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Electricity Restructuring Roundtable Boston, MA

Policy Support for the Development of a Robust Solar PV Market in MA Dwayne Breger, Ph.D. Director, Renewable and Alternative Energy Division September 16, 2011. Electricity Restructuring Roundtable Boston, MA. Outline. Solar Goals and Market Creation since 2007

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Electricity Restructuring Roundtable Boston, MA

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  1. Policy Support for the Development of a RobustSolar PV Market in MADwayne Breger, Ph.D.Director, Renewable and Alternative Energy DivisionSeptember 16, 2011 Electricity Restructuring Roundtable Boston, MA

  2. Outline Solar Goals and Market Creation since 2007 Policy Design of the MA RPS Solar Carve-Out Current Status of the SREC Market Update on Net-Metering Associated Activities Solarize Massachusetts Renewable Thermal Initiatives 2 2

  3. Cumulative Obligations ofRPS / APS* Programs RPS / APS Minimum Standard 30% APS 25% Class II - WTE 20% Class II Class I - Solar 15% Percent Obligation, % Class I 10% 5% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2019 2020 2003 2004 2005 2006 2016 2017 2018 Compliance Year *Alternative Energy Portfolio Standard (APS) 3

  4. Massachusetts Solar Development Strategies(apart from the RPS Solar Carve-Out) Governor Patrick’s goal – 250 MW by 2017 Commonwealth Solar (Rebates) – initiated Dec. 2007 Rebate Program: $68 million, 27 MW Successfully achieved and completed Oct. 2009 Created the beginning of a robust PV development sector in MA Commonwealth Solar II (Rebates) for small (<10kW) systems has maintained residential PV market (managed by the MassCEC) Federal Stimulus/ARRA funds used by DOER to support 10 MW of PV at state/municipal facilities. Green Communities Act allows for Distribution Utility ownership of PV Generation National Grid approved for 5 MW, 3.3 MW installed WMECO approved for 6 MW, 1.8 MW installed 4 4

  5. Installed CapacityLeading up to Solar Carve-Out CS II & CS Stimulus Utility Owned Federal Stimulus 2007 Pre 2007 2007-2011

  6. RPS Solar Carve-OutWill Carry Market Far Forward 6

  7. RPS Solar Carve-Out Program Basics Market-based incentive, part of the broader RPS Program Program is capped at 400 MW of qualified capacity 1 SREC (Solar Renewable Energy Certificate) represents the attributes associated with 1 MWh of qualified generation Units must be qualified by DOER before they can begin generating SRECs All generation is metered and reported to MassCEC’s Production Tracking System (PTS) MassCEC provides data verification and reports generation to NEPOOL GIS where SRECs are minted on a quarterly basis

  8. Eligibility Criteria andQualification Process Eligibility criteria Have a capacity of 6 MW (DC) or less per parcel of land Be located in the Commonwealth of Massachusetts, which includes municipal light district territories Use some of its generation on-site and be interconnected to the utility grid Have a Commercial Operation Date of January 1, 2008, or later Online application Need Authorization to Interconnect from local utility before SRECs can be generated Review process is quick and straightforward (30 days or less)

  9. SREC Program Design Features Program design features help ensure market stability and balance Adjustable Minimum Standard maintains SREC demand/supply in reasonable balance Forward ACP Rate Schedule proposed; provides investor certainty Solar Credit Clearinghouse Auction Account essential price support mechanism to assure SREC floor price Opt-In Term provides right to use Auction, adjusted to throttle installation growth rate These features work together to ensure the market will remain in balance as more PV is built

  10. Minimum Standard Adjustment For 2012 and beyond, the Minimum Standard (Compliance Obligation) is adjusted each August according to a formula set in the program regulation. 2012 Min. Stand = 2011 Min. Stand + [Projected 2011 SRECs – Actual 2010 SRECs]  x  1.3 – 2010 ACP Volume +  2010 Banked Volume + 2010 Auction Volume Actual 2012 Calculation 81,559 MWh = 78,577 MWh + [29,056 – 2,738]  x  1.3 – 31,231 +  0 + 0 10

  11. Proposed ACP Rate Schedule • 2011 ACP Rate set at $550 (reduced from $600 in 2010) • DOER recently proposed a 10-year forward ACP Rate Schedule • Designed to reduce market risk and uncertainty • Maintains current ACP Rate through 2013 before reducing 5% annually • DOER accepted written comments on proposal through August 15th • Will issue an RPS Guideline after considering comments received • Will move to insert schedule into the MA RPS Class I Regulation shortly after the Guideline has gone into effect 11

  12. Program Design: Opt-in Term The Opt-In Term is the number of quarters a qualified project has the right to deposit SRECs into the Auction Account (to be assured floor price). The Opt-In Term is currently 10 years (40 quarters), but can be adjusted each July for subsequent qualified projects. Opt-In Term Adjustments Long Market: Opt-In Term reduced by 4 quarters for each 10% of Compliance Obligation deposited into the Auction Account Short Market: Opt-In Term increased by 4 quarters for each 10% of Compliance Obligation met through ACP Payments Opt-In Term may not increase or decrease more than two years as a result of an annual adjustment, nor can it exceed 10 years. 12 12

  13. Price Support – Auction Mechanism Solar Credit Clearinghouse Auction Account Open every year from May 16th – June 15th Any unsold SRECs may be deposited into the Account Designed as option of last resort for SREC owners that have not found buyers for their SRECs by the end of the Compliance Year Auction held no later than July 31st, but after the Minimum Standard adjustment is announced Deposited SRECs re-minted as “extended life” SRECs (good for compliance in one of the following two Compliance Years) SRECs offered to bidders for a fixed price of $300/MWh before being assessed a $15/MWh auction fee by DOER. SREC owners will be paid $285/MWh for each SREC sold through the Auction. Bidders bid on volume willing to buy at the fixed price. Auction clears if bid volume exceeds volume deposited. Multiple rounds of Auction are used, if necessary, to clear deposits.

  14. Current SREC Program Statistics – 9/16/11 Over 1,000 applications received and qualified Approximately 41 MW qualified Nearly 27 MW of projects are installed 2,741 SRECs created in 2010 2,358 SRECs created in Q1 2011 More than 6,000 SRECs expected to be created in Q2 2011

  15. Current SREC Program Statistics – 9/16/11Activity by System Size

  16. Solarize Massachusetts Goals • Utilization of community networks and local marketing to decrease the installer’s customer acquisition cost (soft costs) • Reduce cost of materials through bulk purchasing (hard costs) • Increase adoption rate of solar PV Methods • Educating community about solar PV • Partnering with the town and solar integrator to offer reduced pricing to community members • Tier pricing structure – the more people sign up, the more everyone saves! Initial Outcomes are encouraging • Pilot program in • Harvard • Hatfield • Scituate • Winchester • Collaboration between MassCEC and DOER Green Communities Program

  17. Net MeteringChanges Adopted in 2010 • Requires DPU to adopt an “assurance of net metering process” • New definition for public net metering facility Owned or operated by a public entity; OR 100% of output is assigned to the public entity • New Caps of 1% for private projects and 2% for public projects • Currently DPU Dockets 11-10 and 11-11 are addressing implementation of these and other changes.

  18. Solar Hot Water Pilots andLow-Income Program (MassCEC) Commonwealth Solar Hot Water Residential Pilot Program • $1 million budget for SHW systems serving 1-4 units • 129 projects awarded to date Commonwealth Solar Hot Water Commercial Pilot Program • $1 million budget for pre-design study grants and construction rebates • $350,000 for pre-design studies and $600,000 for construction rebates with the goal of supporting 100 projects. Low Income Solar Thermal Program • MassCEC awarded the Low-Income Energy Affordability Network (LEAN) $2 million to manage program • Install SHW systems at multi-family residential and nonprofit facilities serving low income residents and participants

  19. Renewable Thermal Policy • No comprehensive policies supporting development of renewable thermal in place • Despite large potential for decreasing dependence on fossil fuels, meeting GWSA GHG reduction commitments, and job creation • MA Clean Energy Plan 2020 calls for Policy Framework • DOER/MassCEC • RE Thermal technology assessment (ongoing) • Solar, Biomass, High Efficiency Heat Pumps, Biofuels • In fall 2011 RE Thermal policy options will be assessed • MassCEC • Implement pilot programs (solar ongoing)

  20. Links and Contact Info DOER Website: www.mass.gov/energy/solar Contact: DOER.SREC@state.ma.us Production Tracking System Website: www.masscec.com/pts Contact: pts@masscec.com Commonwealth Solar II Website: www.masscec.com/solar Contact: cs@masscec.com Solarize Mass Website: www.masscec.com/solarizemass Contact: solarize@masscec.com Commonwealth Solar Hot Water Website: www.masscec.com/solarhotwater Contact: solarhotwater@masscec.com 20

  21. Appendix Slide

  22. Price Support – Auction Mechanism

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