Solar Update: Emergency DOER Regulations Will Strengthen Hot Solar Market In Massachusetts

The recent announcement that the Massachusetts Department of Energy Resources (DOER) will promulgate emergency regulations should alleviate concerns of many solar energy developers and their investors and lenders over a potential oversubscription of the Commonwealth’s Renewable Portfolio Standard (RPS) Solar Carve-Out program, that had a cap of 400 MW (400 MW Program).

BACKGROUND

May 1, 2013

• Patrick Administration announces that goal of 250 MW of solar generating capacity in Massachusetts by 2017 already achieved, 4 years early.
• Patrick Administration announces new goal of 1600 MW by 2020.
• Most commentators think remaining capacity in 400 MW Program will be utilized in next 12-18 months.
• As of May 20, 2013, 287 MW of capacity qualified by DOER and 113 MW available under 400 MW Program.

February-March, 2013

• DOER begins circulating draft regulations for post 400 MW Program.
• DOER solicits public comments and holds stakeholder meeting on March 22, 2013.
• Additional stakeholder meeting scheduled for June 7, 2013.

CURRENT STATUS – (IT’S RAININING SQAs)

April-June, 2013

• DOER sees steady increase in filing of Statement of Qualification Applications (SQAs) for the 400 MW Program.
• On May 29 DOER announces that it has received SQAs for over 500 MW.
• Before June 7 meeting DOER, received a total of 1,628 SQAs totaling 619 MW.  This was in addition to the 287 MW that were already qualified under the 400 MW Program.
• Applications numbered 306-1,628, totaling approximately 507 MW of capacity, are past the 400 MW line on DOER’s queue.
• Developers and Lenders worry-will their projects be eligible?
• What are the rules of the queue?
• Many projects below the line are fully permitted, have interconnection agreements, are under construction, and have substantial sums of money invested in reaching these objectives.
• Some projects above the line have none of the above.
• What will DOER do?

THE SOLUTION

• At June 7 Meeting (which was supposed to cover only post 400 MW Program) DOER announces it will issue emergency regulations.
• If your Project is below the 400 MW cap line on the DOER queue and greater than 100 KW, it still can qualify for the 400 MW Program (the capacity of which will be increased beyond 400 MW) and receive a Statement of Qualification from DOER (which a Project needs to mint Solar Renewable Energy Certificates (SRECs) and otherwise qualify for the other provisions of the 400 MW Program) if:

(a) Project has an executed interconnection agreement dated on or before June 7, 2013;and

(b) Project meets certain prescribed construction time lines.

• Prescribed Construction time lines are:

(a) Project must receive Authorization to Interconnect from its local distribution company on or before December 31, 2013;

(b) If Project has not received Authorization to Interconnect on or before December 31, 2013 and Project can demonstrate to DOER’s satisfaction that 50% of total construction costs of Project have been expended by December 31, 2013, then Project can receive an extension to March 31, 2014; and

(c) If Project is otherwise complete by December 31, 2013 or March 31, 2014 and interconnection depends only on receipt of notice of Authorization to Interconnect and such receipt is delayed caused by distribution company, ability to receive Statement of Qualification extended indefinitely until such notice is received or denied.

• Projects below the line and equal to or less than 100 KW, which have an Authorization to Interconnect and have submitted an SQA prior to the effective date of new regulations, shall also be provided a Statement of Qualification.
• The Compliance Obligation under the 400 MW Program, which encourages Retail Electricity Suppliers to purchase SRECs (or make more expensive Alternative Compliance Payments) will be adjusted upward based on the number of Qualified Units as of April 1, 2014.

Please note that DOER only released a summary of the content of the emergency regulations in a power point presentation at the June 7 meeting.  The actual emergency regulations, which are expected this month, will contain more details and specifics as to the general points delineated above.

DOER’s quick response to the deluge of SQAs and its clear criteria for inclusion of qualified projects below the 400 MW cap line in the current 400 MW Program has provided certainty to developers, investors and lending institutions that work in developing solar generating facilities.

It will help strengthen one of the hottest solar markets in the country (pun intended).

We will address any specifics contained in the actual emergency regulations and the proposals for the post 400 MW Program in future blog posts.