United States: Emergency Extension Promulgated; Factors Reduced

Last Updated: July 14 2016
Article by Adam Harmon

On April 8, 2016 the Massachusetts Department of Energy Resources (DOER) filed emergency changes to 225 CMR 14.00 with the Secretary of the Commonwealth in an effort to bridge the gap between the expiration of the current solar incentive program and the expected publication of a new solar incentive program. Subsequent to a public hearing and comment period, DOER made several responsive modifications, and finalized the regulations which the Secretary of the Commonwealth officially promulgated as of July 1, 2016. Specifically, DOER made two major changes:

1. A Four Month Extension Beyond January 8, 2017; But at a Cost

Responding to multiple stakeholder comments requesting an extension of SREC II availability for those Generation Units which have received a statement of Qualification but have not yet received their authorization to interconnect or permission to operate, DOER is offering a four month extension. Similar to the extension granted between SREC I and SREC II, DOER added the following language:

If a Solar Carve-out II Renewable Generation Unit can demonstrate to the Department's satisfaction that it has expended at least 50% of its total construction costs by January 8, 2017, it will be provided an extension through May 8, 2017, at which point the Generation Unit must provide evidence that it has received its authorization to interconnect or permission to operate, or that it meets the criteria to qualify for an additional extension under 225 CMR 14.05(9)(s)4.b or c.

The additional language gives an opportunity for Generation Units which have expended at least 50% of their total construction costs prior to January 8, 2017, and leaves in place the current ability to apply for an extension if interconnection depends only upon receipt of notice of authorization to interconnect from the distribution company or for good cause. While the four month extension provides some comfort to those stakeholders who have applied for an SREC authorization and begun solar development projects, it was accompanied by a second change which reduces the benefit of SRECs developed under such extension.

2. SREC Factor Reduction – The Cost of Extension

In order to mitigate the cost impact of the SREC II extension, projects will be qualified under a reduced SREC Factor according to the following language:

Notwithstanding 225 CMR 14.05(9)(l)3, any Solar Carve-out II Renewable Generation Unit that has a nameplate capacity equal to or less than 25 kW and receives an authorization to interconnect after January 8, 2017 or that qualifies for an extension under 225 CMR 14.05(9)(s)4.a will receive a lower SREC Factor that shall be established in a revision to the SREC Factor Guideline on or before August 31, 2016.

According to the DOER interpretation, this language applies to two types of projects. First, those that are equal to or less than 25kW and receive an authorization to interconnect after January 8, 2017, and second, those that are greater than 25kW and qualify for an extension due to having spent more than 50% of construction costs prior to January 8, 2017. The revised SREC Factor Guidelines will be available prior to August 31, 2016.

While the extension grant is good news for Solar Developers who began projects and submitted applications prior to the SREC cap being reached, but who have not yet completed construction, the associated lower SREC Factor thereunder will necessitate difficult choices ahead. This approach may give insight into what we can expect to see in the future as DOER moves to implement St. 2016, c. 75, § 11(b), "An Act Relative to Solar Energy," in which the Legislature directed DOER to create a new solar incentive program taking into account costs.

An unofficial version of 225.CMR 14.00 with the new language can be found at the DOER website here, and an official version may be obtained through the Secretary of the Commonwealth.

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