On August 11, 2017, Massachusetts regulators filed the proposed final version of CMR 7.75, the Clean Energy Standard (CES), a plan to cut state GHG emissions by 80% of their 1990 levels by 2050. To achieve this aggressive target, the state is going to rely on the procurement of long-term contracts to import hydropower from Canada, as well as the development of more renewable resources, such as wind and solar. Ultimately, however, whether this new mandate can achieve its compliance targets is going to require not only committed project development capital, but also large investments in new transmission lines.
On August 11, 2017, the Massachusetts Department of Energy Resources (DOER) filed a much anticipated final version of the Solar Massachusetts Renewable Target (SMART) Program regulation. This revised SMART framework proposition includes several components that market participants heavily discussed during three public hearings as critical to the success of this program and its objectives.
On January 31, 2017, Massachusetts policy makers unveiled a much anticipated, revised solar program that radically transitions solar incentives away from the SREC market and towards a structure akin to a feed-in-tariff regime. Nevertheless under the new program, facilities will still generate Class I RECs that could be used to meet MA Class I compliance obligations.
After the recent failure of the Massachusetts legislature to pass a compromise bill to raise the net metering cap before winter recess, many projects are at risk of heading off a cliff. Coupled with the Investment Tax Credit (ITC) step-down from 30% to 10% for commercial projects, the delay in raising the net metering cap may jeopardize the installations of over 115 MW in 2016. In this Report, the Karbone Research Desk addresses the impact of these recent developments on the SREC-II market and discusses forward build rates scenarios, historical pricing trends, and the impact of legislative uncertainty on market fundamentals.
The third Massachusetts SREC I Auction cleared in the first round for the first time amid overwhelming demand. Preliminary results of the Auction indicated mixed implications for forward supply and demand scenarios. Can the SRECs sold in the Auction help satisfy the projected shortage in 2015 Compliance Obligation? Will enough of the reserve of re-minted SRECs be held out for future usage to relieve the perceived tightness in 2016 supply? The Karbone Research Desk addresses forward supply & demand dynamics, pricing, and market balance concerns in this report.
Massachusetts solar saw a number of important developments in Q3: SREC I finalized its Program Cap, held the first successful Solar Credit Clearinghouse Auction, and experienced dramatic price appreciation for forward vintage SRECs. SREC II nearly avoided major legislative changes, received an incremental increase in net metering caps, and had DOER growth projections suggest a re-orientation of the market away from Managed Growth-type projects.
On June 11th, key solar policy decision makers unveiled a Proposal that would radically transition solar incentives in Massachusetts away from the SREC market and towards a more feed-in-tariff type regime. The Proposal outlines a Declining Block Solar Incentive Program that would supplant much of the recently launched SREC II program. If implemented, we estimate that the SREC II market size could be reduced from roughly 1 GW to closer to 300 MW.
Mark Sylvia, MA DOER Commissioner, on December 13 presented to the Electricity Restructuring Roundtable the final policy design for the RPS Solar Carve-Out II Program. The presentation included important developments in the market structure, such as SREC Factor changes, an ACP funded financing program, and raising the Net Metering (NM) Cap, which Karbone will cover in this report.
The following research brief will focus on the recent developments in the NJ SREC market, including pricing and installation trends, followed by comparisons against the MA SREC market.
To address the oversupply of project applications for the Massachusetts Solar Carve-Out Program, the Department of Energy Resources (DOER) announced in its June 7, 2013 Stakeholder Briefing that it is instituting an Emergency Regulation to expand the current 400 MW Program cap. This expansion comes in response to the estimated 900 MW of current cumulative project pipeline capacity. The excess of potential Program supply is a result of rapidly accelerated Qualification Application rates, particularly since April 2013, as developers have rushed their efforts to get projects included within the 400 MW cap. MA qualified capacity as of May 20, 2013 was 287 MW, of which 217.9 MW was currently operating.