Archive for the ‘Massachusetts’ Category

Massachusetts SREC-II Update – April 2017

Posted April 21st, 2017 by SRECTrade.

In the last month we have two new and important pieces of information. On March 13, the Department of Energy Resources (DOER) updated the list of projects with a Statement of Qualification (SQA) and NEPOOL-GIS published the 2016 year-end SREC supply figures. Since our last update in SREC-II, the DOER announced that projects lacking an extension from DOER would lose their SQA. However, such projects are allowed to re-apply for an SQA with the understanding of the lower SREC factors. Please see the full presentation of data and analysis here.

Based on the latest information, we see the total installed & operational capacity in SREC-II is 812 MW, with an additional 1,076 MW qualified but not yet operational:

MA SREC-II qualified-capacity-over-time

With the year-end figures on SREC-II supply coming in at 556,510 we can better estimate the extent of over-supply for the year. Note that while the supply figures are out for the year, we won’t see the aggregate demand figures for a few weeks still. Using 2015 figures as a proxy, we estimate an oversupply of 282,802 MA16 SREC-IIs:

MA16 SREC-II srec-oversupply

With such a large surplus of SRECs, we’re certain to see a Solar Credit Clearinghouse Auction (SCCA) this summer. Recall that the DOER will accept SRECs until June 15 before initiating the Clearinghouse Auction towards the end of July. During that interval, the DOER will announce the 2018 Minimum Standard, which may increase if the SCCA does not clear by Round 2:

www_mass_gov_eea_docs_doer_renewables_solar_srec-presentation_pdf

Source: DOER

DOER Announces Final SREC-II Factor Guidelines

Posted March 27th, 2017 by SRECTrade.

On Thursday, March 23rd the DOER provided an update on the finalized SREC-II program SREC Factors for projects over 25 kW that have not previously qualified for an SREC-II extension.

All SREC-II facilities that have a Statement of Qualification (SQA), but have not yet received an extension, will have their SQAs rejected. New applications may be submitted for these facilities, however, to seek an extension under these new guidelines. Any extension granted will be effective until March 31, 2018 at the following factors:

new-market-factors

Please note that SREC-II systems with a capacity equal to or less than 25 kW will still receive an SREC Factor of 0.8, so long as they receive their authorization to interconnect before the effective date of the SMART program.

Facilities eligible for the extension are those that have not already received either a mechanically complete or 50% construction cost extension; facilities that can demonstrate that they are mechanically complete or commercially operational by March 31, 2018 will receive their respective SREC Factor listed above.

Massachusetts DOER Announces Final Program Design for successor to SREC-II

Posted February 1st, 2017 by SRECTrade.

On January 31, 2017 the Massachusetts Department of Energy Resources (DOER) unveiled their final program design for a new solar incentive mechanism following the very successful SREC-II program. The forty-seven slides linked above provide a highly-detailed review. Below, please find a brief summary of pertinent issues. Please keep in mind this information is proposed by DOER. Stakeholders are encouraged to submit comments to DOER.SREC@state.ma.us by February 17.

SREC-II
SREC-II will continue until the new scheme is implemented with reduced SREC-factors (30% of original). Expected fuse left on SREC-II development: through 2017

new_srec-ii_factors
Projects that did not qualify in time for the January 8th deadline will lose their Assurance of Qualification and have to re-apply. New projects may also apply for SREC-II qualification.

Please note that projects 25kW or less will continue to be approved at the 0.8 SREC Factor until the next program begins. The 0.7 SREC Factor for the extension only applies to those projects in market sector A that are over 25kW.

New Program (SMART)
Goal: 1600MW of new solar

Incentive mechanism: Declining Block with payment in the form of Net-metering credits or on-bill credits. Additionally, a buy-all, sell-all rate will be available.

Incentive level: set once through a procurement of 100MW of large (> 1MW) projects. Such large projects will offer into the procurement and the marginal project will set the price for all winning projects. Large projects will have a 20-year payment term. Smaller projects will have their incentive level set by an index relative to the level determined by the competitive procurement described above. Small projects will have a ten-year payment term.

Incentive adders: Depending on location, type of off-taker and the addition of storage to a solar array, a project may earn a higher rate of incentive.

Both the base incentive level and incentive adders will decline 4% per block.

Process: DOER will file an Emergency Regulation which will trigger a 90-day regulatory process including hearings and written comments. Following the Emergency Regulations being implemented, three additional processes will occur: 1) RFP for Administrator of this program 2) RFP for 100MW of new PV (> 1MW only), 3) EDCs jointly file at DPU for cost recovery and approval.

 

DOER Announces Status of Next Generation Incentive Program and SREC-II Bridge

Posted January 24th, 2017 by SRECTrade.

This morning, the DOER provided an update on both the Next Generation Incentive Program and the transition between SREC-II and the new program.

Next Generation Incentive Program

The DOER  will present the final proposal for the design of the Next Generation Incentive Program at a public briefing on January 31, 2017. Per the DOER’s update, the “proposal will be used by DOER as the framework for the regulation to implement the program, which DOER plans to file in the coming weeks.”

SREC-II Transition

Due to the expected timeframe for the implementation of the Next Generation Incentive Program, the DOER is in the process of implementing interim measures to bridge the gap and ensure a smooth transition between SREC-II and the new program. The DOER will provide additional details regarding these interim measures in the January 31st meeting.

Information for the meeting is as follows:

Date: January 31, 2017
Time: 1:00-4:00PM
Location: Federal Reserve Building
Morris Auditorium
600 Atlantic Avenue

Boston, MA 02210

The Federal Reserve Building requires a list of all attendees in advance of the meeting. If you plan to attend the meeting, the DOER requests that you please fill out this form to RSVP by 5:00PM this Friday, January 27, 2017.

MA SREC-II Extension Webinar

Posted December 13th, 2016 by SRECTrade.

Earlier today, SRECTrade hosted a webinar covering the current state of the Massachusetts SREC-II program, key deadlines for qualifying systems under SREC-II, and SRECTrade application processes.

The application window is currently open for all MA systems, regardless of size, although qualification deadlines are approaching. Please feel free to reference SREC-II Extension Application Instructions HERE.

For access to the presentation slides, please click here: MA SREC-II Extension Webinar. To view a video recording of the webinar, please click the image below.

This document and recording is protected by copyright laws and contains material proprietary to SRECTrade, Inc. It or any components may not be reproduced, republished, distributed, transmitted, displayed, broadcast or otherwise exploited in any manner without the express prior written permission of SRECTrade, Inc. The receipt or possession of this document does not convey any rights to reproduce, disclose, or distribute its contents, or to manufacture, use, or sell anything that it may describe, in whole or in part. If consent to use these materials is granted, a link to the current version of this document on the SRECTrade website must be included for reference.

MA SREC-II Installer Webinar

Posted December 12th, 2016 by SRECTrade.

SRECTrade will be hosting a webinar this Tuesday, December 13th, at 2:00 PM EST. The webinar will cover the current state of the Massachusetts SREC-II program, key deadlines for qualifying systems under SREC-II, and SRECTrade application processes to consider as the program’s close approaches.

To attend the webinar click HERE to register. A recording will be made available on SRECTrade’s blog for those unable to attend.

Massachusetts DOER Updates Exempt Load Figures

Posted November 16th, 2016 by SRECTrade.

On November 14, the DOER updated the exempt load projections for both SREC-I and SREC-II, as well as provided information on the total volume of re-minted SRECs available in the market. These two data points impact the level of demand and expected supply, respectively.

Briefly on SREC-II, the exempt load numbers for 2016 and 2017 increased slightly, which will in turn lower aggregate demand. We already anticipated those markets being oversupplied and with this new data, this assumption strengthens. See our most recent analysis for a deeper dive.

As a follow-up to our recent post on the MA16 SREC-I market, we will incorporate recent data published by the Department of Energy Resources (DOER) and re-examine supply assumptions to provide another view into the recent weakness in the market.

Starting with the demand side of the market, we now project the total market demand for MA16 SREC-I in the range of 807,203 – 832,507, depending on the total amount of electricity sales. Note, the scenario on the left assumes load is down approximately 3% from 2015, while the scenario on the right keeps load flat at the estimated 2015 levels.

2016_11_04_SREC-I_Model

For a more nuanced view on the projected supply for the year, we consider using Q3 and Q4 issued SRECs from 2015 as a proxy for this year. Adding those figures to SRECs already issued in Q1 and Q2 of this year results in an estimated supply of 818,761 for MA16 SREC-I.

With the latest data from DOER, we can now add 50,499 additional SRECs to the supply side. These SRECs are re-minted volumes from past Clearinghouse Auctions that are eligible for compliance on 2016. In sum, we anticipate a total supply of 869,260.

When compared to the range of demand we anticipate the market is long by 4%-8% of demand, or 36,753-62,057 SRECs:

2016_11_04_SREC-I_Model

Factors that could swing the market one way or the other include how much electricity is sold and how much output comes from the installed capacity. Additionally, although the market is potentially oversupplied, it is possible some participants may not bring supply to the market if market prices are lower than their expectations. This could influence price upward to levels we experienced earlier in the year. On the other side, if natural buy-side demand chooses to take a wait and see approach the efficiency of the market can be impacted and influence price downward. The latter has been the case over the past months as the market has moved down on a dearth of natural buy-side demand.

MA16 SREC-I Market Review

Posted November 3rd, 2016 by SRECTrade.

With the October issuance of Q2 2016 SRECs behind us, we are now approximately halfway through the 2016 energy year in Massachusetts. This blog post will take into account observed issuance numbers from the first half of the year and use projections for future issuance periods to understand what caused the fall in MA16 SREC-I prices from $450+ in January to more recent bids of $380. We will look at the supply and demand balance in order to survey what may be coming in the months ahead.

Recall that demand is driven by retail electric sales in the State. The latest data we have comes from 2014, a year in which 48,129,294 MWh were sold. If we assume that retail electricity sales are flat and we apply the obligation of 1.76% and then adjust for exempted load, we derive a total estimated demand of 833,780 SRECs:

MA16 SREC-I Demand

On the supply side of the market, the simplest analysis assumes the market generates nearly 784,000 SRECs and when combined with the re-minted volumes from this year’s SCCA (1,898), then we get a total supply of 785,886. When compared to the demand outlined above, we conclude the market is short nearly 48,000 SRECs.

MA16 REC-I simple supply

What would explain falling prices in a market that is potentially under-supplied? The quick answer is that perhaps retail sales of electricity are falling instead of flat, which would lower the demand. Alternatively, perhaps the supply of SRECs is higher than detailed. We’ll examine some supply scenarios first.

One component of supply is the banked SRECs from prior years. Retail suppliers can bank up to 10% of their annual obligation for use in future years. The maximum volume of banked RECs in the market is estimated at 65,382 – the sum of the total obligation in 2014 and 2015 multiplied by 10%. If all of those SRECs were brought to market in 2016, then we would see the market long by 17,488 SRECs. We see that scenario as unlikely since 2015 was short and the bank may have been used to avoid paying Alternative Compliance Payments (ACPs). On the other hand, it’s possible that between re-minted SRECs from the 2013 and 2014 SCCCA and banked volumes, that upwards of 15,000 SRECs from prior vintages may impact the 2016 market. This source of supply would help to tighten the balance of supply and demand, but not necessarily push to over-supply.

Examining a different scenario on the demand side, even if retail sales were down 3%, the total SREC demand would still sit at 808,414, leaving a tight, yet still under-supplied market based on the simpler supply analysis.

Another element worth mentioning is liquidity. While a healthy market needs liquidity from both buyers and sellers in order to function properly, we will direct our attention to the buy-side. Because there are far more sellers than buyers in this market, an absence of even a handful of buyers is far more impactful to the efficiency of the SREC markets than the absence of an equivalent number of sellers.

In recent months we have observed a noticeably subdued level of activity from buyers. What happens when SRECs are issued and a bunch of sellers come into a quiet market? As evidenced from pricing over the last month, bids start to retreat:

Market_Insights___SRECTrade

A simplistic read of the current state of the market is that prices have dropped due to the possibility of oversupply. However, deeper examination of current supply and demand in SREC-I markets points towards a tighter, more balanced market. The bearish sentiment reflected in recent weeks may actually reflect a lack of activity from natural compliance buyers in the face of a glut of supply coming to market after Q2 issuance. These two scenarios mean very different things for medium to long term “equilibrium” pricing in the SREC-I market. A structural and persistent oversupply, a scenario we do not perceive as likely, would mean that lower prices are justified and here to stay. A mismatch of liquidity due to trading preferences of buyers and sellers however would point towards short term volatility but longer term stability in supportive SREC prices.

As always, we will continue to provide follow-up analysis as more information becomes available.  Feel free to reach out to your contacts on SRECTrade’s brokerage desk with any questions you may have.

 

Disclaimer. This document, data, and/or any of its components (collectively, the “Materials”) are for informational purposes only. The Materials are not intended as investment, tax, legal, or financial advice, or as an offer or solicitation for the purpose or sale of any financial instrument. SRECTrade, Inc. does not warranty or guarantee the market data or other information included herein, as to its completeness, accuracy, or fitness for a particular purpose, express or implied, and such market data and information are subject to change without notice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Any comments or statements made herein do not necessarily reflect those of SRECTrade, Inc. SRECTrade, Inc. may have issued, and may in the future issue, other communications, data, or reports that are inconsistent with, and reach different conclusions from, the information presented herein.

Copyright. This document is protected by copyright laws and contains material proprietary to SRECTrade, Inc. This document, data, and/or any of its components (collectively, the “Materials”) may not be reproduced, republished, distributed, transmitted, displayed, broadcasted or otherwise disseminated or exploited in any manner without the express prior written permission of SRECTrade, Inc. The receipt or possession of the Materials does not convey any rights to reproduce, disclose, or distribute its contents, or to manufacture, use, or sell anything that it may describe, in whole or in part. If consent to use the Materials is granted, reference and sourcing must be attributed to the Materials and to SRECTrade, Inc. If you have questions about the use or reproduction of the Materials, please contact SRECTrade, Inc.

MA DOER Seeking Comments on Next Generation Solar Incentive Straw Proposal

Posted October 25th, 2016 by SRECTrade.

On September 23, 2016, the Massachusetts Department of Energy Resources (DOER) presented its Straw Proposal to outline its vision for the next solar incentive program for the state. The DOER is proposing to shift away from the state’s successful SREC program, which has created one of the largest and most robust solar markets in the country.

Under the DOER’s proposal, a declining block feed-in-tariff would be established in regulated utility territories, and a separate program would be created for municipal light districts. Moving away from the current market-based framework will impose a substantial transition burden and introduce new costs to participants. The shift to a completely different program will have a negative impact on the viability of the solar industry in the interim and poses uncertainty moving forward.

Massachusetts has installed more than 1,200 MW of operational solar capacity to date and was ranked 2nd in the nation in total solar industry employment in 2015. Replacing the current market-based framework with a declining block feed-in-tariff will not only be costly to all stakeholders, but it will also fail to satisfy the DOER’s objective to “provide clear policy mechanisms that control ratepayer costs and exposures”. By imposing this new and complicated model, the DOER will force the state’s many market participants to manage, understand, and abide by multiple programs at once. This will undoubtedly increase soft costs and increase administrative burden across the industry.

In contrast, establishing an SREC-III program would allow the state’s solar industry to continue relying on a market-based policy to set incentive levels and forge ahead on its path to a stable, equitable, and self-sustaining solar market. By making adjustments to SREC factors, market sectors, the SCCA and SACP, the Commonwealth can continue to benefit from the successful SREC model and preserve the progress it has made since SREC-I was implemented six years ago.

SRECTrade encourages all stakeholders in the Massachusetts solar market to submit comments in support of a smooth transition to another successful SREC program. Comments can be submitted to the DOER via email at DOER.SREC@state.ma.us and must be submitted by this Friday, October 28th.

Massachusetts SREC-II Update – September 2016

Posted September 26th, 2016 by SRECTrade.

The Department of Energy Resources (DOER) published an updated list of projects with a Statement of Qualification (SQA) on August 25, 2016. Since the last update in July not much has changed in the SREC-II landscape. Expected oversupply still remains the reality reflected in pricing for 2016. Similarly, monthly build-rates are more or less unchanged. The total installed capacity increased 65MW since the last update, bringing us to 573.54 MW. You can find our in-depth analysis here. Below, please find some highlights.

Based on the latest data, there are currently 573.54 MW of operational assets, with an additional 956.87 MW that is qualified, but not operational:

Installed Capacity

Finally, based on current build rates, we continue to see a gross oversupply for the MA2016 SREC-II market:

S, D

Thus far, the market has generated 82,758 MA2016 SREC-IIs and based on current build-rates and installed capacity, we estimate an additional 473,084 SRECs coming later in the year. Adding in the re-minted volumes of 67,046, we see a potential pool of supply upwards of 622,888. Compare that supply figure to the demand side of approximately 327,471 and we conclude the market is oversupplied by 90%. In other words, nearly half of all MA2016 SRECs may find their way to the Solar Credit Clearinghouse Auction next year.

 

Disclaimer. This document, data, and/or any of its components (collectively, the “Materials”) are for informational purposes only. The Materials are not intended as investment, tax, legal, or financial advice, or as an offer or solicitation for the purpose or sale of any financial instrument. SRECTrade, Inc. does not warranty or guarantee the market data or other information included herein, as to its completeness, accuracy, or fitness for a particular purpose, express or implied, and such market data and information are subject to change without notice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Any comments or statements made herein do not necessarily reflect those of SRECTrade, Inc. SRECTrade, Inc. may have issued, and may in the future issue, other communications, data, or reports that are inconsistent with, and reach different conclusions from, the information presented herein.

Copyright. This document is protected by copyright laws and contains material proprietary to SRECTrade, Inc. This document, data, and/or any of its components (collectively, the “Materials”) may not be reproduced, republished, distributed, transmitted, displayed, broadcasted or otherwise disseminated or exploited in any manner without the express prior written permission of SRECTrade, Inc. The receipt or possession of the Materials does not convey any rights to reproduce, disclose, or distribute its contents, or to manufacture, use, or sell anything that it may describe, in whole or in part. If consent to use the Materials is granted, reference and sourcing must be attributed to the Materials and to SRECTrade, Inc. If you have questions about the use or reproduction of the Materials, please contact SRECTrade, Inc.