Massachusetts’ solar development just had its worst year in over a decade in terms of new installations, but Greenfield Solar partner Claire Chang says her firm that does jobs throughout the Valley hasn’t experienced the same downturn.

As a small commercial and residential solar company, Greenfield Solar installs smaller solar systems that face less red tape due to their lesser impact on the state’s electric grid.

“The reason why the commonwealth saw a decrease in solar is because the largest system sizes saw a significant delay in siting and interconnection permissions,” Chang said. “We have similar issues, but they’re not nearly as large of a time constraint.”

Once a leader in solar development, Massachusetts is experiencing slower growth because of electrical grid capacities and reduced incentives. That’s according to a new report by Solar Energy Industries Association (SEIA) and the energy consulting firm Wood Mackenzie, which ranked Massachusetts 25th in the country for new solar installations in 2023, installing 238 megawatts. That’s 15 spots lower than Massachusetts’ rank from two years ago, when 600 megawatts worth of solar capacity was added.

Nationally, the solar industry had a banner year in 2023, adding a record-shattering 32.4 gigawatts of new electric generating capacity, a 37% increase from the previous record set in 2021 and a 51% increase from 2022.

“Despite year-over-year growth, obstacles persist in mature state markets” like Massachusetts, the executive summary of the SEIA report said. “(Newly) installed capacity in Massachusetts, for example, declined 72% from 2022 as developers continue to wait on siting, permitting and interconnection reform.”

The wait is particularly acute for larger developments, when systems 1 megawatt or larger — the type of installations integral to meeting Gov. Maura Healey’s solar targets — can take as long as two to five years. Greenfield Solar typically waits between two and six months for interconnection permissions from utility companies for its 250-kilowatt systems, Chang said.

Interconnection is the approval process by which utilities study a solar project to identify the potential impacts it will have on the grid.

Projections from the SEIA report track Massachusetts to have 6 gigawatts of solar by 2028, far below Healey’s target of 10 gigawatts in the same time frame. The state acknowledges that it will need more solar development — about 10 times more — to achieve its emissions reductions of least 50% below the 1990 baseline by 2030 and to achieve net-zero statewide greenhouse gas emissions by 2050.

“Massachusetts was an industry leader. The state came out early with Solar Massachusetts Renewable Target (SMART) program which really drove sustainable clean energy development in the commonwealth,” said Valessa Souter-Kline, the Northeast regional director of SEIA. “Now we are seeing them drop off a bit.”

These industry-wide issues aren’t lost on the Healey administration. Recently, the Department of Energy Resources, in collaboration with the Department of Public Utilities, launched several initiatives to bring solar back to industry-leading levels, including utility-produced electrical distribution plans for clean energy systems and a review of the SMART program to increase incentives, access and development of solar technology.

With many of these initiatives seeing light this year, solar stakeholders hope this year and next will be big years for solar in the commonwealth.

“These programs should show continued commitment from the commonwealth to this section and this technology. There might be bumps along the way, but we think there’s a very bright future for solar in Massachusetts,” DOER Commissioner Elizabeth Mahony said.

Electric sectormodernization plans

Since Massachusetts had 2,321 megawatts of solar capacity stuck in interconnection limbo at the end of 2022, state agencies have begun to put pressure on electric distribution companies to keep pace with the state’s climate goals.

In 2022, Massachusetts passed a law requiring each electric distribution company to draft plans to upgrade the grid for clean energy needs. These so-called Electric Sector Modernization Plans (ESMP) forecast and outline each utility company’s steps toward the state’s climate goals over the next five to 10 years. The document includes solar and storage, electrification, electric vehicle expansion and heat pump installation targets.

“For the first time ever, we are seeing a plan from the utilities that look at the health and future of the distribution grid as its related to the net-zero carbon goals,” Mahony said. “It’s an exercise to transform their thinking to proactively plan for clean energy development.”

Utilities submitted their plans last September, and the DPU is currently giving feedback on the plans and will approve, reject or modify the plans this August. The documents themselves are the beginning of long and expensive upgrades to the electrical infrastructure from 2025 to 2050.

“A substation cannot be built overnight, as the utility will point out, you can’t just upgrade a substation that’s sitting in a current location,” said Nick d’Arbeloff, president of the Solar Energy Business Association of New England. “Much like a bridge, you have to build a new substation right next to it and then retire the old one.”

As utilities implement their Electric Sector Modernization Plans over the next decade, Mahony said continued communication between utility companies and state agencies is key to achieving the commonwealth’s climate goals.

“We need to be talking to communities about what it means to have a clean energy future and what infrastructure they require,” she said. “We need to be talking to developers and, instead of building solar on the cheapest and easiest spots, encourage them to go to the places … where there is an interconnection spot for them. And we need to be talking to the utilities and keep those lines of communication open.”

SMART program review

In addition to interconnection delays, solar projects are stalling because of declining incentives under the SMART program, making Massachusetts less attractive to solar developers.

Launched in 2018, SMART pays solar owners a set rate for each kilowatt hour produced. Rates are based on the size and location of the solar system, and then extra incentives are added factoring in additional features of the solar system. But instead of high demand driving down the price of installing solar, the opposite is happening, d’Arbeloff said.

“The SMART program was designed on the basis that component prices would continue to decrease and so the incentives could decrease along with them. The return would remain roughly similar,” d’Arbeloff said. “Because of supply chain issues during the pandemic, prices shot back up” and incentives have not kept pace.

SMART incentives for 25-kilowatt systems are negative, and incentives for systems between 25 and 500 kilowatts — the smaller systems companies like Greenfield Solar install — are zero, Chang said. While larger systems still benefit from SMART, the big systems have the largest issues with interconnections.

Considering the changes in the solar technology and market, the DOER is conducting a program review of SMART to address the cost of solar development. Mahony said the review will culminate in a proposal this summer. The goal of the changes will be to streamline program administration, create incentives that match the current market, and address gaps in solar access.

“We know by looking at the data that we have that we are doing a terrible job of bringing solar access to every citizen, resident and solar ratepayer. There has been some attempts by developers and municipalities to address this, but we know we need to do a better job,” Mahony said.

Mahony adds that the SMART Program Review team identified locations to increase solar incentives with the DOER’s Technical Potential Siting Study. Released last summer, the study locates the best potential sites for solar development based on a variety of factors including agricultural land, electrical infrastructure and biodiversity.

“We’ve never had that kind of data in guiding us, so it’s going to be instrumental in this SMART program redesign,” Mahony said.

As part of the review, the DOER reached out to various solar interest groups and industry professionals to provide feedback on the program. In the Solar Energy Business Association of New England’s feedback, d’Arbeloff focused on increasing the financial benefits of solar in developed areas and brownfields, as well as decoupling solar from energy storage to speed up development and interconnection.

“I think the Healey administration is aware that SMART needs to be reconsidered in certain areas, and I applaud efforts to solicit input from the industry,” he said. “While that also is not a magic wand and won’t change things overnight, it’s my guess that we are going to see 2025 be a fairly strong year for solar.”

Chang, however, remains wary.

“There’s a step in the right direction,” she said. “It depends if it’s a tiny step, a bunch of steps or a giant leap. It would great if it’s a giant leap, but business as usual is what the utilities would prefer.”

Emilee Klein can be reached at eklein@gazettenet.com.