SMART 3.0 - PY 26 Update

The Massachusetts Department of Energy Resources (MA DOER) released their final form for the 2026 Program Year. Here’s what you need to know: 

• The DOER began accepting SMART 3.0 applications on October 15, 2025, and since then, 191.90 MW has been submitted, with 301 applications > 25 kW and 86 applications < 25 kW 

• Based on several factors, from the One Big Beautiful Bill Act (OBBBA) of 2025, to equipment supply chain issues, and projected load growth, the DOER revised the following elements of the draft report: 

  • PY26 Base Compensation Rates 

  • PY26 Energy Storage Multiplier 

  • PY26 Annual Capacity Block 

  • PY26 Capacity Allocations and Set Asides 

Capacity Block: 

PY2026 will have a 600 MW AC of available capacity for STGU subject to the annual cap. This is an increase from the 450 MW AC capacity in the initial draft. Per 225 CMR 28.05 (4), each EDC will be allocated at least 5% of the available capacity block and the remaining capacity will be allocated to the total retail electric load served to Massachusetts customers by each EDC. The distribution capacity for PY2026 was based on March 2026 retail electric load of each EDC. The allocations shall be as follows: 

225 CMR 28.05 (5), a minimum amount of capacity is set aside for the following categories: 

• Standalone STGUs > 25 kW and ≤ 250 kW 

• STGUs > 250 and ≤ 500 kW 

• Low Income Property STGUs 

• And Community Shared Solar STGUs 

These set asides are allocated accordingly:

Base Compensation Rates: 

Base Compensation Rates for STGUs > 25 kW AC were based on the levelized revenue requirements for each project based on the following inputs: 

• Capacity factor 

• Production degradation 

• Installation costs 

• Financing costs 

• Operation and maintenance costs 

• Project management costs 

• Land lease costs 

• Incremental operating and capital expense costs 

Based on public feedback, and an attempt to balance analysis results with the desire to avoid a significant shift in the MA solar market in the first full year of SMART 3.0 Base Compensation Rates were revised as follows: 

PY2026 Adders 

• The Compensation Rate Adders for STGUs >25 kW AC were developed by comparing the average levelized cost of energy of all project types >25 kW AC for each respective adder category to a baseline value.  

• Based on the Program Year 2026 analysis, DOER found that there was variation in whether Compensation Rate Adders for Program Year 2026 should be reduced, kept the same, or increased (see “Calculated PY26 Adder Rate” below). 

• As with the Base Compensation Rates, based on the overall Annual SMART Program Assessment, DOER decided to maintain or increase the value of Compensation Rate Adders (see “PY26 Adder Rate” below). That said, the Compensation Rate Adders for PY2026 will be as follows: 

• In conclusion, it is clear that federal policy and broad-based challenges in the energy value chain prompted some changes. We find that rates have mostly increased or stayed the same relative to the initial draft proposal.

• We see that the DOER is sending a price signal that energy storage and solar are going to be key tools in achieving state mandated energy affordability and climate-based goals. 

• One thing is clear; Massachusetts is setting a strong example of how to fairly incentivize public and private investment in energy infrastructure with the goal of making energy affordable across customer archetypes in the Commonwealth.