementation timeline, which is as yet unknown, but is likely to be at least 9-12 months out.
(Lines 970-974; page 47)
Section 85 Overview: Net Metering Facility Qualification Change
This provision eliminates net metering caps for Class II and Class III net metering facilities that serve on site load; any credits accrued in excess of its annual electricity consumption for the period running from April through the following March shall be credited or paid out for such excess credits at the utility’s avoided cost rate (which is expected to be 3-6 cents/kWh). This means onsite solar systems that are greater than 60 kW+ AC and sized to the building’s usage will get full retail net metering credit value based on the meter’s rate class, but will come with the caveat that any excess calculated over the course of a year will be sold off at a very unfavorable rate. This will incentivize developers to size conservatively to ~90% of usage to avoid this outcome.
Overall, this is a big win for larger onsite solar projects in National Grid and Eversource West where net metering has not been available for the past few years. The implementation timeline is anticipated to be the same as Section 84.
(Lines 975-984; pages 47-48)
Section 94 Overview: Guidance for Future Solar Incentive Program Design
According to this section, any new solar incentive program developed by the DOER shall to the greatest extent feasible:
Provide equitable access to all Massachusetts ratepayers, including low-income ratepayers
Address solar energy access and affordability for low-income communities
Include effective consumer protection provisions
Ensure that information about the program and its benefits are provided in a readily accessible manner to all ratepayers, including non-English speaking communities
DOER shall consult with diverse range of stakeholders to inform the design of any such solar incentive program, including low-income ratepayers and organizations representing their interests
This is an important next step to ensuring that we don’t let another incentive program go by without meaningfully addressing the barriers to clean energy adoption in underinvested communities. This will be a key opportunity for our colleagues to intervene in the regulatory process to ensure that the successor to the SMART program goes much further in incentivizing and achieving equitable solar deployment in the Commonwealth.
(Lines 1035-1045, page 50)