Massachusetts DOER Floats Simpler Concepts for New Solar Incentive Program
In response to criticism that its proposed restructure of the Renewable Energy Portfolio Standard (RPS) Solar Carve-Out program was too complicated, the Massachusetts Department of Energy Resources (DOER) has unveiled a simpler proposal. Commissioner Mark Sylvia and his senior DOER staff gathered solar program stakeholders together again on August 12, 2013, to report back on their work developing the next generation of solar power incentives.
As reported in a previous post, the DOER is planning to restructure the RPS Solar Carve-Out program, the proposed SREC II. This program requires that the state’s distribution utilities fulfill their mandated RPS by annually purchasing a certain number of Solar Renewable Energy Certificates (SRECs) – tradable property rights to the environmental benefits of solar power generation. DOER will attempt to promote solar power by managing its growth through 2020, while gradually reducing subsidies embodied in SRECs that ultimately are borne by utility ratepayers.
DOER received a number of comments from utilities, the solar industry, potential hosts of solar projects and other renewable energy advocates. Many argued that DOER’s initial concept unveiled in June for the new SREC program (SREC II) was too complicated and subjected solar transactions to too much uncertainty. Under the current SREC I program, one SREC is generated for each megawatt hour of electricity produced. Under the initial concept for SREC II, the amount of SRECs generated by a solar project would be calculated by applying a factor that declined over time. In addition, the initial design could require solar facility owners to participate in markets for both SRECs and much less lucrative ordinary Renewable Energy Certificates (RECs). Developers pointed out that having to guess at both the future SREC capacity of a project and the future behavior of two separate markets for a project’s output would deter negotiations of economic terms with purchasers of solar electricity, landowners and financing entities.
DOER has revised the design so that fixed factors for the duration of the SREC II program would be used to calculate the eligible SREC output for various types of solar projects. The size of the factor would favor some solar sectors over others. The most generous incentive — an SREC factor of 0.9 (i.e., 0.9 SRECs for each megawatt hour of electricity) – would be offered for residential projects, roof-mounted projects, solar canopies over parking areas and ground-mounted projects with more than 67% on-site electricity use. Projects on closed landfills and brownfields would receive an SREC factor of 0.8, while smaller ground-mounted projects that export 33% or more of their electricity off-site would qualify for a 0.7 factor. Finally, DOER would solicit competitive bids for SRECs generated by larger ground-mounted projects that export 33% or more electricity off-site, thereby constraining the growth of this sector by limiting the number of remaining SRECs available.
See the website for more details on the proposed program: http://www.mass.gov/eea/energy-utilities-clean-tech/renewable-energy/solar/rps-solar-carve-out/post-400-mw-solar-policy-development.html. DOER invited additional comments on the program design. The new comments, now published by DOER on its website, continue to request further fine tuning, and argue that proposed incentives will be either too modest or too costly. DOER will spend the next month or so finalizing the proposed regulations for the SREC II program, which will then be subject to final comment. DOER plans to implement SREC II by the beginning of 2014.
About Kevin: I specialize in Environmental Law, Litigation, Energy and Municipal Law at Anderson & Kreiger. Previously, I was a conservation manager developing and implementing energy and environmental programs for Austin, TX.
Photo credit: Raul Hernandez Gonzalez
Posted In: Solar Energy