The Massachusetts solar industry has a long history of hitting caps. Whether it’s for net metering or the SREC market (both SREC I and II), as more solar energy systems have come online in the Commonwealth, current solar policies in place have reached their limits.  And now, it is time for a rethinking to occur.

Back in January, we learned that Massachusetts was approaching its capacity limit for SREC II. Since then, the industry has been preparing to transition to a new program, which has raised a lot of questions as to how solar development will continue in the state until the new program is promulgated. (Today, the solar industry learned that the new incentive regime is expected to begin in summer 2017. Stay tuned to the September issue of SOURCE for more information.)

The Great Transition: SREC II to the New Incentive Program

To help answer these questions, the Massachusetts Department of Energy Resources (DOER) filed for emergency regulations to ease the transition from SREC II to the new solar program.  The most recent result of these emergency regulations, came on August 31st when the DOER announced that systems less than or equal to 25 kW, as long as the system has authorization to interconnect BEFORE January 8, 2017 will still be eligible for current SREC II factors (Table 1). Systems under 25kW that receive authorization to interconnect AFTER January 8, 2017 will still be eligible to apply to the SREC II program until the new program comes into effect, but they will fall under reduced SREC II factors (Table 2).

Systems above 25kW that cannot demonstration mechanical completion by January 8, 2017 will be provided a construction deadline extension to May 8, 2017 if it can be demonstration that the project has expended at least 50% of its total construction costs by January 8, 2017. Projects that qualify for the extension will be subject to the reduced SREC II factors (Table 2).  This means that as of right now, Massachusetts solar projects over 25kW that cannot meet these deadlines are left waiting for the new program, creating much uncertainty that will slow development.

Table 1

Table 1

Table 2

Table 2

By the way, what’s an SREC Factor?

Good question.  SREC factors affect how much a system will have to generate before a full SREC can be minted. Typically, for every 1000 kWh or 1 MWh a system produces, 1 SREC is minted. However, with SREC factors, when an SREC is minted only the SREC factor will count, and the rest will be automatically retired. For example, if there is an SREC II factor of .8, when 1 MWh is reached .8 SREC IIs will be minted, and the other .2 SREC IIs will be retired. So, if a system generated 40 MWhs, only 32 SREC IIs would mint. That’s a result of the 40 x .8. This means there will be a decrease in the frequency for solar projects to produce SRECs, and therefore, a decrease in the number of SRECs that can be monetized for a given project. These changes were made to facilitate the transition to the new incentive program, but also make sure that projects that did not meet the original cap on the SREC II program are not incentivized at the same high levels.

I’m Already Getting Paid for my SRECs. Will This Affect Me?

No. If you have already been registered and approved for the SREC I or II program, do not worry. These guidelines only affect those who have not yet qualified. Everything will remain the same for you, and your incentive levels will operate under the regime that you are accustomed to.

What Happens Next?

The Massachusetts Department of Energy Resources will hold an intensive stakeholder process this fall as it works to develop the successor program to SREC II. For more updates, be sure to stay tuned to our Sol Systems blog and subscribe to SOURCE. We will keep you updated with the latest changes to the Commonwealth’s solar policies.

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Over the last eight years, Sol Systems has delivered more than 500 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.