The Massachusetts Department of Energy Resources (DOER) launched the first Massachusetts SREC market in January 2010. The program now referred to as SREC-I was initially set with a capacity cap of 400 MW DC. In lieu of a traditional, pre-determined increase in the number of SRECs required year over year, the DOER utilizes a formula that takes in to consideration build rates and the performance of a state-run auction, to determine annual SREC requirements. The DOER is currently in the process of transitioning from the SREC-I program to a new SREC-II program that will allow a total solar capacity of 1,600 MW DC to produce SRECs. The rules and scope of the SREC-II program are not yet official.
The Massachusetts SREC programs are built around a price support mechanism called the Solar Credit Clearinghouse Auction (SCCA). In over-supplied years (more SRECs are available than are required) buyers are incentivized to purchase SRECs through the SCCA, if they believe that the SCCA price is at or below the potential future price of the SRECs. SRECs from the SREC-I program may only be deposited in an SREC-I SCCA and SRECs from the SREC-II may only be deposited in an SREC-II SCCA. Furthermore, the program rules do not require buyers to purchase SRECs through the SCCA, so there is no guarantee that SRECs deposited in an SCCA will be purchased. Buyers that do buy SRECs in the SCCA must pay pre-determined purchase prices. However, the DOER takes a 5% administration fee for each sale, so the potential value to a seller with SRECs in the SCCA is the pre-set SCCA price, less 5%. SRECs eligible for the SREC-I program have a fixed potential SCCA sale price of $285 per SREC ($300 less the 5% DOER administrative fee).
Markets for MA systems
Massachusetts SRECs are defined by eligibility for the DOER Solar Credit Clearinghouse Auction. Eligible facilities may produce DOER Solar Credit Clearinghouse Auction eligible SRECs from no more than 40 quarters (10 years) of power generation. Applications submitted after certain program deadlines may either truncate the eligibility period or delay the start of eligibility until some time after the date of interconnection.
The Massachusetts SREC market is actually split in to two distinct programs with different SREC price requirements. SREC-I was started in 2010 and will be officially capped in June 2014 to allow no further capacity. SREC-II, while not yet official, is expected to start accepting SREC applications in early 2014. The aggregate goal for both programs is to incentivize 1,600 MW DC of solar capacity. The yearly SREC requirement for each program is established using a formula that takes in to account previous years' qualified capacity build rates and the performance of the DOER Solar Credit Clearinghouse Auction in over-supplied years.
The formula for determining the SREC requirement under both the SREC-I and SREC-II programs is as follows:
"Banked Volume" refers to the number of SRECs deposited in each program's Solar Credit Clearinghouse.
Facilities must report generation from revenue grade meters. Facilities with a nameplate capacity > 10 kW must report automatically using an acceptable revenue grade meter online monitoring system.
Upon date of interconnection, as long as the system is certified by the state before that quarter's SREC's are generated. A system should apply for certification around the date of interconnection to assure they receive full credit for their generation.
The Solar Alternative Compliance Payment (SACP) is the penalty price, that power providers must pay per SREC if they are unable to file the required number of SRECs at the end of the compliance period. The SACP price decreases over time with both the SREC-I and SREC-II programs. The SACP price and the yearly SREC requirement are what create the SREC market.
SRECs unsold by the end of each trading year (June) must be deposited in the DOER Solar Credit Clearinghouse Auction (SCCA). If an SREC deposited in the SCCA is not purchased in the SCCA, then it is re-issued and must be sold within three years, however, the SREC may not be deposited in future Solar Credit Clearinghouse Auctions, effectively stripping the SREC of the SCCA price support. The risk of an unsuccessful SCCA sale and the time value of money are two reasons sellers will sell SRECs below the SCCA price in over-supplied years.
The breakdown of the state SREC market requirements as currently set by state legislation.
|Energy Year||Estimated Capacity (MW)||Estimated SRECs Required (MWh)||SACP|
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