Solar Renewable Energy Certificates (SREC-II)

Summary

Massachusetts' renewable portfolio standard (RPS) requires each regulated electricity supplier/provider serving retail customers in the state* to include in the electricity it sells 15% qualifying renewables by December 31, 2020. The RPS was significantly expanded by legislation enacted in July 2008 (S.B. 2768), which established two separate renewable standards -- a standard for “Class I” renewables, and a standard for “Class II” renewables. The Massachusetts Department of Energy Resources (DOER) regulates the RPS and developed corresponding rules. In January 2011, final rules were implemented for the state's Solar Carve-Out program, which is the portion of the required renewable energy under the Class I Standard that must come from qualified, in-state, interconnected solar facilities. In April 2014, final rules were implemented that ended the application period for the original Solar Carve-Out Program, and established the Solar Carve-Out II Program.

Facilities qualified under the Solar Carve-Out II Program generate Solar Renewable Energy Certificates (SREC IIs), which represent the renewable attributes of solar generation, bundled in minimum denominations of one megawatt-hour (MWh) of production. Massachusetts' Solar Carve-Out II provides a means for SREC IIs to be created and verified, and allows electric suppliers to buy these certificates in order to meet their solar RPS requirements. All electric suppliers must use SREC IIs to demonstrate compliance with the RPS. The price of SREC IIs is determined primarily by market availability, although the DOER has created a certain amount of market stability by establishing a state Solar Credit Clearinghouse Auction II (where prices are fixed according to a yearly schedule minus a 5% administrative fee), as well as the Solar Alternative Compliance Payment (SACP) for the state RPS (set at $375/MWh for 2014). The Solar Credit Clearinghouse Auction II should only be utilized if or when SREC II generators cannot sell their SREC IIs on the open market.

Only solar-electric facilities built on or after January 1, 2012, may be qualified to generate SREC IIs. SREC IIs are generated on or after January 1, 2014, since that is the date the Solar Carve-Out program took effect. Generators must apply and receive a statement of qualification (SQ) from the DOER and must establish an account with NEPOOL GIS in order to participate in this program.

The SACP is currently set at $375 (2014) and the Solar Credit Clearinghouse Auction II price is currently set at $300 (2014). Both prices decline over time according to the following schedules:

The Solar Carve-Out and Solar Carve-Out II programs are intended to support approximately 1,600 MW of solar facilities in Massachusetts. As the Solar Carve-Out Program has approximately 659 MW of qualified facilities, the Solar Carve-Out II Program will support approximately 941 MW of additional solar facilities by no later than 2020. Qualified projects will generate SREC IIs for the ten years from the date they are qualified. After ten years, facilities will continue to be eligible to generate renewable energy credits (RECs) and will be able to sell those for compliance under the Class I standard.