Massachusetts Department of Energy Resources

On June 30, 2017, the Massachusetts Department of Energy Resources (DOER) announced that Massachusetts would adopt an aspirational 200 megawatt-hour (MWh) energy storage target to be achieved by January 1, 2020. The target is the second largest in the nation, although it is far lower than California’s 1.3 gigawatt storage mandate. Still, Massachusetts’ storage target will make the commonwealth a leader in the burgeoning energy storage field.

The process of setting storage targets began last summer, when Massachusetts enacted a law directing DOER to determine whether to set targets for electric companies to procure energy storage systems by January 1, 2020. In September 2016, Massachusetts released a report called the “State of Charge,” which recommended the installation of 600 megawatts (MW) of energy storage by 2025. The report predicted that 600 MW of storage could capture $800 million in system benefits to Massachusetts ratepayers. The energy storage industry praised the 600 MW level as a good starting point.

DOER’s “aspirational” 200 MWh by 2020 target falls short of the “State of Charge” recommendation, but leaves the door open to achieving 600 MW by 2025. DOER’s letter announcing the target noted that “[s]torage procured under this target will serve as a crucial demonstration phase” for Massachusetts to gain knowledge and experience with storage. “Based on lessons learned from this initial target,” the letter continues, “DOER may determine whether to set additional procurement targets beyond January 1, 2020.”

Beyond DOER’s storage target, Massachusetts has a broader Energy Storage Initiative, which includes a $10 million grant program aimed at piloting energy storage use cases and business models in order to increase commercialization and deployment of storage technologies. DOER also announced that it will examine the benefits of amending the Alternative Portfolio Standards, an incentive program for installing alternative energy systems, to expand the eligibility of energy storage technologies able to participate. While Massachusetts’ storage targets are not as lofty as some in the industry were hoping, the commonwealth is demonstrating a clear commitment to developing its energy storage industry beyond the few megawatts currently installed.

The Massachusetts Department of Energy Resources (DOER) released a draft guideline last week outlining a proposed process to grant Assurances of Qualification to solar generation facilities seeking to participate in the Solar Carve-Out II program.  The guideline is designed to mirror the Massachusetts Department of Public Utilities’ Net Metering System of Assurances since many solar projects seek to qualify for both net metering and the Solar Carve-Out II program.

A solar generation unit must receive a Statement of Qualification (SQ) from DOER to take part in the Solar Carve-Out II program.  To receive a SQ, the generation unit must have approval to interconnect with the grid from the local distribution company and meet certain other qualifying criteria.  Because interconnection occurs at a late stage in project development, DOER is developing the Assurance of Qualification program to establish a process for solar generation units to reserve a spot in the queue and have some assurance, prior to incurring the significant costs of development, that the project will be able to participate in the Solar Carve-Out II program (so long as it meets the Assurance of Qualification conditions).  The Assurance of Qualification is particularly relevant for projects that will fall under the Managed Growth Market Sector since there is likely to be more capacity proposed for development than is reserved under the limited Annual Capacity Blocks, as set out in the current draft of the Solar Carve-Out II regulations.

To obtain an Assurance of Qualification, a generation unit must submit (1) a Statement of Qualification Application, (2) an executed Interconnection Service Agreement, (3) evidence of adequate site control and (4) all necessary governmental permits and approvals to construct the project.  If there is insufficient capacity available under the applicable Annual Capacity Block, DOER will place the generation unit on a waiting list until more capacity becomes available.   Once an Assurance of Qualification is received, the unit has nine months to receive approval to interconnect.  The guidelines provide two limited circumstances under which this reservation period may be extended:  (a) six months where a legal challenge to a permit or government approval remains pending and (b) indefinitely where the unit is only waiting for the distribution company to approve interconnection.

DOER is accepting comments on the draft guideline through March 28, 2014.

The Massachusetts Department of Energy Resources (DOER) earlier this year released its proposal for the Commonwealth’s next solar energy incentive program, the Solar Carve-Out II program (SREC II).  The program will increase to 1600 MW the amount of solar generation in Massachusetts qualified to produce solar renewable energy certificates (SRECs), well above the 400 MW cap set by the existing and now-over-subscribed first Solar Carve-Out program.  DOER is hosting a public hearing on the proposed regulations and is accepting written comments until January 29.

The SREC II proposal includes many of the same mechanics as DOER’s first Solar Carve-Out program.  Qualified renewable generation units will produce SRECs for 40 calendar quarters that may be sold or deposited into an auction account for bidding.  The auction price, which sets a price floor, will initially be fixed at $300 per SREC, the same auction price that currently exists under the first Solar Carve-Out program.  The SREC II auction price will decrease in subsequent years beginning in 2017.

One new aspect of SREC II is the segmentation of generation units into four market sectors, with each sector receiving its own SREC Factor (which determines the number of SRECs per MWh of electricity generated by a generation unit):

  • Market Sector A: any Generation Unit with a capacity less than or equal to 25kW, Solar Parking Canopy Generation Units, Emergency Power Generation Units or Community Shared Solar Generation Units.  Proposed SREC Factor:  1.0
  • Market Sector B: any Building Mounted Generation Unit, or ground mounted Generation Units with a capacity of greater than 25 kW for which 67 percent or more of its annual electric output is used on-site.  Proposed SREC Factor: 0.9
  • Market Sector C: any Generation Unit with 50 percent or more of the equipment used for generating power installed at an Eligible Landfill or Brownfield and any Generation Unit with a nameplate capacity less than or equal to 500 kW for which less than 67 percent of annual electrical output is used on-site.  Proposed SREC Factor: 0.8
  • Managed Growth Sector: any units that do not meet the requirements for the other market sectors.  Proposed SREC Factor: 0.7

The SREC Factor is designed to create an incentive to develop smaller solar generation units and a greater variety of generation units.  DOER plans to review SREC Factors in early 2016 with any changes applying to generation units qualified on or after January 1, 2017.

The Managed Growth Sector is subject to an annual capacity cap.  Each year, DOER will prescribe an annual capacity block to be filled by qualified generation units in the Managed Growth Sector.  DOER’s proposed annual capacity block for 2014 is 26 MW, and for 2015 the capacity block is 80 MW.  DOER will announce the annual capacity blocks two years in advance for future years.

by William Friedman

The Massachusetts Department of Energy Resources (DOER) announced that it re-filed its Solar Carve-Out Emergency Regulation without any changes, thereby finalizing the temporary regulations that had been in effect for the past three months and bringing stability to the existing Solar Carve-Out program.  The Solar Carve-Out program enables participating solar units to produce valuable Solar Renewable Energy Credits (SRECs), which can be sold on the open market or at auction.  Earlier this year, DOER announced that applications exceeded the Solar Carve-Out program’s 400 MW cap.  In late June, DOER released the Emergency Regulation to deal with the program’s oversubscription and to offer a path forward for projects that were uncertain as to whether they would still qualify for incentives under the Solar Carve-Out. 

Under Massachusetts law, however, the Emergency Regulation could only remain in effect for three months if not finalized into law.  Finalizing the regulations gives all projects relying on the terms of the Emergency Regulation certainty that the previously announced requirements and construction timeline will remain in force.

Along with its announcement of the re-filed regulations, DOER released a draft guideline for qualified Solar Carve-Out units seeking an extension of the December 31, 2013 construction deadline.  Under the regulations, in order to qualify for the Solar Carve-Out, a solar project must be completely installed and receive authorization to interconnect from the local distribution company by December 31, 2013.  If a project does not meet the December 31 deadline, it may receive an extension until June 30, 2014, if it can demonstrate that it expended at least 50 percent of its total construction costs by December 31, 2013. 

The draft guideline explains that DOER will only consider costs associated with building the generating units as construction costs, and will not take into account legal fees, permitting, or financing costs.  The guideline provides two alternative methods for calculating the total construction costs of a generation unit.  First, the owner or operator can multiply the solar unit’s direct current capacity by the corresponding dollar per watt cost, as set out in the table below.  Second, the owner or operator of the generation unit can provide DOER with actual demonstrated costs.  All eligible costs must be incurred no later than December 31, 2013.

No later than January 6, 2014, all generation units seeking an extension must submit their applications for extension to DOER. DOER will notify applicants of its decision within 30 days.

Finally, if a project can demonstrate that it is ready to begin operations and is only waiting for a distribution company to issue its authority to interconnect, the interconnection deadline is extended indefinitely.

by William Friedman

As previewed at a recent solar stakeholder meeting, the Massachusetts Department of Energy Resources (DOER) released its emergency regulation on June 28, 2013 to address the excess of applications for Massachusetts’ Solar Carve-Out program and to guide the program’s future.  Qualification for the program enables a solar project to sell valuable Solar Renewable Energy Certificates (SRECs) to distribution companies, which are required to fill a minimum percentage of their electricity sales with generation qualified under the Solar Carve-Out.  Last month DOER reported that an unexpectedly high volume of applications for the Solar Carve-Out blew through the program’s 400 megawatt (MW) cap, creating uncertainty as to which projects would qualify under the program. 

The emergency regulation sets the 400 MW cap aside and permits all projects that meet certain conditions and construction deadlines to qualify for the Solar Carve-Out.  The conditions in the emergency regulation were previously announced by DOER at its solar stakeholder meeting and described in an earlier article. The emergency regulation changes the date for extension of the construction schedule from March 31, 2014 to June 30, 2014.   In addition, the emergency regulation clarifies that all solar projects under 100 kilowatts will qualify for the Solar Carve-Out so long as they have submitted their Statement of Qualification Application and receive authorization to interconnect or permission to operate by the effective date of the next Solar Carve-Out program or June 30, 2014, whichever is earlier.

Along with new qualification requirements, the emergency regulation changes the formula used to calculate the compliance obligation of retail electricity suppliers, who must fill a minimum percentage of their electricity sales from generation qualified under the Solar Carve-Out program.  The updated compliance obligation formula is based on the new Program Capacity Cap, which will be announced by DOER on or before July 31, 2014, and will reflect actual supply beyond 400 MW.  However, DOER will provide exemptions to the additional compliance obligations for load that was under contract before the effective date of the emergency regulation.

Under Massachusetts law, the emergency regulation is only effective for three months unless DOER gives notice and holds a public hearing to formalize the rule.  According to the explanatory release accompanying the emergency regulation, DOER plans soon to schedule a public hearing and comment period in order to finalize the regulation.

 by William Friedman

At a recent solar stakeholder meeting, the Massachusetts Department of Energy Resources (DOER) outlined its emergency regulation that will address the recent influx of applications for the Massachusetts Solar Carve-Out.  The Solar Carve-Out program, which was established in 2009, is currently capped at 400 megawatts (MW) of installed capacity.  DOER announced this spring that the program cap had been exceeded months earlier than expected with applications totaling more than 550 MW.  While reaching the 400 MW cap four years before Governor Patrick’s target is a remarkable step for the Commonwealth of Massachusetts and its renewable energy goals, it left the solar industry in Massachusetts, particularly those developers with projects on the waiting list, with questions about solar’s present and future in the state.

In Massachusetts, participation in the Solar Carve-Out enables a solar system to produce Solar Renewable Energy Certificates (SRECs).  For each megawatt-hour generated by a qualified solar system, it receives one SREC, which can be sold on the open market or at auction.  Distribution companies purchase SRECs to meet their compliance obligations under Massachusetts’ Renewable Portfolio Standard, which requires distribution companies to fill a minimum percentage of their electricity sales with generation qualified under the Solar Carve-Out.

At the stakeholder meeting, DOER announced that it will scrap the 400 MW cap; all projects that applied to DOER and executed an Interconnection Service Agreement with a local distribution company by June 7, 2013 will qualify under and be able to participate in the existing Solar Carve-Out if they meet prescribed project construction deadlines. Specifically, a solar project must be completely installed and receive authorization to interconnect from a local distribution company by December 31, 2013.  If a project does not meet the December 31 deadline, it may receive an extension until March 31, 2014 if it can demonstrate that it expended at least 50 percent of its total construction costs by December 31, 2013.  Finally, if a project can demonstrate that it is ready to begin operations and is only waiting for a distribution company to issue its authority to interconnect, the qualification deadline is extended indefinitely.  DOER also intends to recalibrate the Solar Carve-Out compliance obligations of distribution companies to match the extended cap. The emergency regulation is expected to be published this month.

DOER’s emergency regulation comes as welcome news to developers and investors who faced the possibility that projects in which they have already placed substantial investments would lose access to the potentially significant revenue stream created by the Solar Carve-Out.  DOER’s extension of the Solar Carve-Out program demonstrates the agency’s preference for solar projects that are well invested and significantly developed and its awareness of the vital role that the Solar Carve-Out has played in the rapid growth of the solar industry in Massachusetts. 

DOER has also begun the rulemaking process for a new Solar Carve-Out to meet Governor Patrick’s recently announced goal of an aggregate of 1,600 MW of installed solar generation capacity by 2020.  While still in the early stages, “Phase II” of the Solar Carve-Out will consist of a new cap, a separate SREC market, and new compliance obligations for retail suppliers.  DOER is accepting public comments on its plans for the post-400 MW program through June 21.