Massachusetts solar developers will be breathing a sigh of relief after last week’s announcement.
After the initial August 26th announcement that the 2016 Managed Growth Capacity Block would be 0MW, the Massachusetts Department of Energy Resources (DOER) opened a public comment period. As expected, solar stakeholders expressed their concern over the 2016 allocation, citing that the DOER had projected overly ambitious growth in Market Sectors A-C. In response to these comments, DOER adjusted the 2016 Managed Growth Capacity Block allocation from 0MW to 20MW.
What is Managed Growth in Massachusetts?
The Massachusetts SREC-II Program, initiated in April, creates differentiated financial incentives for each market sector (“SREC Factor”) to level the playing field. This program makes smaller solar projects more competitive compared to larger ones by ideally giving financial preference to residential and rooftop projects (a higher SREC Factor close to 1.0) and providing less support for larger projects (ground mount, landfill or brownfield projects less than 650kW.) Previously, this program allocated 26MW and 81MW for the Managed Growth sector in 2014 and 2015 respectively. As the legislation mandates, the reconsideration and final decision of the 2016 Managed Growth Capacity Block came from the following formula:
(2016 Targeted Cumulative Installed Capacity at End-of-Year) – (2015’s Cumulative Market Capacity) – (2016 Actual and Projected New Capacities in Markets A-C) = (Available Capacity for 2016 Managed Growth Sector)
The re-calculation for 2016 is as follows: 361MW – 253MW – 88MW = 20MW
Implications for the Massachusetts Solar Market
The DOER’s announcement represents a glimmer of hope for a few lucky developers with projects high up on the Managed Growth waiting list in 2016. However, given how lengthy the waiting list for installing capacity under the Managed Growth sector is, it is unlikely that developers who plan to develop new projects in this sector will be able to prior to 2016.
Looking forward, the Managed Growth capacity allocation for 2016 and beyond have yet to be determined. However, if this year’s announcements are any indication of future ones, it does not look like there will be significant capacity allocated in future years for projects over 650kW. Given the limited options in Massachusetts for the large projects that have been that state’s idiosyncratic mainstay, it is likely that developers will look to shift their focus to developing projects in Market Sectors A-C or look to expand into nearby states such as New York where a new, attractive “MW Block” program, is currently being established, and a significant amount of “low hanging fruit” remains to be harvested.
Still, there is hope for projects under 650kW, and Sol Systems is especially interested in financing projects in the .8 factor (landfill, brownfield and under 650kW projects), particularly if they can be grouped into portfolios.