Massachusetts offers a lifeline as solar incentives vanish in D.C.

With federal support for clean energy on shaky ground, Massachusetts is doubling down on state-level solar incentives that help energy-conscious homeowners save money. 

Last month, the state finalized new rules for its Solar Massachusetts Renewable Target (SMART) program to help stabilize energy markets and keep solar projects viable even if federal clean energy tax credits are rolled back.

The revamped SMART program—which compensates homeowners and businesses for the solar electricity they produce—now includes a built-in mechanism to respond to market shifts. Like in former versions of the program, solar customers of Eversource, National Grid, and Unitil will receive a fixed per-kilowatt-hour (kWh) payment. But unlike before, those compensation rates will now be reviewed and reset annually. The program is part of Governor Healey’s Energy Affordability Agenda, with the goal of making energy more affordable for everyone with an electric bill. 

Earlier versions of SMART used a declining rate block structure, with incentive rates dropping each time a new enrollment tier was filled. That model led to sharp drops in compensation, and by 2023, rates had bottomed out, with some customers receiving little or no incentive at all. 

“We’re evolving our solar incentive programs in a way that encourages development, but also keeps ratepayer impacts in mind,” Elizabeth Mahony, commissioner of the Department of Energy Resources (DOER), said to EnergySage. “This iteration replaces an outdated, inflexible, inefficient program with a more nimble program, with one that encourages development and tries to reduce costs in the long run.”

DOER filed the SMART 3.0 Program as an emergency regulation with the Secretary of State’s Office on June 20, enabling the rules to go into effect immediately. However, utility regulators must give final approval, and the state will hold three public hearings—two virtual sessions on July 24 and an in-person hearing in Greenfield, MA on July 25—to gather feedback. The latest iteration of the SMART program will begin accepting applications on October 15.

Massachusetts has long punched above its weight in solar deployment, but the state has lost ground in recent years. Once a top-five state for installed solar capacity, Massachusetts dropped to 26th in 2024, reflecting a slowdown related to interconnection delays, permitting obstacles, and waning incentive programs that left solar installers unsure about the future returns of running a business in the clean energy sector.

“Massachusetts energy jobs are on the line as we work to get more solar into Massachusetts,” said Lieutenant Governor Kim Driscoll in a press release. “Thousands of Massachusetts workers support our energy infrastructure and help us keep the lights on. Getting more solar into the state will help us strengthen our local workforce and keep our investments circulating in our state, rather than elsewhere.”

There are 10% fewer solar jobs in Massachusetts today than in 2018, according to the release. The updated SMART regulations are intended to reverse that trend by creating new jobs meant to restore the state’s employment numbers to pre-pandemic levels.

“We took decisive action two weeks ago to signal the industry: Go ahead, build right now,” Mahony said to EnergySage. “We’re creating the fertile ground for the industry. The confidence we build in the industry will bring those companies and those jobs back to Massachusetts.”

The new SMART rules are just in time. While it’s designed to address local concerns around jobs, affordability, and market stability, the program will also help shield Massachusetts from the ripple effects of looming federal clean energy cuts.

Clean energy programs have been on President Trump’s chopping block since he re-assumed office in January. A sweeping domestic policy bill currently under consideration by Congress would either eliminate or dramatically accelerate the phaseout of tax credits that were, under current law, set to remain in place through at least 2032. Chief among them is the 30% residential solar tax credit, which is at serious risk of being eliminated at the end of this year with no phase-down period.

Losing key federal clean energy tax credits will result in lost jobs, canceled renewable energy projects, heightened grid strain, and higher electricity costs for everyone. However, in Massachusetts, the newly enhanced SMART program is expected to blunt some of those impacts. By providing stable, state-level support for solar, the program gives developers and homeowners a financial backstop, helping to keep installations moving even if federal dollars dry up.

“On the hottest days of the year, it’s solar that helps keep the lights on and costs down. That’s because Massachusetts has prioritized getting solar on roofs and lowering customer bills,” said Energy and Environmental Affairs Secretary Rebecca Tepper in the release. “As the federal government stalls more energy projects than it advances, our administration is looking for ways to get more energy into our state and protect our grid from reckless energy policies.”

The newest iteration of the SMART program will lower costs, encourage more state solar generation, and protect the state’s natural landscape. Massachusetts plans to achieve these goals through a built-in economic analysis mechanism and a new mitigation fund to offset the environmental impacts of solar installations. 

Compensation rates will reset annually 

The SMART program initially reduced incentive rates in step with the number of solar installations—a structure based on the assumption that, as adoption grows and the market matures, costs will fall and less financial support will be needed. In theory, it works. But in practice, the fixed declining block system proved too rigid. While market disruptions like the COVID-19 pandemic constrained global supply chains and kept solar costs high, SMART incentive rates still continued to fall—blunting the program’s ability to meaningfully offset upfront costs. 

This time, rather than automatically reducing rates as blocks fill, the state will now recalibrate annually. Program size and incentive rates will be adjusted each year, taking into account factors like federal solar incentive rollbacks and tariff-driven price increases that make equipment like solar panels more expensive.

Strategic solar siting

The updated SMART program introduces a more thoughtful approach to where solar is built—and how to balance renewable energy growth with environmental preservation. A new mitigation fund will collect fees from large-scale solar projects and reinvest that money into efforts to protect Massachusetts’ natural resources, including conservation, biodiversity, and landscape restoration initiatives.

The program also doubles down on installing solar where it makes the most sense. Projects built on landfills, brownfields, and parking lot canopies will receive additional incentives, signaling the state’s intent to prioritize solar development within the built environment rather than in forests or open space.

As temperatures soared during last month’s heat wave, so did electricity demand across Massachusetts. But the grid held thanks in part to solar power, bolstered by programs like SMART.

“Had it not been for solar and energy efficiency, we would have had an all-time high energy demand,” said Mahony. “There were questions about whether or not we had enough power to meet it. Solar is a difference maker. It reduces costs and it helps stabilize our energy needs.”

That difference may soon be harder to sustain. The Senate’s recently passed domestic policy bill includes steep cuts to clean energy incentives, threatening the financial underpinnings of solar projects nationwide. With fewer systems likely to be installed, pressure on the aging grid will only intensify, especially as electricity demand continues to skyrocket.

For states like Massachusetts, programs like SMART aren’t just about making solar more financially viable—they’re about keeping the lights on.