Massachusetts' Newest Solar Incentive, SMART 3.0

Is It Actually the Better Deal?

A practical comparison of SMART, net metering, renewable energy credits, batteries, and the new low-income opportunity

By Gregory Garrison, President, Northeast Solar Design Associates | September 2026

A guaranteed solar payment for 20 years sounds like an easy yes.

But fixed does not always mean better.

For a standard residential solar system, SMART 3.0 currently pays 3 cents for every kilowatt-hour the system produces. In return, the program gets the system's renewable energy credits, commonly called RECs. A homeowner who stays outside SMART can keep and sell those RECs while still getting the value of the power used at home and any net-metering credits.

That is an important difference. At Northeast Solar, we have generally recommended net metering and keeping the RECs for our residential customers. It is simpler to install, does not require the extra production meter, and lets the homeowner keep whatever those RECs are worth in the market.

We wanted to know whether that preference still holds under SMART 3.0, so we built a ten-year comparison using current Eversource Western Massachusetts and National Grid rates, current REC market information, the new SMART rates, and the actual administrative and installation costs we expect to see.

Our answer is not that SMART is good or bad. The answer depends on the customer.

For most homeowners, the numbers come out a little better with net metering and customer-owned RECs. For a qualifying low-income household, SMART may be the better choice. If a battery is part of the project, ConnectedSolutions usually matters more than the SMART battery incentive. For a farm, nonprofit, affordable-housing property, or small business, SMART can be worth much more. We just have to run the numbers for that property.

Here is how we reached those conclusions.

First, SMART does not replace net metering

People often describe this as a choice between net metering and SMART. For a typical home, that is not really the choice.

Either way, the solar power used in your home lowers the amount of electricity you have to buy. Extra solar power sent to the grid can still earn a net-metering credit. If electric rates go up, the power you use yourself and the credits you earn can become more valuable whether or not you choose SMART.

That credit is not one permanent number. For the typical home system under 25 kilowatts that we are discussing, the simple version of the Massachusetts calculation is:

  • Net excess kilowatt-hours × (Basic Service + distribution + transmission + transition) = dollar credit

The customer charge and several other charges are not included. The parts that are included can change, and the answer can also depend on the customer's rate class and the season. Different rules can apply to larger projects. That is why net metering is valuable, but it is not literally every penny of the retail rate shown on the bill.

For an Eversource Western Massachusetts R-1 customer, using rates that took effect Sep 1, 2026, the math is 9.837 cents for distribution, plus 4.673 cents for transmission, minus 0.077 cents for transition, plus 15.934 cents for Basic Service. That comes to 30.367 cents per kilowatt-hour. Eversource's heat-pump rate uses the same eligible components during the summer, but lower delivery rates during the winter.

A bill can show a different number when its service period crosses a rate change. One recent Western Massachusetts heat-pump account showed 28.890 cents per kilowatt-hour for a July-to-August billing period that crossed Eversource's August 1 Basic Service change. That is the correct effective rate for that bill. It is not the same thing as the rate calculation for a full billing period under the rates that took effect September 1.

For a National Grid R-1 customer on fixed Basic Service, using rates effective Aug 1, 2026, the same calculation comes to 33.042 cents per kilowatt-hour. These are dated examples, not promises. Before we compare options for a customer, we need to check the utility, rate class, season, service dates, and current tariff.

One more detail matters: a competitive supplier or town electricity program can change what solar power used directly in the home is worth. It does not replace the utility's Basic Service rate in the net-metering credit formula.

The real choice for a homeowner is who keeps the RECs:

  • Outside SMART, the homeowner keeps the Class I RECs and can sell them through a broker.
  • Inside SMART, the homeowner receives a fixed payment for every kilowatt-hour the system produces, and the program gets the RECs.

For Program Year 2026, SMART 3.0 pays a standard residential system 3 cents for every kilowatt-hour it produces. A qualifying low-income system receives 6 cents. Once the project is approved, that payment stays fixed for 20 years.

That certainty is one of the good things about SMART. The homeowner does not have to wonder what the REC market will pay next year. The tradeoff is that the homeowner gives up the chance to benefit if REC prices rise. The SMART payment also does not go up with electric rates or inflation.

What the ten-year residential numbers show

We used an example of an 8 kW AC residential system purchased with cash. It produces 10,000 kWh in the first year, and we reduced production by 0.5 percent each year after that. Over ten years, the system produces 97,779.74 kWh.

To make a clean side-by-side comparison, we used today's standard R-1 electricity rates and REC values for all ten years. We are not saying those prices will stay the same. This is also not a customer quote. The real answer for your home will depend on your roof, shade, electricity use, utility, rate class, season, town electricity program, system design, and what happens in the REC market.

 

For the Eversource Western Massachusetts example, we assumed that half of the solar power is used in the home and half is sent to the grid for net-metering credits.

In this example, keeping the RECs comes out about $693 better over ten years than standard SMART.

 

The same example comes out higher for a National Grid customer because its current electric rates are higher. The ten-year totals are about $38,473 with net metering and customer-owned RECs and $37,780 with standard SMART. The difference is still about $693 because both customers get the same value from using their solar power and net metering.

 

About $293 of that difference comes from what RECs are worth today. For this example, we used a September price of about $38 for a Massachusetts Class I REC. After the broker's stated minimum fee of $5, the customer receives about $33 per REC. That works out to 3.3 cents for every kilowatt-hour the system produces. Standard SMART pays 3 cents.

 

The other $400 is the extra cost we expect when a homeowner chooses SMART: about $150 for the application and office work, plus $250 for the second meter, socket, materials, and installation labor.

 

Beginning November 1, a system using the simplified interconnection process also has a $225 Common System Modification charge. That fee applies whether or not the customer chooses SMART. It makes the overall project $225 more expensive, but it does not change this comparison.

 

The $693 difference matters, but it is not a huge amount over ten years. If REC prices fall, SMART's fixed payment will look better. If REC prices rise, the homeowner who kept the RECs gets the benefit. That is why we will not tell every homeowner that there is one answer for every house.

 

Ask to see both choices in dollars. Northeast Solar can compare SMART with net metering and REC income using your utility, system size, expected production, and actual installed costs.

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Do rising electric rates change the answer?

When electric rates go up, owned solar becomes more valuable because the homeowner is buying less high-priced electricity from the utility. Net-metering credits may also go up. Those benefits generally apply whether the customer chooses SMART or keeps the RECs.

 

So rising electric rates do not automatically make SMART the better choice. They increase the value of the solar electricity under both choices.

 

The SMART payment is the part that stays fixed. If inflation averages 3 percent, that 3-cent payment will buy about what 2.3 cents buys today in year ten and about what 1.7 cents buys today in year twenty.

 

Net metering does not protect a homeowner from every part of a utility rate increase. Solar does not offset the fixed monthly customer charge, and some parts of the bill are not included in a net-metering credit. Using solar power directly in the home can also be worth more than sending it to the grid. But the main point is simple: under either choice, the homeowner still gets the value of the solar electricity. The SMART decision is mostly about whether to keep the RECs or trade them for a fixed payment.

What is a REC, and what makes it valuable?

A solar system produces two things: electricity and proof that the electricity came from a qualified renewable source. That proof is called a renewable energy credit, or REC. One REC is created for every 1,000 kilowatt-hours of qualified renewable electricity.

Our example system produces 10,000 kilowatt-hours in its first year, so the math is simple:

  • 10,000 kWh ÷ 1,000 = 10 RECs

At the September 2026 market indication of $38 per REC, those 10 RECs are worth $380 before the broker's fee. With the $5-per-REC fee used in our comparison, the homeowner receives about $330. It is not the largest part of the solar benefit, but it is real income in addition to the electricity savings.

Who buys them? Electricity suppliers serving Massachusetts customers must buy enough Class I RECs to meet the state's renewable-energy requirement. In 2026, that requirement is 30 percent. A supplier selling 100 megawatt-hours would need 30 Class I RECs. The requirement rises to 40 percent in 2030, which can increase demand.

Homeowners usually work through an aggregator. The aggregator helps qualify the system, records its production in the regional tracking system, and sells the RECs. Northeast Solar helps with the introduction and paperwork; the continuing agreement is between the homeowner and the broker.

The market price depends on both demand and supply. The state requirement can increase demand, while new renewable projects and RECs saved from earlier years add supply. Residential electric rates do not directly set the REC price, and nobody can promise that it will rise.

There is also an Alternative Compliance Payment, called the ACP. A supplier that is short can currently pay $40 for each missing REC instead. That gives buyers little reason under ordinary conditions to pay much more than $40. It is a practical ceiling, not a guaranteed minimum.

With the market around $38 today, the immediate room to rise under the current rules is only about $2 per REC, or about $20 for the 10-REC example. Future policy could change the ACP, and future supply and demand could move the market either way. Customer-owned RECs carry that upside and downside. SMART trades both for a fixed payment.

What happened to the old declining tranches?

The concern about declining SMART payments comes from the earlier program.

SMART 1.0 and 2.0 divided each utility's available capacity into blocks. As one block filled, customers entering the next block could receive a lower payment. That gave people a reason to apply before the next drop.

SMART 3.0 works differently. The state now sets rates by Program Year. Once a customer is approved at a certain rate, that rate does not drop each year. It stays with the system for the 20-year SMART term.

The state reviews the rates each year, so next year's customer may be offered a different payment. The simple way to remember it is this: your approved payment stays fixed, but the payment offered to a new customer next year may not be the same.

The important low-income exception

This is where the residential conclusion changes.

For Program Year 2026, a qualifying low-income residential system receives 6 cents per generated kilowatt-hour, twice the standard small-system payment.

Using the same 8 kW system and ten-year production:

  • 97,779.74 kWh × $0.06 = $5,866.78

In the same example, selling the RECs brings in $3,226.73. Low-income SMART comes out about $2,640 ahead before the extra SMART cost and about $2,240 ahead after the $400 application and metering cost.

That is enough to deserve attention.

More households may qualify than people realize. There are several ways to qualify:

  • Enrollment in an Eversource or National Grid low-income discount rate;
  • Residence in a defined Low Income Eligible Area;
  • Documented participation in a qualifying needs-based program, such as LIHEAP, SNAP, Medicaid or MassHealth, WIC, Head Start, subsidized housing, or another program accepted by DOER;
  • Participation in a qualifying Massachusetts Solar for All offering, although the state currently says that program is paused; or
  • A DOER self-attestation that the household meets the applicable income requirements.

First-time homebuyer status does not qualify someone by itself.

For a typical low-income system installed at a home, the system must be 25 kW AC or smaller and located at the qualifying customer's residence. All of the power it produces must benefit that customer, either as electricity used at the home or as bill credits.

The 6-cent payment does not pay for the entire solar system. In this example it is worth about $600 in the first year and $5,867 over ten years. We still have to consider the roof, electrical service, financing, system cost, the customer's utility discount, and actual household usage.

That is where Northeast Solar can help. UMassFive's MySolar loan may include needed roof work, battery storage, tree removal, and site work, subject to the lender's requirements and limits. We can also look at other financing, including Propel. Propel starts with third-party ownership and offers a path to homeowner ownership after year five. With any third-party ownership plan, we need to read the actual agreement carefully to see who receives the incentives and owns the RECs.

Think you or someone you know may qualify? Northeast Solar can assist with the SMART 3.0 eligibility review and evaluate whether the complete project can work. We will not promise approval or affordability before looking at the actual home and customer circumstances.

What about solar plus battery storage?

A typical residential solar system of 25 kW or less does not receive an extra SMART payment for adding a battery. That battery payment starts with solar systems larger than 25 kW AC.

That does not mean a home battery has no value. It can provide backup power, help the family use more of its own solar power, and earn money through ConnectedSolutions if the customer, utility, equipment, and installation qualify.

A homeowner in SMART can still enroll an eligible battery in ConnectedSolutions. The two programs pay for different things. SMART pays for solar production and takes the RECs. ConnectedSolutions pays the customer for letting the battery help the electric grid on high-demand days.

Mass Save currently advertises $275 for each kilowatt the battery contributes on average during summer events. If a battery averages 5 kW, that could be as much as $1,375 for the summer. The actual payment depends on how the battery performs and on the program rules in effect at the time, so that income is not guaranteed.

For most homeowners adding a battery, we would start by looking at net metering, customer-owned RECs, and ConnectedSolutions together. We would choose SMART only if the full set of numbers comes out better, not just because the project includes a battery.

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Why commercial SMART can be different

Commercial systems greater than 25 kW use a different formula:

  • Base Compensation Rate + eligible adders - Value of Energy

The formula looks technical, but the idea is fairly simple. SMART starts with a base payment, adds more for certain kinds of projects, and then subtracts the value the customer already receives from the electricity.

For Program Year 2026, the starting rate for systems larger than 25 kW and up to 250 kW AC is 28.07 cents for every kilowatt-hour produced. From that number, SMART subtracts the project's Value of Energy. A system mounted on a building can add 3 cents. A qualifying Low Income Property can add 5 cents. An eligible battery may add another amount.

The Value of Energy changes with the utility, rate class, electric-supply choice, and details of the project. That means there is no single SMART payment that applies to every commercial project in Massachusetts.

For the small businesses, farms, nonprofits, and affordable-housing organizations we work with, SMART may pay much more than it does for a standard residential system. A roof-mounted system with a battery can look very different from a ground-mounted system without one. National Grid can come out differently from Eversource Western Massachusetts. Even two projects of the same size can get different answers because their electric rates and extra SMART payments may be different.

Most of our commercial work is under about 250 kW AC. That is not a hard limit, but it is the size range where we do most of our work for local organizations.

For a commercial property, we need to run the actual numbers before making a recommendation.

Does SMART give utilities more control over RECs?

Yes, it does give them more control over this part of the transaction.

When a customer enters SMART, the homeowner gives the RECs to the program in return for a fixed payment. If REC prices fall, the program takes that risk. If REC prices rise, the program gets the benefit instead of the homeowner.

That makes program costs easier for utilities and regulators to predict. It also puts control of the REC value back into the program instead of leaving it with each homeowner.

I think it is fair to question that design. Utilities want to limit costs that can move up and down, and regulators want to control what customers pay for these programs. But I have not found evidence that SMART was created only to hold down REC prices or create a windfall for utility shareholders.

Here is the part we know: SMART does not make the uncertainty around REC prices disappear. It moves that risk, and the chance of a higher return, from the homeowner to the program.

For some homeowners, certainty is worth that trade. For others, ownership of the REC value is more important.

The Northeast Solar recommendation

For most residential customers, we recommend net metering and keeping the RECs. Northeast Solar will help with the paperwork and introduce the customer to the REC broker. After that, the agreement is between the customer and the broker, and the broker's fee comes out of the customer's REC payment.

For a qualifying low-income homeowner, we will look at SMART separately because the 6-cent payment can make a real difference over ten years.

For a home with solar and a battery, we will look at backup power, how much solar the family can use directly, and ConnectedSolutions. We will not assume that adding a battery makes SMART the better choice.

For small businesses, farms, nonprofits, and affordable-housing projects, we will calculate SMART using the actual utility account, rate class, system size, system location, battery, and any extra payments the project qualifies for.

My job is not to put every customer into the same program. It is to explain the choices, show the numbers, and help you decide what works best for your home or business.

Bring us your Eversource Western Massachusetts or National Grid bill and your energy goals. We will compare the available paths before you choose.

Northeast Solar | (413) 247-6045 | northeast-solar.com

Serving Franklin, Hampshire, Hampden, and Berkshire Counties.

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