SRECTrade hosted a webinar on Wednesday, 12/5/2012. You may watch the webinar by clicking on this link. The webinar covers the status of the Massachusetts SREC Program, an update on SRECTrade’s services, an analysis of the SREC market moving forward and some best practices on getting solar installations registered to create Massachusetts Solar Renewable Energy Certificates.
TweetToday, the MA DOER announced the 2013 compliance year (January 1 – December 31, 2013) Solar Renewable Energy Credit (SREC) requirement. Massachusetts’ SREC requirement is set each year by a formula that takes into consideration the current year SREC obligation plus the projected SREC generation for the current year less the SRECs generated in prior years multiplied by 1.3. Additional adjustments are then made for prior year’s Alternative Compliance Payment (ACP) volume, banked SREC volume, and DOER Credit Clearinghouse auction volume. The detailed formula for 2013 is as follows:
Total Compliance Obligation 2013 = Total Compliance Obligation 2012 + [Total SRECs Generated (projected) 2012 – SRECs Generated (actual) 2011] x 1.3 – ACP Volume 2011 + Banked Volume 2011 + Auction Volume 2011
MA2013 Compliance Obligation
The MA2013 SREC requirement has been set at 135,495 SRECs. This figure does not take into consideration exempt load based on the TransCanada settlement reached during the first year of the MA SREC market. In the calculation, the DOER provided the effective reduction in SREC Demand for 2013 at 4,784. This means that, under the announced 2013 requirement, the actual number of SRECs needed to be purchased under the 2013 obligation will be equal to 135,495 less 4,784; 130,711 SRECs.
The 2013 Requirement Might Increase
In coordination with its announcement, the DOER also stated its intention to begin a rulemaking process to address the following:
1) Formally insert the 10 Year Solar ACP schedule into regulation;
2) Adjust the formula above to remove the term that subtracts “ACP Volume” from prior years.
The DOER stated its intention to adjust the formula would retroactively apply to the 2013 SREC requirement. The removal of this term from the formula would increase the SREC requirement from 135,495 to 189,297 SRECs required in 2013. Taking into consideration the effective reduction of 4,784, that would put the net 2013 requirement at 184,513.
The table below demonstrates the current formula requirement vs. the proposed formula requirement:
The DOER noted their plans to begin the rulemaking process in September 2012. The DOER welcomes any comments on the announcement prior to beginning the process. Comments can be sent to DOER.SREC@state.ma.us by 5:00pm on September 14th.
On July 15, 2012 the first 2012 vintage MA SRECs will be minted. To date, all transactions of MA SRECs in 2012 have been for 2011 vintage SRECs. Short of something unanticipated the 2011 market will remain under-supplied and MA 2011 SRECs (if they have not yet been sold) should continue to sell close to SACP pricing.
The DOER recently issued a press release reminding SREC sellers that they have until June 15th to sell SRECs on the open market. Any SRECs not sold on the open market will need to be placed in the DOER’s “last chance” Solar Credit Clearinghouse Auction and put up for the sale at the mandated $300 per SREC offer. Remaining SRECs not placed in the auction will be automatically retired and will not be eligible for future transactions.
SRECs transacted through SRECTrade have consistently sold for $540 per SREC. Please do not hesitate to contact us if you are a seller with unsold Massachusetts SRECs. For a history of MA SREC pricing in the SRECTrade auctions click here and scroll to the bottom of the page.
TweetOn December 28, 2011, the Massachusetts Department of Energy Resources (DOER) announced that after reviewing the public comments on the suggested 10-year Forward Schedule for the Solar Alternative Compliance Payment (SACP or ACP) rate, they published a guideline to establish the 10-year rolling ACP rate schedule. This guideline will act as an interim step to implement permanent regulatory change. The DOER will be working to revise the existing regulations to implement the new ACP schedule into the Solar Carve-Out program. It will replace the existing ACP rules that provided the DOER the discretion to reduce the ACP on an annual basis.
The DOER noted the following in its release:
“DOER recognizes the importance for project developers and project financers, along with retail electric suppliers with compliance obligations, to have greater certainty of the ACP Rate further into the future. Additional certainty is expected to enhance parties’ abilities to estimate expected SREC revenue streams and to facilitate project financing and negotiations for long-term contracts for SRECs. The ACP rate must be sufficient to ensure sufficient project profitability to stimulate market growth to meet the program goals, but avoid unnecessary costs to ratepayers”
The ACP schedule to be implemented is at the values initially proposed. The table below outlines the schedule. Over the course of the 2012 and 2013 compliance periods, the rate will stay set at $550 per SREC and decline by 5% per year thereafter. Additionally, by January 31 of each year, the DOER will announce the new 10th year price in order to maintain a complete 10 year schedule at all times.
On August 2, 2011, the Massachusetts Department of Energy Resources (DOER) proposed an amendment to the Solar Alternative Compliance Payment (SACP) schedule for the MA SREC program. Feedback from market participants including project developers, financing parties, and retail electricity suppliers indicated the current SACP structure creates uncertainty around future SREC valuation. Under the existing structure, the DOER has the ability to reduce the SACP on a yearly basis by up to 10% of the current value. The amended schedule seeks to provide more certainty for expected future prices while assisting project financing and negotiations for long-term SREC contracts.
The proposal establishes a 10-year schedule for the SACP that would maintain the current rate of $550/SREC through compliance year 2013, then decrease 5% each following year. The proposal also requires the schedule to be updated on a yearly basis to include a price for the 10th year of the schedule. For example, the 2022 price will be added to the schedule no later than January 31, 2012. The table below demonstrates the proposed schedule.
Prior to implementation, the proposed schedule is to go through a comment process. The comment period is currently open through August 15, 2011. Once all comments are collected, the DOER will review and begin the necessary process to amend the existing Solar Carve-Out provisions.
TweetThe DOER announced today that they will no longer be awarding retroactive credit for SRECs from generation prior to the current SREC generation period.
In simplified form, this change means that installers and system owners should get their EasyREC paperwork in as soon as their system is interconnected to the electric grid. By submitting immediately, the the DOER and MassCEC will have ample time to approve the system. Even for systems that go online at the end of Q1 (i.e. March 20th), the state will then have a full 3 months to get the system certified for Q1 SRECs on July 15th.
If a system was interconnected in Q1 but is not certified in DOER by July, then it’s first chance to create SRECs will be October 15th. On that date, DOER will only create Q2 SRECs, and will ignore any Q1 SRECs that would have been generated for the system on July 15th.
All recent applications to SRECTrade’s EasyREC service have already been submitted to DOER on the customer’s behalf, and thus are not going to be affected by this change. Feel free to follow up with us, though, if you would like to double-check your status.
If your system went online before March 31, 2011 and you have not yet submitted your application, go to our EasyREC page and fill out the forms as soon as possible!
TweetStatement from the Massachusetts DOER
While DOER realizes as a practical matter that providing a reduced ACP Rate for pre-existing contracts will result in a reduction in the demand for SRECs in the early years of the program, that exact percentage is unknown at this time. The demand will be a direct reflection on that percentage of load that was contracted for prior to January 1, 2010 which is data that DOER does not generally collect. DOER did discuss this issue with a handful of competitive retail suppliers, and under a confidentiality agreement, obtained contract information from 8 suppliers serving about 1500 GWh in 2009. DOER provides the following information with no warranty of its accuracy beyond the above stated parameters.
Approximately 50% of the retail load in Massachusetts is served by competitive suppliers, and of that portion, DOER estimates that about 70-90% of that load will be served in 2010 under a pre-2010 contract. This percentage decreases dramatically in the following years as contracts expire or are renewed, such that in 2011 only 40% of the competitive supply load will be served by pre-2010 contracts. This trend continues with 20% in 2012, 10% in 2013, and under 5% in 2014.
It is important to remember that combined with the growth in the Minimum Standard each year, the overall percent of applicable load relative to the Standard diminishes even more substantially.
While DOER hopes this very limited analysis provides some information to the solar development community but will not assure its accuracy beyond the given parameters or be responsible for any further conclusions drawn by any market participant. DOER will receive additional information on load under contracts by retail suppliers as part of the 2009 Annual Compliance Filing and will report that information, in the aggregate, as soon as it is available.
SRECTrade Comment
Essentially what this is saying is that the settlement exempts suppliers under previous supply contracts from the SREC requirement. This will impact 35-45% of the demand in the Massachusetts SREC market. This means that if the requirement in 2010 was 30 MW of solar to meet the RPS, with these exemptions, the actual requirement will be 17-20 MW of solar. In the following 3 years the impact is reduced to 20% of the total demand, 10% and 5%, respectively. Fortunately, DOER has several levers it can pull to ensure that pricing of SRECs stays within the $300-$600 range. For example, if there is a surplus in 2010, the requirement for 2011 will likely be increased to adjust for the surplus. This should mitigate the impact of this settlement. Finally, even with the reduced demand, the state needs to get to an average solar capacity of 17-20MW in 2010. This is no small task.
