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DOER outlines SMART 3, warns industry must accelerate to capture federal tax credits
Summary
The Massachusetts Department of Energy Resources detailed the SMART 3 incentive, protections for open space, and actions to speed solar deployment as federal tax credits wind down, and urged regulators and utilities to move quickly to preserve projects.
The Massachusetts Department of Energy Resources on Thursday told state legislators that a redesigned Solar Massachusetts Renewable Target program, SMART 3, aims to speed solar deployment while protecting ratepayers and sensitive lands — but officials warned developers and regulators must move quickly to capture federal tax credits that will phase out.
"SMART 3 is an evergreen incentive program" that can "quickly respond to changing market conditions," Elizabeth Mahoney, commissioner of the Department of Energy Resources, told the Joint Committee. She said the DOER recently opened a portal accepting applications for up to 900 megawatts under the new version of the program.
The program is designed to set a base compensation rate for produced energy and pay adders for projects that meet state priorities such as low-income access and site protections, Mahoney said. "For consumers, we're focused on offering ease of participation and strong consumer protections," she said. She added that SMART 3 moves away from a fixed declining compensation model and toward annual analysis of cost drivers so incentive levels can be adjusted.
Why it matters: federal tax credits for some solar projects are time-limited, creating a narrow window for many Massachusetts projects to start construction and still qualify. Mahoney told the committee that utility-scale projects generally must be placed in service before 2027 to receive federal tax credits and that residential homeowner credits will expire sooner for some installations, producing "urgency for Massachusetts solar industry within the next 26 months." She noted the administration has doubled planned 2025 capacity and opened an additional 450 megawatts for 2026.
Committee members pressed DOER on caps and cost allocation. Mahoney acknowledged legacy limits such as a 10-megawatt municipal cap born from earlier net‑metering rules and said the state should revisit those limits: "I think that's something that is, more easily addressed." But she said officials must also resolve who ultimately pays for grid upgrades and interconnection so costs are shared equitably across the Commonwealth.
Mahoney described site protections in SMART 3: "we've eliminated our most valuable lands from consideration. Incentives are just not allowed for development on many parcels," and the program includes "a dynamic upfront mitigation fee based on environmental impact." She also estimated the program could deliver roughly $300,000,000 in energy savings per year, citing summer performance where distributed solar reduced wholesale prices.
On other policy tools, Mahoney said DOER supports steps to speed interconnection and permitting, including flexible interconnection and net‑crediting (net billing) changes at the Department of Public Utilities (DPU). She also said Massachusetts joined a lawsuit after a federal program called Solar for All was canceled; DOER had planned a roughly $156,000,000 program and "we will continue to fight really hard on that because it's, egregious," she said.
Looking ahead, Mahoney said DOER will finalize siting and permitting regulations by March 1 and is soliciting comments on draft 2026 SMART rates, a process she said helps the program adjust to shifting market conditions.
Ending: Commissioners and legislators emphasized the compressed timetable imposed by changes in federal tax policy and urged coordination among DOER, the DPU, utilities and developers to capture projects before federal incentives change.
