February 9, 2016
The Sun has Set on the SREC-II Program
Last Friday, Feb 5th DOER announced that the SREC-II program has been fully subscribed. The SREC-II program, instituted in 2014 as an extension of the original Massachusetts SREC-I program, was designed to incentivize solar development to reach the Commonwealth’s goal of installing 1,600 megawatts (MW) of solar energy by 2020. The program issues Solar Renewable Energy Certificates (SRECs), which are financial incentives based on the amount of solar energy a system generates. On January 5, 2016 the Department of Energy Resources (DOER), the body that regulates the program, allocated 120 MW of SREC-II to sub-25 kilowatt (kW) systems, leaving roughly 250 MW under the SREC-II cap for projects greater than 25 kW. By January 25, the 250 MW was down to 100 MW.
When these numbers were updated on February 1, 2016, nearly all of that capacity was gone, leaving only 22 MW under the cap for solar projects greater than 25 kW. And just a few days later on February 5, DOER announced the program had been fully subscribed having received an influx of applications and “…exceeding the cap for projects over 25kW DC by more than 193 MW DC.” While those customers who already receive SRECs remain eligible, due to the rapid flood of applications the potential exists that many customers who have already made investments in solar energy systems and have not yet received a confirmation of qualification, could be left without access to the state’s SREC-II incentive. Also, unlike its predecessor SREC-I, there is no “bridge” program for the solar industry to offer potential customers while the next program is developed. Effectively, the SREC-II program has run its course, and DOER has yet to define a path forward.
SRECs play a substantial role in a solar owner’s return on investment. Without this crucial incentive, solar simply isn’t financially feasible for many small and medium business owners based on current material and installation costs. Without a path forward, not only does this produce indefinite uncertainty in the market and prevent millions of dollars of investment right here in Massachusetts, it’s also likely to cause hundreds if not thousands of layoffs in the solar industry across the state, and significant job/revenue loss for businesses that feed off the solar industry such as legal firms, CPAs, Engineering firms, and contractors.
While there remains close to 90 MW of space available under the SREC-II program for projects less than 25kW, that capacity is expected to fill up quickly as the DOER receives nearly 1 MW of applications per day for projects smaller than 25 kW.
The Net Metering Debate Continues
Meanwhile, for the past seven months, the solar industry has been restricted by the net metering cap; an arbitrary limit on the amount of energy utilities are legally required to reimburse to distributed solar energy generators at a fair retail rate. In short, the net metering policy allows consumers to sell the excess energy produced from their solar array back into the region’s electric grid by getting a credit against excess capacity produced – which is especially critical in the summer when peak production occurs. Net metering caps have already been hit in over 175 communities in Massachusetts, preventing Massachusetts citizens from recouping the full value of their clean energy investment, therefore reducing their incentive to invest.
Late last year, both the Senate (S-2058) and the House (H-3854) passed legislation with varying approaches to the long-term future of the state’s solar programs. Perhaps the most shocking part of the proposed legislation is that the House Bill would retroactively reduce the net metering credit rates for existing solar energy installations by 75% after the first 15 years of operation. That would mean taking away a key financial incentive that was already promised to owners and investors of solar systems.
Both bills were sent to the Telecommunications, Utilities & Energy conference committee in November to be reconciled in order to develop a comprehensive solution. Over three months later, the conference committee has failed to reach an agreement on the two bills leaving the solar industry and its thousands of stakeholders’ future at stake.
The End of Solar in MA?
Not necessarily, but we’ll need your help. While caps on two of the key incentives for solar is far from good news, we remain optimistic. Solect has been actively working with our state’s legislators, clean energy and environmental advocacy groups, clients and even our competitors to ensure the benefits of solar to homeowners, municipalities, business owners and non-profit institutions remain available, and to provide a practical path forward for the future of solar in MA. We are hopeful that an attractive “SREC-III” program will materialize quickly, but the solar industry and its customers do not have the leisure of waiting several months or longer for new solar policy to formalize.
We cannot wait any longer, and now we need your help.
The most effective way to affect change is to write an email to your local state representative asking them to lift the net metering cap, institute the next “SREC” program, and ask that they escalate your request to the Speaker of the House, Mr. Robert DeLeo.
We’ve drafted an email template you can use to urge your state legislators to take action in support of solar. Simply visit Find a Legislator or view the full contact list of Legislators by Town to locate your state representatives and senator(s), and send them the email (click the image below) today.
