(1) Annual SMART Program Assessment. The Department shall conduct an annual assessment of the SMART Program. The Department may contract with a third-party vendor to assist in this assessment, Based on this assessment, the Department shall set the following Program Year's Capacity Block, Capacity Allocation, Annual Capacity Set Asides, Base Compensation Rates, Compensation Rate Adders, and Flat Incentive Rate for 25 kW or less STGUs as detailed in 225 CMR 28.05(3) through (7).

1. (a) Factors considered in Setting Program Year's Block and Rate Structure. The Department shall consider the following factors as part of its Annual SMART Program Assessment:

   1. 1. the Commonwealth's progress toward achieving the statewide greenhouse gas emissions limits and sublimits established pursuant to M.G.L. c. 21N;
   2. 2. historic program participation rates, including participation by Low Income Customers;
   3. 3. current and forecasted ratepayer cost impacts;
   4. 4. regional and national solar costs;
   5. 5. material and development costs for solar; and
   6. 6. the Commonwealth's land use and environmental protection goals.
2. (b) Annual Survey of Solar Development Costs. As part of the Annual SMART Program Assessment, the Department shall issue a survey to stakeholders pertaining to solar development costs. The survey will cover solar development costs in the Commonwealth including, but not limited to, financing models, permitting and interconnection costs, development timelines, capital costs, operating expenses, or other factors as determined by the Department. The Department will consider the results of the survey in determining the levelized revenue requirement for different STGU configurations and other considerations relevant to the Annual SMART Program Assessment.

(2) Annual Program Year Report. Starting for Program Year 2026, and annually thereafter, no later than December 1st or the following Business Day, the Department shall publish a report on the Department's website that contains the results of the Annual SMART Program Assessment. The report shall contain the annual determinations detailed in 225 CMR 28.05(3) through (7).

1. (a) Release of Draft Report for Public Comment. Annually, no later than October 1st, or the following Business Day, the Department shall publish a draft Annual Program Year Report to the Department's website and provide notice and a 30-day public comment period.
2. (b) First Program Year. For Program Year 2025, the Department shall publish the first Program Year Report by September 1, 2025, for the period of October 15, 2025, to December 31, 2025. Program Year 2025's Annual Program Year Report shall be based upon the Evaluation of Solar Costs and Needed Incentive Levels across Sectors from 2025-2030 published to the Department's website on July 10, 2024. The report shall contain the annual determinations detailed in 225 CMR 28.05(3) through (7).

(3) Annual Capacity Block Determination. Annually, the Department shall determine the available Annual Capacity Block for the Program Year.

1. (a) First Program Year. For Program Year 2025, the Annual Capacity Block shall be 900 MW.
2. (b) Unused Program Year Capacity. Any unused capacity for a given Program Year shall not roll into the following year's Annual Capacity Block.
3. (c) Determination of Capped Capacity for Certain Project Types. STGUs less than or equal to 25 kW and Behind-the-Meter STGUs greater than 25 kW and less than or equal to 250 kW shall not count toward the Annual Capacity Block, unless based on the Annual SMART Program Assessment, the Department opts to impose a capacity set aside for such STGUs for the next Program Year. The Department shall include any proposed set aside in its draft Annual Program Year Report.

(5) Annual Capacity Set Asides. For each Annual Capacity Block, the Department shall set aside capacity for the below listed STGU types. The annual capacity set aside for each STGU type shall not be less than the percentages listed in the below table.

Set-aside Category Minimum % of Program Year

Capacity

• Standalone STGUs greater than 25 10%

kW and less than or equal to 250 kW; and

• STGUs greater than 250 kW and less

than or equal to 500 kW

Low Income Property Generation Units 10%

Community Shared Solar Generation Units 15%

1. (a) Additional Set Aside Categories. The Department may set aside capacity for additional STGU types, including for STGUs less than or equal to 25 kW and Behind-the-meter STGUs greater than 25 kW and less than or equal to 250 kW, as it deems necessary.
2. (b) Capacity Reallocations. Set-aside capacity shall not be reallocated.
3. (c) Set Aside Capacity Assignments, If an STGU qualifies for more than one set aside category, the Department shall count the STGU's capacity toward the applicable Compensation Rate Adder set-aside category. If that Program Year's set-aside category is full, then, if applicable, the capacity shall count towards the set aside for STGUs greater than 250 kW and less than or equal to 500 kW. If that Program Year's set-aside category is full, the capacity shall count towards any applicable set aside categories established pursuant to 225 CMR 28.05(5)(a). If all applicable set-aside categories have already been filled for the Program Year, the capacity shall not count towards any set aside categories.

(7) Annual Calculation of Flat Incentive Rate for Less than or Equal to 25 kW STGUs. Annually, the Department shall determine the Flat Incentive Rate for STGUs with a capacity less than or equal to 25 kW. The Flat Incentive Rate shall be based on the Annual SMART Program Assessment and the methodology identified in the Department's Guideline on Base Compensation Rates, Compensation Rate Adders, and Annual Assessment.

1. (a) Minimum Incentive Payment. The incentive payment for an STGU with a capacity less than or equal to 25 kW shall not be less than $0.01/kWh.
2. (b) Adder for Low Income STGUs. Annually, the Department shall determine an additional adder amount to be added to the Flat Incentive Rate determined pursuant to 225 CMR 28.05(7) for STGUs less than or equal to 25 kW that qualify as Low Income STGUs pursuant to 225 CMR 28.07(5)(c)2.
3. (c) Flat Incentive Rate and Adder Change Cap. Any increase or decrease to the value of the Flat Incentive Rate or adder for Low Income STGUs shall not exceed 20% of the value from the prior Program Year or one cent per kWh, whichever is greater.