2. Klavens Law Group, P.C.
• Small Boston law firm focused on clean energy ventures and projects
• Represents companies, investors, public entities and nonprofits
(including sellers and buyers in power purchase agreement matters)
• Provides start-up, outside general counsel, transactional, project
development and regulatory services
• Brings critical interdisciplinary approach by drawing on experience in
corporate, energy, land use, environmental, municipal and nonprofit law
3. Topics
• Federal Renewable Energy Tax Credit Extension
• MA Net Metering & Solar Incentives Update
• Other Developments
oSection 25D residential solar tax credit – application to community solar
oFalmouth wind energy facility – not exempt from special permit
oLocal BOH jurisdiction over wind energy facility in neighboring town
oMunicipal aggregation
4. Federal Tax Credit Extension
• Legislation signed into law 12/18/15
• Full 30% Investment Tax Credit (ITC) under IRC § 48 for commercial solar
facilities and IRS § 25D for residential solar facilities extended for 3 years
through 2019, followed by phase-out period
• Production Tax Credit (PTC) under IRC § 45 of $0.023/kWh for wind energy
facility extended through 2016, followed by phase-out period
• Broader use of “begun construction” standard for qualification
The Basics
5. Federal Tax Credit Extension
• Through 12/31/19 – Full 30% ITC for commercial and residential solar
• Through 12/31/20 – 26% ITC for commercial and residential solar
• Through 12/31/21 – 22% ITC for commercial and residential solar
• 1/1/22 and after – 10% ITC for commercial; no ITC for residential
• BUT larger ITC level available for commercial solar facilities if construction
begins before applicable deadline and equipment placed in service by
12/31/23
ITC Details
6. Federal Tax Credit Extension
• Through 12/31/16 – Full PTC of $0.023/kWh for wind energy facilities
• Through 12/31/17 – 80% of PTC
• Through 12/31/18 – 60% of PTC
• Through 12/31/19 – 40% of PTC
• In each case a facility qualifies for PTC if construction begins before deadline
(no placed in service deadline)
PTC Details
7. Federal Tax Credit Extension
• ITC extension predicted to result in more than 20 GW/year by 2020 (20 GW
total through 2014) and employment of 420,000 workers (increase of
220,000) (SEIA)
• PTC extension predicted to lead to another 19 GW of wind capacity installed
between now and 2021 (Bloomberg New Energy Finance)
• Continued reliance on “tax equity” – unhealthy delay in shift to broader
sources of capital?
Potential Impacts
8. Net Metering & Solar Incentives
• MA net metering and solar renewable energy certificate (SREC) programs originated
in the MA Green Communities Act of 2008
• Both are “production incentive” programs that encourage installation and operation
of distributed renewable energy facilities
• Net metering program allows “host customer” to run its meter backward, receiving
roughly the same value for excess production that it would pay for power delivered
to its utility meter
• SREC program creates regulatory market where retail electricity sellers must buy a
certain number of SRECs although, subject to a price ceiling, the market determines
the price
Background
9. Net Metering & Solar Incentives
• Net metering cap already hit (in March 2015) in National Grid territory, which
covers 170 MA communities
• SREC statewide program cap of 1600 MW DC may soon be hit
• Final report of Net Metering and Solar Task Force (established by legislature
in 2014) issued in April 2015 indicates net metering/solar incentive program
options would provide net benefits to the Commonwealth but Task Force
failed to agree on compelling policy recommendations
Policy Challenge
10. Net Metering & Solar Incentives
• Solar industry and environmental advocates believe solar is not being
compensated for full value provided to other ratepayers and the state as a
whole and have invited formal “value of solar” study to determine
appropriate “compensation”; focus on investment, jobs and municipal
benefits in MA
• Utilities and Baker Administration maintain that solar is being
overcompensated and “subsidies” should be slashed; re-focus on achieving
climate change goals through payments for out-of-state hydro and wind
Policy Challenge
11. Net Metering & Solar Incentives
• Would raise net metering caps by 2% for private and public projects (likely only enough to
clear NGRID waiting list)
• Solar net metering facilities that qualify for net metering after 1600 MW of solar installed
would get credit for net excess generation at variable monthly wholesale price
• Previously qualified projects would be exempt from changes only for 20 years from
interconnection date
• Would allow distribution companies to propose fixed monthly charges on net metering
customers
• Would require DOER to lower solar incentives for solar facilities that become operational
after 1600 MW of solar installed
Current Proposals – House Bill (H. 3854)
12. Net Metering & Solar Incentives
• Would change existing public/private net metering caps of 5%/4% to single cap of 1600 MW for
solar net metering facilities (also provides a section to take effect in future to have no cap for solar
net metering)
• After 1600 MW goal is reached, solar net metering facilities that serve an onsite load of at least
67% of their output would continue under current net metering system
• Solar net metering facilities without such load would get credit for net excess generation at solar
net metering credit rate with same components as current rate but DPU allowed to adjust portion
of credit from distribution charge
• Previously qualified projects would be exempt from changes
• Directs DOER to develop solar incentive program for solar facilities that become operational after
1600 MW of solar installed taking into account specific economic and environmental factors
Current Proposals – Senate Bill (S. 1979)
13. Net Metering & Solar Incentives
• Conference committee has authority to work out compromise legislation;
legislative session ends 7/31/16
• While House bill passed overwhelmingly, many affirmative votes were
apparently cast as a procedural tactic or without realization of impacts
• Given unexpected end in sight for 1600 MW SREC program, solution must go
beyond modest net metering cap increase and focus on 1600 MW of solar
• Policy solutions exist that can provide stability and healthy economic &
environmental benefits at reasonable cost – will politics get in the way?
Potential Outcomes
14. Net Metering & Solar Incentives
• 12/23/15 Nevada PUC decision radically changed net metering framework for solar
facilities
• Over 4 years, compensation for net excess generation will decrease from retail rate
(currently ~ $0.124/kWh) to wholesale rate (currently ~ $0.02/kWh)
• Adds fixed $40/month service charge for most net-metered solar customers – wiping
out average monthly savings for typical residential solar customer
• Applies retroactively to customers that relied on the existing rate and incentive
framework – unique in the US and very troubling
• Major solar companies have laid off workers and pulled out of Nevada
Will what happens in Nevada stay in Nevada?
15. Other Developments
• Application of residential ITC under IRC § 25D to community solar – IRS PLR
201536017 (July 28, 2015) allows taxpayer to claim residential solar tax credit
for portion of offsite community solar facility directly and wholly owned by
taxpayer (i.e., particular solar panels) as well as common infrastructure
directly and partially owned by taxpayer (e.g., racking, inverter)
• MA solar/wind property tax exemption – KTT, LLC v. Board of Assessors of
the Town of Swansea – On 6/11/15, MA ATB granted abatement to solar
facility owner; yet-to-be-issued written decision expected to confirm that net
metering facility is exempt even where net metering credits are sold to
unrelated third parties
16. Other Developments
• Falmouth wind energy facility required special permit – Drummey, et al. v.
Town of Falmouth, et al. (Mass. App. Ct. Feb. 26, 2015) – One of Town’s wind
energy facilities required special use permit under zoning bylaw – operation
of a facility was not a municipal purpose allowed as of right
• Local board of health jurisdiction over wind energy facility in neighboring
town – Bourne BOH currently seeking to regulate wind energy facility in
Plymouth, contrary to jurisdictional limitations in statute, caselaw and BOH’s
own regulations
• Municipal aggregation – Surge in municipalities seeking to create municipal
aggregation programs
17. Resources
• Federal Renewable Energy Tax Credit Extension
o Consolidated Appropriations Act, 2016
o SEIA - Impacts of Solar Investment Tax Credit Extension
o North American Windpower – Congress Passes Omnibus Bill With Five-Year Wind PTC
Extension
18. Resources
• MA Net Metering & Solar Incentives
o Massachusetts Net Metering and Solar Task Force – Final Report to the Legislature (Apr.
30, 2015)
o House Bill 3854
o Senate Bill 1979
o Mass Solar Blog – Senate saves solar from House bill, but net metering caps remain in
place
o Greentech Media – Nevada Regulators Eliminate Retail Rate Net Metering for New and
Existing Solar Customers
o Greentech Media – What If Nevada’s Solar Regulators Came to Massachusetts?
19. Resources
• IRC § 25D Residential Solar Tax Credit – Application to Community Solar
o Clean Energy States Alliance resource package
o IRS PLR 201536017 (July 28, 2015)
• MA Solar/Wind Property Tax Exemption
o MGL c. 59, § 5, Forty-fifth
o Forrestall Enterprises, Inc. v. Board of Assessors of the Town of Westborough (MA
Appellate Tax Board 12/4/14)
o KTT, LLC v. Board of Assessors of the Town of Swansea (MA Appellate Tax Board) [watch for
decision on ATB webpage]
• Falmouth Wind Energy Facility
o Drummey, et al. v. Town of Falmouth, et al. (Mass. App. Ct. Feb. 26, 2015)
20. Resources
• Local Boards of Health – Limitations on Jurisdiction Outside Municipality
o MGL c. 111, § 122
o MGL c. 111, § 131
o Stone v. Heath, 175 Mass. 385 (1901)
o Bourne Board of Health Wind Energy Conversion System Regulations
• Municipal Aggregation
o MA DPU – Municipal Aggregation Dockets
21. Contact
Jonathan Klavens
Klavens Law Group, P.C.
420 Boylston Street, Suite 610
Boston, MA 02116
(617) 502-6281
jklavens@klavenslawgroup.com
http://www.klavenslawgroup.com
22. Disclaimer
This document, which may be considered advertising under the ethical
rules of certain jurisdictions, is provided with the understanding that it
does not constitute the rendering of legal or other professional advice by
Klavens Law Group, P.C. or its attorneys. Please seek the services of a
competent professional if you need legal or other professional assistance.
