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Massachusetts Department of Energy Resources (DOER) Unveils Emergency Regulation to Address Oversupply of Solar Applications

At a recent solar stakeholder meeting, the Massachusetts Department of Energy Resources (DOER) outlined its emergency regulation that will address the recent influx of applications for the Massachusetts Solar Carve-Out.  The Solar Carve-Out program, which was established in 2009, is currently capped at 400 megawatts (MW) of installed capacity.  DOER announced this spring that the program cap had been exceeded months earlier than expected with applications totaling more than 550 MW.  While reaching the 400 MW cap four years before Governor Patrick’s target is a remarkable step for the Commonwealth of Massachusetts and its renewable energy goals, it left the solar industry in Massachusetts, particularly those developers with projects on the waiting list, with questions about solar’s present and future in the state.

In Massachusetts, participation in the Solar Carve-Out enables a solar system to produce Solar Renewable Energy Certificates (SRECs).  For each megawatt-hour generated by a qualified solar system, it receives one SREC, which can be sold on the open market or at auction.  Distribution companies purchase SRECs to meet their compliance obligations under Massachusetts’ Renewable Portfolio Standard, which requires distribution companies to fill a minimum percentage of their electricity sales with generation qualified under the Solar Carve-Out.

At the stakeholder meeting, DOER announced that it will scrap the 400 MW cap; all projects that applied to DOER and executed an Interconnection Service Agreement with a local distribution company by June 7, 2013 will qualify under and be able to participate in the existing Solar Carve-Out if they meet prescribed project construction deadlines. Specifically, a solar project must be completely installed and receive authorization to interconnect from a local distribution company by December 31, 2013.  If a project does not meet the December 31 deadline, it may receive an extension until March 31, 2014 if it can demonstrate that it expended at least 50 percent of its total construction costs by December 31, 2013.  Finally, if a project can demonstrate that it is ready to begin operations and is only waiting for a distribution company to issue its authority to interconnect, the qualification deadline is extended indefinitely.  DOER also intends to recalibrate the Solar Carve-Out compliance obligations of distribution companies to match the extended cap. The emergency regulation is expected to be published this month.

DOER’s emergency regulation comes as welcome news to developers and investors who faced the possibility that projects in which they have already placed substantial investments would lose access to the potentially significant revenue stream created by the Solar Carve-Out.  DOER’s extension of the Solar Carve-Out program demonstrates the agency’s preference for solar projects that are well invested and significantly developed and its awareness of the vital role that the Solar Carve-Out has played in the rapid growth of the solar industry in Massachusetts. 

DOER has also begun the rulemaking process for a new Solar Carve-Out to meet Governor Patrick’s recently announced goal of an aggregate of 1,600 MW of installed solar generation capacity by 2020.  While still in the early stages, “Phase II” of the Solar Carve-Out will consist of a new cap, a separate SREC market, and new compliance obligations for retail suppliers.  DOER is accepting public comments on its plans for the post-400 MW program through June 21.

© 2019 McDermott Will & Emery

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