The Massachusetts Clearinghouse Auction has helped propel the Commonwealth to one of the top nation's solar markets in the nation.

The Massachusetts Clearinghouse Auction has helped propel the Commonwealth to one of the nation’s top solar markets

Lately, Massachusetts has gotten used to winning, and the Massachusetts solar market is no exception. With over 300 MW of installed solar capacity and nearly 10,000 solar jobs, Massachusetts comes in at the 4th strongest solar market in the country. And thanks to last year’s unveiling of the state’s SREC-II program, growth has continued.

The Commonwealth’s Solar Carve-Out was initially intended to support the development of 400MW of solar, but in an effort to incentivize further growth, the Carve-Out has since been expanded (with goal of 1600MW in mind). Over the past several years, the Massachusetts Department of Energy Resources’ (DOER) Solar Renewable Energy Credit Clearinghouse Auction has played an essential role in stabilizing the Massachusetts SREC market. This summer’s iteration was, for the most part, no exception. At the end of July, DOER held the third Clearinghouse Auction for its SREC-I program since the state established its Solar Carve-Out in 2010. Sol Systems sold SRECs in the auction on behalf of customers, and it was also one of 55 bidders to participate.

Here’s how it went down:

The SREC-I auction proved to be successful, proportionally distributing SRECs to bidders at the fixed price of $300/MWh ($300 minus fees are distributed to customers). But unlike last year’s auction, the Clearinghouse was heavily over-subscribed from the start, causing it to clear easily in the first round. In fact, buyers placed nearly 10 times as many bids for SRECs as there were SRECs available for purchase (124,831). This was in large part due to a projected market shortage that has sent 2016 SREC prices soaring to $450/MWh. Because Massachusetts allows buyers to bank SRECs purchased in the auction for later use, many entities with future compliance obligations have rushed to take advantage of the SRECs’ extended life (an additional two years upon entering the auction). Anticipating this spike in demand and to ensure that utilities are able to meet their compliance obligations, DOER earmarked half of the available SRECs for purchase exclusively by utility companies.

DOER did not hold an auction for the newly created SREC-II market this year since all qualifying systems were able to sell their SRECs on the open market.

The Massachusetts Solar Magnet

High SREC prices are a major driver of the Massachusetts gold rush, causing developers from across the country to flock to the Commonwealth in search of opportunity. By offering a fixed Clearinghouse Auction price of $300/MWh and maintaining some of the highest Alternative Compliance Payments in the country, the state sends utilities a clear signal that they must continue to invest heavily in solar development. In fact, just last winter, customers in Massachusetts experienced a significant rate increase, one that solidified the state’s position as one of the most expensive electricity markets in the country.

The Massachusetts solar magnet has caused many areas in the Commonwealth to hit their net metering caps, providing cause for concern over the future stability of the commercial market (the cap doesn’t apply to residential systems).The good news? Solar development continues to be a priority in Massachusetts, and Sol Systems is committed to continuing to drive down project transaction costs to ensure that more deals are financed in the Commonwealth. For more information on Sol Systems’ SREC services for installers in Massachusetts and around the country – or general financing for commercial solar projects in the Commonwealth – please contact finance@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 333MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.