On Wednesday, July 19^th, the Massachusetts Department of Energy Resources (DOER) announced the preliminary Minimum Standards and Compliance Obligations for 2018 Solar Carve-out (SREC-I) and Solar Carve-out II (SREC-II). The DOER notes that these numbers only represent preliminary estimates and final numbers will be released no later than August 30^th.

SREC-I

Based on current load capacity projections, the DOER estimates that the 2018 Compliance Obligation and Minimum Standard for the SREC-I Program will be approximately 838,995 MWh and  1.7903%, respectively, for load served under contracts on or after June 28, 2013.  If the 2017 SREC-I auction does not fully clear, these values will be increased to 857,423 MWh and 1.8296%, respectively.

For load served under contracts executed before June 28, 2013, the 2018 Minimum Standard will be 1.1411%.

SREC-II

The DOER estimates that 2018 Compliance Obligation and Minimum Standard for the SREC-II Program will be 1,347,902 MWh and 2.8762%, respectively, for load served under contracts before May 8, 2016. If the auction does not fully clear, these values will be increased to 1,591,279 MWh and 3.3955%.

To calculate this baseline Minimum Standard and Compliance Obligation, the DOER first determined the expected MWh/year that would have resulted had the SREC-II Program Capacity Cap remained 947.7 MW by:

1. Identifying the percentage share of MW capacity currently qualified under each SREC-II Market Sector;
2. Multiplying these percentages by the original 947.7 MW SREC-II Program Capacity Cap;
3. Multiplying these totals by (1) their respective SREC Factors, (2) a 13.71% expected capacity factor, and (3) 8,760 hours/year.

The DOER then summed these values and combined the remaining auction volumes and banked SREC-II volume from the 2016 Compliance Filings resulting in a total baseline Compliance Obligation and Minimum Standard.

In addition, the DOER estimates the Compliance Obligation and Minimum Standard for load contracts signed after May 8, 2016 to be 1,923,743 MWh and 4.1049%. respectively. If the auction does not fully clear, these values will be increased to 2,167,120 MWh and 4.6242%, respectively.

The official announcement can be found here.

In the last month we have two new and important pieces of information. On March 13, the Department of Energy Resources (DOER) updated the list of projects with a Statement of Qualification (SQA) and NEPOOL-GIS published the 2016 year-end SREC supply figures. Since our last update in SREC-II, the DOER announced that projects lacking an extension from DOER would lose their SQA. However, such projects are allowed to re-apply for an SQA with the understanding of the lower SREC factors. Please see the full presentation of data and analysis here.

Based on the latest information, we see the total installed & operational capacity in SREC-II is 812 MW, with an additional 1,076 MW qualified but not yet operational:

With the year-end figures on SREC-II supply coming in at 556,510 we can better estimate the extent of over-supply for the year. Note that while the supply figures are out for the year, we won’t see the aggregate demand figures for a few weeks still. Using 2015 figures as a proxy, we estimate an oversupply of 282,802 MA16 SREC-IIs:

With such a large surplus of SRECs, we’re certain to see a Solar Credit Clearinghouse Auction (SCCA) this summer. Recall that the DOER will accept SRECs until June 15 before initiating the Clearinghouse Auction towards the end of July. During that interval, the DOER will announce the 2018 Minimum Standard, which may increase if the SCCA does not clear by Round 2:

Source: DOER

On January 31, 2017 the Massachusetts Department of Energy Resources (DOER) unveiled their final program design for a new solar incentive mechanism following the very successful SREC-II program. The forty-seven slides linked above provide a highly-detailed review. Below, please find a brief summary of pertinent issues. Please keep in mind this information is proposed by DOER. Stakeholders are encouraged to submit comments to DOER.SREC@state.ma.us by February 17.

SREC-II
SREC-II will continue until the new scheme is implemented with reduced SREC-factors (30% of original). Expected fuse left on SREC-II development: through 2017

Projects that did not qualify in time for the January 8th deadline will lose their Assurance of Qualification and have to re-apply. New projects may also apply for SREC-II qualification.

Please note that projects 25kW or less will continue to be approved at the 0.8 SREC Factor until the next program begins. The 0.7 SREC Factor for the extension only applies to those projects in market sector A that are over 25kW.

New Program (SMART)
Goal: 1600MW of new solar

Incentive mechanism: Declining Block with payment in the form of Net-metering credits or on-bill credits. Additionally, a buy-all, sell-all rate will be available.

Incentive level: set once through a procurement of 100MW of large (> 1MW) projects. Such large projects will offer into the procurement and the marginal project will set the price for all winning projects. Large projects will have a 20-year payment term. Smaller projects will have their incentive level set by an index relative to the level determined by the competitive procurement described above. Small projects will have a ten-year payment term.

Incentive adders: Depending on location, type of off-taker and the addition of storage to a solar array, a project may earn a higher rate of incentive.

Both the base incentive level and incentive adders will decline 4% per block.

Process: DOER will file an Emergency Regulation which will trigger a 90-day regulatory process including hearings and written comments. Following the Emergency Regulations being implemented, three additional processes will occur: 1) RFP for Administrator of this program 2) RFP for 100MW of new PV (> 1MW only), 3) EDCs jointly file at DPU for cost recovery and approval.