Massachusett's SREC-II Program is in the Crosshairs

Remember a few months ago in our blog post "The RECS are too Damn High" when we said to expect a major fight in the MA legislature over raising the net metering caps? Well it's here and it's getting ugly. We'll start with a little background and then dig into the current state of affairs which are volatile and subject to change.

In early 2014, Representative Frank Smizik, a solar friendly Democrat from Brookline, introduced House Bill 3901 which would have removed the caps on net metering through 2016 and mandated a commission to study the costs/benefits of net metering, etc. A similar bill, Senate Bill 2019 was introduced by State Senator Anthony Petruccelli. The solar industry cheered, but rumors quickly began swirling that the utilities were going to file a competing bill. In March 2014, they did when S.B. 2030 was filed by State Senator Michael Rodrigues with the ominous title "An Act reducing the cost of solar power through increased competition."

Fast forward to June 2014 and we have House Bill 4185. This bill was developed in closed door sessions by the utilities, MA DOER, and selected renewable energy stakeholders. The table below includes a brief synopsis of the provisions of the bill (although its possible there are some Easter eggs in here that we aren't catching at first glance).

This bill has really split the solar community in MA. On one side is the Solar Energy Industries Association (SEIA) and the New England Clean Energy Council and on the other is the Solar Energy Business Association of New England (SEBANE) and SREC aggregators like SREC Trade. The big takeaway that we take from this is that if you are planning any significant solar project in MA, you need to stop and wait for this process to play out. We think the residential and small commercial markets will be fine, but the impacts to the economics for larger (60+ kW) SREC-II based projects in the proposed SREC-II wind down period are unclear and it's hard to tell if this new regime will be better or worse. Our take is that compensation rates will go down, but financing might be easier and more predictable. 

This turn of events isn't entirely surprising as the utilities strongly expressed that central procurement/feed in tariff programs were their preference, but it is disappointing. The SREC-II program was the result of more than a year's worth of stakeholder input facilitated via a structured MA DOER process. It is now being dismantled by legislation that was crafted by a select group of insiders behind closed doors. We don't doubt that the proposed new solar regime in this legislation will be less costly (based on CT's ZREC experience and RI's current Feed in Tariff), but solar will get built more slowly and cynicism will reign regarding the regulatory climate in MA. What's the point of participating in a lengthy development process like SREC-II if it will get dismantled by legislation less than 4 months after going live? At a minimum, our take away is that its important to have good lobbyists on Beacon Hill, because if you aren't paying attention, something bad will probably happen to you.