Posts Tagged ‘Opt-In Term’

Massachusetts DOER Fixes Opt-In Term at 40 Quarters

Posted May 2nd, 2013 by SRECTrade.

The Massachusetts Department of Energy Resources (DOER) is expected to announce via a general email that they will forego the much anticipated DOER Solar Credit Clearinghouse Auction eligibility step down requirement for  systems registered after a certain date this year. Previously the DOER had stated that applications must be submitted by either June or July (the deadline was recently pushed to July 15th) in order to be eligible for the DOER Solar Credit Clearinghouse Auction for 40 quarters worth of SREC production.

This adjustment has a few obvious implications. The market will now last longer (40 quarters from the date that the 400th MW is installed) and all systems will have 40 quarters of eligibility from the date that they begin their SREC production eligibility. All solar facilities registered in the current version of the Massachusetts SREC market are limited to 40 quarters of Opt-In eligibility. This announcement does not imply that existing solar facilities now have more time to produce SRECs that are eligible for the DOER Solar Credit Clearinghouse Auction.

In Massachusetts SRECs are created on a quarterly basis and the DOER Solar Credit Clearinghouse Auction is viewed as a price support mechanism for the stability of SREC prices. The DOER Solar Credit Clearinghouse Auction goes in to effect in years where there are more SRECs available to the market than are required by the state’s Renewable Portfolio Standard (RPS). In previous trading years the market was under-supplied. The 2012 trading year is the first over-supplied year for Massachusetts SRECs and approximately 45,000 SRECs will be deposited in the inaugural DOER Solar Credit Clearinghouse Auction. For those  clients using SRECTrade’s asset management services, EasyREC, SRECTrade will automatically transfer any unsold SRECs to the DOER Solar Credit Clearinghouse Auction account. No action is required by clients utilizing this service. To learn more about the current state of the market and the upcoming DOER Solar Credit Clearinghouse Auction click here.

SRECTrade will continue to post updates on this topic as more information becomes available.

Massachussetts DOER Auction 40 Quarter Opt-In Deadline Now July 15th

Posted April 18th, 2013 by SRECTrade.

The Massachusetts Department of Energy Resources (DOER) sent out a general letter on April 12, 2013 clarifying the deadline for submitting an application to guarantee the 10 year/40 Quarter DOER Auction Opt-In Term. The new deadline is July 15, 2013. SRECTrade had originally communicated that the deadline was June 20, 2013 based on previously provided DOER information. SRECTrade will be be able to process EasyREC applications for the 10-year Opt-In Term if submitted by July 1, 2013. The earlier an application is submitted, the easier it will be to ensure that applications are processed in a timely fashion. We encourage early submission of applications.

Successful acceptance into the 10 year/40 Quarter DOER Auction Opt-In term begins upon the statement of qualification date. For example, if a project is accepted in Q3 2013, but not interconnected until Q1 2014, the project will forego 2 quarters (i.e. Q3 and Q4 2013) of DOER auction eligibility.

What is required to submit an application that qualifies for the 10 year Opt-In Term?

  • Completed EasyREC application (without letter of interconnection)
  • Must be submitted to SRECTrade before July 1, 2013
  • Proof of applicable state and local permits is required for projects greater than or equal to 1 MW

Massachusetts 10 Year Opt-in Term Deadline

Posted February 6th, 2013 by SRECTrade.

The opt-in term for MA systems will likely be reset to 8 years for systems that submit their information to the DOER after June 20th. SRECTrade customers should submit the complete system information for any new systems prior to June 1st to ensure that SRECTrade can process them and correct any errors prior to the June 20th deadline. Existing systems which are already qualified or have submitted their complete information will not be subject to any change in their opt-in term and do not need to take any action at this time.

There have been a number of questions recently submitted by astute readers of the MA solar carve-out rules about the potential for reduction in the opt-in term. One of the features of the MA solar carve-out is a dynamic opt-in term that expands and contracts based on the over or under supply of SRECs each year. The opt-in term is the length of time that a generation unit is eligible to participate in the Solar Credit Clearinghouse Auction, typically referred to as the last chance auction, run by the MA Department of Energy Resources.  The opt-in term was originally set to 40 quarters (10 years), and is increased or decreased by four quarters for each full 10% of the compliance obligation that is deposited into the last chance auction. However, it can only change by a maximum of 8 quarters per year, and can never go below 5 years or above 10 years. This system is designed to make solar installation less attractive in an over-build and more attractive in an under-build scenario, hopefully avoiding the significant volatility seen in other state SREC markets.

Each system is assigned an opt-in term at the time it receives its statement of qualification. The term commences the earlier of the RPS Effective date (the date a system is turned on or receives interconnection, whichever is later) or the first day of the next calendar quarter from the date of qualification. Once a system is assigned an opt-in term, it keeps that term for the life of the system. Any changes to the opt-in term only impact new systems going forward.

The opt-in term has remained at 10  years because no SRECs were deposited in the last chance auction last year. However, based on the installed base of systems in MA in 2012, SRECTrade calculates that approximately 50,000 more SRECs were produced than the 73,400 needed under the RPS. This will trigger a maximum 8 quarter reduction in the opt-in term. Systems can receive qualification prior to interconnection if a completed application is submitted to the DOER by June 20th.  Submitting an application to the DOER prior to  June 20th will allow the system to receive the current 10 year opt-in term. The applications will need to include all system information, however the system information can be updated with the final build specs when the interconnection letter is submitted.  We recommend that all SRECTrade customers have their full application in to SRECTrade by June 1st, to allow us to check for any missing information and ensure the completed application is submitted by the June 20th deadline.

For more information on the Massachusetts 10 year opt-in deadline please visit the Massachusetts Department of Energy Resources Statement of Qualification page.

Update, 2/25/2013, per an email from the DOER, systems greater than 1 MW must prove that they have received all applicable state and local permits (if they have not yet received interconnection) in order to qualify for the 10 year opt-in prior to June 20th. 

How long will projects be eligible for the Massachusetts Solar Carve-Out?

Posted March 16th, 2011 by SRECTrade.

Understanding the length of time that Massachusetts solar facilities can generate and sell SRECs as part of the Solar Carve-Out is key to financing solar in the state. In an earlier post, we explained the Massachusetts Last-Chance Auction in great detail. The purpose was to help stakeholders understand the conditions, if any, that would result in the SREC market dropping below $285. From there, it is also important to understand how long a facility can bank on the floor price set by the auction.

The Opt-In Term is the length of time a facility is eligible for the Last-Chance Auction
There are a few misconceptions regarding the “10-year” Opt-In Term and the 400 MW Minimum Standard Cap. For example, it might seem that the program is slated to last 10 years or until it reaches 400 MW, after which the SRECs go away. This is most definitely NOT true. The Opt-In Term actually represents the length of time that a facility that is approved for the SREC program can opt into the Last-Chance Auction, i.e. the amount of time a facility is guaranteed a floor price in the market. Once a facility is approved, this term cannot be changed – though the Opt-In Term for future projects may be adjusted by the DOER (see below).

The 400 MW Cap is a limit to the amount that will be approved for the Solar Carve-Out
Meanwhile, the 400 MW cap is actually just a limit to the capacity of projects that can be eligible for the Solar Carve-Out. The 400th MW approved for the SREC program will be eligible for the full-length of the published Opt-In Term. This means that if Massachusetts reaches 400 MW in 2015 and the Opt-In Term is still 10 years, then the Solar Carve-Out will fade out in 2025. In simple terms: the state will accept 400 MWs into the program and every accepted facility will be guaranteed a floor of $285 for “X years” from the time it is installed. “X years” will vary based on the Opt-In Term established in the year of installation.

The Opt-In Term may change for future projects
Today, the Opt-In Term is 10 years and that will not change for any existing projects. However, every year, the DOER may make a change to the Opt-In Term for NEW facilities based on the results of the last-chance auction. If there is an oversupply, then the Opt-In Term may be decreased by as much as 2 years to a minimum of 5 until 2017, and a minimum of zero thereafter. If there is a shortage, the Opt-In Term may be increased to a maximum of 10 years.

The Solar Carve-Out expires when the Opt-In Term ends for the final project approved under the 400 MW Cap
Finally, facilities can continue to sell SRECs after the Opt-In Term as long as the Solar Carve-Out program is still in place. The only difference is that those facilities will no longer be eligible for the Last-Chance Auction and therefore are not supported by the $285 floor price. The Solar Carve-Out will expire after the Opt-In Term for the final project registered under the 400 MW Cap has concluded AND all remaining SRECs created during that time have either been sold or expired. After this time, all facilities will be transferred to the RPS Class I REC market (which by that time could be worth very little).

Here are the key paragraphs taken from the DOER Solar Carve Out website worth reading carefully:

Minimum Standard Cap and Termination of the Program
The Minimum Standard is capped at 455,520 MWh (sufficient to enable the installation of approximately 400 MW of solar PV). When DOER qualifies 400 MW of solar for the program, qualification of all additional solar installations is transferred to the RPS Class I Program. Once the cap has been met, the Minimum Standard for the RPS Solar Carve-Out will be set annually per regulation to maintain market balance. The RPS Solar Carve-Out program remains in effect until all the Auction Opt-In Terms of the qualified projects and the full shelf-life years of any Re-Minted Auction SRECs have both expired, thereby maintaining the price certainty promised to all solar generators. For the year after the final Compliance Year, when the Solar Carve-Out Minimum Standard is set to zero SRECs shall cease to exist, and all generation from qualified Solar Carve-Out Renewable Generation Units shall produce RPS Class I Renewable Energy Attributes.

Opt-In Term
The Auction Opt-­In Term is defined as the number of years (expressed in calendar quarters) that a project is eligible to deposit SRECs into the Solar Credit Clearinghouse Auction Account. For all projects qualified in 2010, this is set at 10 years, or 40 quarters. Any SRECs generated in this span of 40 quarters will be eligible to participate in an auction that will potentially be held each July, where they will be assured a price of $300/MWh for their SRECs (minus a $15 auction fee assessed by DOER). This mechanism sets a floor price for SRECs and gives projects long-­term price assurance should they be unable to sell them directly to LSEs or there be an oversupply of SRECs. Once a project’s Opt-In Term has expired, its owner may continue to sell their SRECs until the program officially ends, but will not have the price assurance guaranteed by the ability to Opt-­In to the auction.

Adjustments to Auction Opt-In Term
Long Market (SREC Oversupply) Adjustment: The Auction Opt-In Term is reduced by 4 quarters for each full 10% of the year’s Compliance Obligation that is deposited into the Auction Account. The maximum reduction per annual adjustment is two years. The minimum Auction Opt-In Term is 20 quarters or 5 years for the first 7 years of the program (through Compliance Year 2016). After that time, the minimum term is reduced to zero years, unless otherwise set by the Department of Energy Resources (DOER). Short Market (SREC Shortage) Adjustment: The Auction Opt-In Term is increased by 4 quarters for each full 10% of the year’s Compliance Obligation that is met through Alternative Compliance Payments. The maximum reduction per annual adjustment is two years. The maximum Opt-In Term is 40 quarters.

In conclusion, we will monitor the Opt-In Term as it is published each year by the DOER. The term will not change for existing projects once established, but it will impact new projects. Solar developers should consider this as they do project finance for facilities that may not be completed this year. Given the shortage in the SREC market in 2010, we do not foresee any changes to the Opt-In Term in 2011.

SRECTrade continues to offer long-term Fixed-Price and Upfront SREC payments for solar projects in Massachusetts.