MARK SANDEEN HAS big plans for Lexington.  

Sandeen, a member of the Boston suburb’s select board and president of the nonprofit group MassSolar, has been involved in solar energy projects for the new high school, parking lots, and town composting facility.  

But he may not be able to have it all. 

Towns and cities around the state like Lexington are now running into two caps that Massachusetts enacted over a decade ago on the amount of solar energy municipalities can net-meter from panels on rooftops, parks, and parking lots. Net-metering is a system in which customers with renewable energy like solar panels can receive a bill credit for the excess power they send to the power grid – making these projects, which often have steep upfront costs, more affordable over the long-term. 

Those caps mean Lexington will only move forward with the high school solar project that Sandeen estimates will save local taxpayers at least $73 million in energy costs over 30 years.  

The other potential projects, for now, won’t make the cut. 

“When municipalities start getting full because of the cap, it has a big impact on the solar developers who don’t have access to a large section of the market,” Sandeen said. “Lexington had to be the one to say to the developer, unfortunately, ‘We don’t have room. Our dance card is full.’” 

The issue threatens to undermine Gov. Maura Healey’s “all-of-the-above” energy strategy as she seeks to thread an increasingly tighter needle to drive down costs, grow power supply, and meet climate commitments as offshore wind stalls. The governor is pressing to cut red tape slowing down new solar generation in the face of declining installations in recent years. 

Now, solar officials and advocates are urging lawmakers to eliminate a 10-megawatt cap on the amount of energy municipalities can net-meter and a regional cap for how much solar power municipalities can net-meter with each utility provider. A draft amendment to Healey’s energy affordability legislation viewed by CommonWealth Beacon, whose sponsor shared the language on the condition of anonymity, would eliminate the 10 MW limit.  

“Remove the caps,” Haskell Werlin, business development director at the renewable energy development company Solar Design Associates, said at a Senate Committee on Climate Change and Global Warming hearing last month. “They’re an impediment to the growth of solar in the commonwealth.” 

The administration appears open to getting rid of the local cap, though the regional cap is trickier given its potential impacts on ratepayer costs, Department of Energy Resources Commissioner Elizabeth Mahony said at the hearing. Raising or removing either cap wasn’t included in Healey’s initial energy affordability legislative package filed earlier this year.  

“That’s a cap that really should be addressed,” Mahony said of the local limit. “I think there’s a lot of communities that have learned and figured out how to do this well, and are figuring out how to do it well on rooftops, and there’s a lot of municipal buildings. That’s something that is more easily addressed, and we have seen the direct benefits from municipal projects to municipal budgets.” 

But eliminating the caps without first cutting the state’s large net-metering compensation rates could trigger even greater electric bills for ratepayers, warned Christopher Knittel, associate dean for climate and sustainability at the Massachusetts Institute of Technology.  

While solar customers should get paid for the excess energy they sell to the grid, the current net-metering structure is such that they are also off the hook for costs tied to transmission and distribution infrastructure even though they take advantage of the wires and poles that both send energy onto the grid and receive electricity when the sun isn’t shining, he said.  

“If I had my druthers, we would get rid of net-metering, and have a smart way to price electricity imports and exports, and then get rid of the cap, because once the town is being paid commiserate to their costs and the system costs that they’re alleviating because of their solar, then go at it. Build as much as you want,” Knittel said. “But what I worry about in the absence of a cap is a bunch of wealthy towns building a lot of solar and then transferring their transmission and distribution costs to the poorer towns that don’t have the means to build as much solar.”   

Either cap can restrict municipalities’ solar development depending on the individual circumstances.  

While Eversource and Unitil both still have availability under the regional cap for municipal solar, at least 25 municipalities from Worcester to Pittsfield to Fall River have fewer than 4 MW of available solar under their local cap for net-metering. 

National Grid, on the other hand, has had no capacity left for municipal solar net-metering for more than eight years, meaning no municipalities served by that utility can deploy additional net-metered solar even if that city or town has room left in their local cap. A spokesperson for the Department of Energy Resources said there has been decreased demand for new municipal net-metered projects in recent years following a period of earlier rapid growth. 

State officials had their reasons for implementing the caps in the first place, said Nathan Phelps, managing director at advocacy group Vote Solar and a former senior economist at the Massachusetts Department of Public Utilities.  

At the time, when Massachusetts first instituted the caps in 2010 at the dawn of the adoption of the technology, the 10 MW limit for each municipality felt generous. And the rationale for granting each municipality regardless of size the same cap was to protect small towns: If an aggregate municipal solar cap was established, large cities like Boston could gobble up all the capacity, leaving small towns with few tools to deploy solar projects in their communities.  

The regional cap is meant to insulate ratepayers from runaway costs, Knittel said. Massachusetts has some of the highest net-metering incentives in the country, which ratepayers pay through their electric bills, and this cap aims to limit the financial burden placed on customers without rooftop solar. 

But now, the caps are “a relic of a historical moment when there was a lot more concern about the ability of the grid to modernize, to actually take on and manage these distributed energy resources,” said Meghan Shaw, who works on climate strategy and implementation for Cambridge. “The whole landscape around grid modernization has really changed.”  

Cities and towns around the state that do want to deploy more solar have another option. They could choose to register their solar projects through the state’s SMART solar incentive program, established in 2018, which operates similarly to the net-metering program in that projects can receive credits on their electric bill. The state just revised the program and opened up 900MW of solar capacity for this year. 

Of the municipal solar projects currently deployed in Massachusetts, SMART program projects that receive what’s known as “alternative on-bill credits” account for more than double the amount of power compared with those compensated through net-metering, according to state solar data reviewed by CommonWealth Beacon.  

But there are stipulations with the SMART program that have steered some municipalities away, forcing them to confront the net-metering caps that threaten to squeeze their projects.  

For one, the net-metering compensation rates are generally better than the credits offered under SMART.  

And under the SMART program, municipalities are forced to sell the Renewable Energy Certificates generated by the solar project to the utility, which supports meeting state climate goals but makes it harder to achieve local renewable energy targets. Utilities must purchase a certain number of these credits each year to meet the state’s green energy commitments. 

The latter is the reason why Cambridge is pushing for the state to lift the caps. The city has net-metered more than 7.3 MW of solar energy and wants to install more solar projects on schools and municipal buildings. 

“It doesn’t take very many projects for us to bump into that cap,” Shaw said. “Anytime there’s a roof replacement on a municipal building, or a new building being built, we’re always looking to maximize solar on those projects. We certainly don’t want to be in a position where we need to pick winners and losers, and solar is really key to meeting the city’s goals to be net-zero by 2050.” 

For Sandeen, the higher net-metering rates and the lack of certainty with the SMART program is what’s led to his legislative push to eliminate the caps. The state needs to add more capacity into the program every few years and adjust the incentives annually based on market conditions.  

New Bedford, with just 2 MW available for net-metering under its local limit, is also concerned about its cap restricting future solar development. The city wants to keep both the renewable energy credits that solar projects generate for its own clean energy goals and finds that the higher compensation rates available through the net-metering program is what helps make the projects economically viable.  

“Originally, the cap was established to protect the ratepayers, but now actually is kind of putting the brakes on municipalities to help deploy clean energy,” said Tyler Reis, the city’s energy manager. “We’ve been selective about what projects we are going to choose to go forward with as a result.” 

The Solar Energy Industries Association said in a statement that it is supportive of the push to eliminate the caps. And Adam Chapdelaine, executive director of the Massachusetts Municipal Association, told CommonWealth Beacon that the caps “certainly merit reconsideration by the Legislature.” 

What kind of opposition the push to lift the caps will face in the Legislature is still unclear. The utilities could in theory take issue with an effort to expand solar net-metering because it is costly for ratepayers and reduces the demand for large-scale electrical transmission. But Eversource, National Grid, and Unitil declined to comment on the legislative push. 

Even as momentum toward eliminating the caps is growing, more legislative fights around solar are ahead as Massachusetts tries to accelerate solar power quickly with the expiration of federal tax credits and a crackdown on offshore wind from the Trump administration. The solar industry is pushing back against Healey’s proposals in her energy affordability bill to cut the net-metering compensation rates for large solar projects in an effort to lower electric bills and force those projects to join the SMART program.  

“Here’s a legislative restriction that nobody can remember why it’s there,” Sandeen said of his push to eliminate the caps. “From a political perspective, I think this is a win-win for everybody.”