Massachusetts DOER Updates Solar Stakeholders on Emergency Regulation and Proposed Post-400 MW Policy

7 Jun 2013

This morning was a big one for the Massachusetts solar market. After the surprising announcement that the Massachusetts Department of Energy Resources (DOER) had already received well over 400 MW of Statement of Qualification Applications (SQA) for the Solar Carve-Out Program, many developers, investors, and other interested parties faced the very real possibility that projects into which they had sunk significant capital and time would not be eligible for SRECs under the 400 MW cap. To follow up on their announcement and provide structure for the pending applications, the DOER specified that projects would need to submit SQAs by June 7th to be considered under the current 400 MW program and then subsequently published a list to outline the status of these applications. Consequently, over the last week in parallel with these announcements the amount of project applications swelled to over 800 MW.

Hundreds attend the Massachusetts DOER Solar Stakeholder meeting at the State House in Boston on June 7th.

Hundreds attend the Massachusetts DOER Solar Stakeholder meeting at the State House in Boston on June 7th.

All this transformed what was supposed to be a stakeholder meeting solely regarding plans for the post solar 400 MW program into a discussion on how the DOER would address the accelerated growth of development of the Massachusetts solar market. Discussion of this emergency regulation lasted for the first thirty minutes; the remaining hour and a half concentrated on plans for the post 400 MW solar carve-out program, although it can no longer technically be called “post-400 MW”, given that the total capacity that is either qualified or under review now totals over 900 MW. There were several interesting developments, and although it remains only a proposal at this point, it is clear the DOER remains committed to the growth of solar and trying to create linear growth towards Governor Patrick’s goal of 1600 MW of solar by 2020. More analysis on the likely form that the post-400 MW program will take will be provided by Sol Systems next week, during a webinar hosted with SEIA, featuring Michael Judge of the DOER.

Dwayne Breger, Director of Renewable and Alternative Energy Development at the DOER, laid out a few possible actions, one of which was simply doing nothing. Fortunately, he soon after announced that the DOER would file an emergency regulation to address the oversupply, which was greeted by applause from the entire room. The stated goal of the emergency legislation is to allow the 400 MW cap to expand to accommodate larger projects that are well invested in the development cycle, as well as small-scale solar projects given their short development timeline.

To be eligible through this emergency regulation, projects that are less than 100 kW can proceed as usual; they must have an Authorization to Interconnect and have submitted a SQA prior to the effective date for the post-400 MW solar carve out program. Projects over 100 kW that have received a Statement of Qualification (SQ), or have an application deemed administratively complete by the DOER, must meet prescribed project construction timelines or they will lose their SQs. Some details on the project construction timelines were provided in today’s presentation. Final requirements will be within the emergency regulation to be filed within the month of June. Once filed, the regulation will be effective immediately. Projects greater than 100 kW that did not originally make it into the 400 MW program will have a chance to qualify under the emergency expansion of the 400-MW solar carve-out program. These projects, on or before June 7, 2013, must have submitted a SQA to the DOER, and also have an Interconnection Services Agreement (ISA) fully executed. The proof of the executed ISA must be provided to the DOER within one week of the date that the DOER files the emergency regulation. These projects must also meet project construction timelines that will be specified in final form in the emergency regulation.

Due to this accommodation for systems that currently fall outside the 400 MW program, there will be a recalibration of the compliance obligation. The framework of formula will remain the same, but there will be adjustments such that the cap will rise up to a steady state level to the total number of qualified MW by April 1, 2014. At this time, of course, it is unclear what the total qualified number of MW will be by April 1, 2014.

Overall, it was a positive morning for the Massachusetts solar market. While there will still be a significant number of projects in development that cannot get SREC eligibility (if they were outside 400 MW and do not have a signed IAS), the DOER has set out a path by which projects that have invested enough to execute their IAS can move forward, as well as allowing for the continued growth of small scale solar. Furthermore, it appears that substantial thought is being put into what the “SREC 2 program” will look like, including an emphasis on small scale solar and solar in the most efficient places. Sol Systems looks forward to Massachusetts continuing as one of our most active markets, both in terms of SREC and project financing services.

Co-authored by Andrew Gilligan, Amber Rivera, and Anna Noucas.

About Sol Systems

Sol Systems is a boutique financial services firm that offers investor clients direct access to the renewable energy asset class and provides developers with sophisticated project financing solutions. Founded in 2008, Sol Systems focuses on meeting the most critical needs of the industry, including SREC monetization, capital placement, tax equity, and New Market Tax Credits. To date, the company has arranged financing for thousands of projects and facilitated hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals.

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Anna Noucas

Anna Noucas