The Massachusetts Department of Energy Resources (DOER) earlier this year released its proposal for the Commonwealth’s next solar energy incentive program, the Solar Carve-Out II program (SREC II).  The program will increase to 1600 MW the amount of solar generation in Massachusetts qualified to produce solar renewable energy certificates (SRECs), well above the 400 MW cap set by the existing and now-over-subscribed first Solar Carve-Out program.  DOER is hosting a public hearing on the proposed regulations and is accepting written comments until January 29, 2014.

The SREC II proposal includes many of the same mechanics as DOER’s first Solar Carve-Out program.  Qualified renewable generation units will produce SRECs for 40 calendar quarters that may be sold or deposited into an auction account for bidding.  The auction price, which sets a price floor, will initially be fixed at $300 per SREC, the same auction price that currently exists under the first Solar Carve-Out program.  The SREC II auction price will decrease in subsequent years beginning in 2017.

One new aspect of SREC II is the segmentation of generation units into four market sectors, with each sector receiving its own SREC Factor (which determines the number of SRECs per MWh of electricity generated by a generation unit):

• Market Sector A: any Generation Unit with a capacity less than or equal to 25kW, Solar Parking Canopy Generation Units, Emergency Power Generation Units or Community Shared Solar Generation Units.  Proposed SREC Factor:  1.0

• Market Sector B: any Building Mounted Generation Unit, or ground mounted Generation Units with a capacity of greater than 25 kW for which 67 percent or more of its annual electric output is used on-site.  Proposed SREC Factor: 0.9

• Market Sector C: any Generation Unit with 50 percent or more of the equipment used for generating power installed at an Eligible Landfill or Brownfield and any Generation Unit with a nameplate capacity less than or equal to 500 kW for which less than 67 percent of annual electrical output is used on-site.  Proposed SREC Factor: 0.8

• Managed Growth Sector: any units that do not meet the requirements for the other market sectors.  Proposed SREC Factor: 0.7

The SREC Factor is designed to create an incentive to develop smaller solar generation units and a greater variety of generation units.  DOER plans to review SREC Factors in early 2016 with any changes applying to generation units qualified on or after January 1, 2017.

The Managed Growth Sector is subject to an annual capacity cap.  Each year, DOER will prescribe an annual capacity block to be filled by qualified generation units in the Managed Growth Sector.  DOER’s proposed annual capacity block for 2014 is 26 MW, and for 2015 the capacity block is 80 MW.  DOER will announce the annual capacity blocks two years in advance for future years.