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Massachusetts Makes
Plans For More Solar

Popular state-level solar initiatives can become victims of their own success - as the industry has seen in New Jersey and elsewhere in the U.S.

An oversupply of solar renewable energy credits (SRECs), a draining of incentive funds or other conditions can easily halt solar market momentum and create project uncertainty as developers wonder when - or if - a remedy will be found.

Massachusetts is now seeking to avoid the dreaded drop-off point with its popular solar carve-out program, which began in 2009 and currently has a 400 MW cap in place. The administration of Gov. Deval Patrick, D-Mass., recently announced that it had begun work on a new policy to sustain solar development past 400 MW. The agency also plans to tweak carve-out compliance requirements and the queuing process for projects now in the market.

“The 400 MW cap of the current program was selected in 2009 to allow the market to begin its robust growth, with the understanding that policy adjustments would be prudent after this threshold, given the rapidly changing market and economic conditions,” the Massachusetts Department of Energy Resources (DOER) noted in a document explaining its plans.

The DOER action comes as a relief to developers building in Massachusetts. With 150 MW installed last year alone, the industry can expect to hit the 400 MW cap soon, according to Dan Berwick, director of policy and business development at PV integrator Borrego Solar, which has an office in Lowell, Mass.

“You can tell that at this pace, the program only has about 18 months left on it - it’s been a successful program,” Berwick says. “So, the question becomes, what comes after the 400 MW program?”

Industry stakeholders and the DOER itself are generally pleased with the results and mechanisms of the current program, he adds. PV system costs have dropped, fostering increased competition among integrators and their partners.

Although the next version of the program may feature a few changes in order to tackle any vulnerabilities, the Massachusetts SREC market as a whole has managed to avoid much of the SREC pricing volatility seen in other states - most notably in New Jersey.

Berwick explains that three particular design elements built into Massachusetts’ SREC market have helped mitigate volatility. First, the reactive design formula takes into account supply growth, speeding or slowing SREC schedules in order to maintain supply-demand balance.

Additionally, a solar credit clearinghouse auction allows for any unsold credits in a given year to be absorbed, preventing supply excess. The most recent auction window, with SRECs to be priced at $300 apiece, opened last May. However, no SRECs were deposited into the clearinghouse pool, leading to the auction’s cancellation.

The third safeguard prevents any SRECs exceeding the cap from entering the market in the first place. “You can’t have a structural oversupply in Massachusetts,” Berwick explains. “The DOER won’t qualify a 401st megawatt - you must soak up the supply first. The 401st megawatt generates only Class-I RECs, not SRECs.”

By the time Massachusetts reaches that 401st megawatt, the DOER expects to have its new cap and associated plans in place.

Following a meeting to introduce various options and the issuance of draft regulations, the agency is expected to receive comments from industry stakeholders before making a recommendation by mid-April.

This accelerated timetable “reflects the focus the administration has on making sure there isn’t a gap between the current program and the future program,” Berwick notes.

As the DOER deliberates, at least one major stakeholder has already weighed in: The Solar Energy Industries Association (SEIA) called on the commonwealth to triple or quadruple the 400 MW cap.

“Establishing a more aggressive solar carve-out program would bring Massachusetts up to the level of other states in the Northeast that are supporting local solar industries,” SEIA said in a statement, citing New Jersey’s 4 GW solar goal and Maryland’s 1.3 GW solar goal.

Massachusetts can also continue to draw on the solar policy implementation lessons from neighboring states, Berwick adds.

“Around the country, there are a lot of different ways that smart policymakers have designed programs to deliver public money to solar projects as efficiently as possible,” he says. “Good policy process considers all those ways and tries to learn from what’s worked and hasn’t worked in the past.” - Jessica Lillian

 

U.K. Reaches
2 GW Milestone

Cumulative solar installations in a European country not known for excessive sunshine - the U.K. - recently crossed the 2 GW threshold.

Record-setting demand in 2011, followed by an even bigger solar deployment total of 965 MW in 2012, helped push the country to its 2 GW milestone, according to new data from NPD Solarbuzz. The market research firm describes the U.K. market as one that the global solar supply chain should prioritize.

The country’s PV industry has not been immune to incentive turmoil: As the industry was setting installation records last year, an ongoing clash over the legality of PV feed-in-tariff (FIT) reductions eventually reached the Supreme Court. After a lower court had ruled that the abrupt FIT cuts were illegal, the Department of Energy & Climate Change (DECC) fought the decision, which was ultimately upheld.

More recently, the DECC revised its Renewables Obligation Certificate (ROC) structure for projects larger than 50 kW. DECC Secretary Edward Davey explained in the announcement that the revised incentive levels reflected drops in installed system costs.

The ROC changes, unlike the sudden FIT cuts earlier in the year, were received with grudging acceptance by the industry, which expressed relief that the reductions were not more severe.

Moreover, the predictability created by the ROC decision - which is not expected to be followed by additional review mechanisms - is now fueling strong demand for both residential rooftop arrays and larger ground-mounted projects, NPD Solarbuzz says in a recent report. Weekly installation rates so far in 2013 have reached nearly 5 MW to 6 MW.

Many industry forecasts in the past months have stressed a massive solar demand shift away from the European markets that have dominated to new markets, such as the U.S. and several countries in Asia.

Could the U.K. be an exception to this trend and continue to thrive as Germany, Italy and other European markets slow down?

Finlay Colville, vice president at NPD Solarbuzz, explains that, most importantly, any global forecasts must be examined in the proper context. Europe’s share of the market is expected to fall from 55% in 2012 to 34% by 2015, per Solarbuzz’s most recent forecast, but these numbers tell only a partial story.

“It is somewhat misleading to look at the shift to non-Europe countries,” Colville tells Solar Industry. “There will be more countries globally for a start, so the share of Europe will decrease.”

But the U.K. solar market does differ in a few important ways, he adds. For instance, demand truly began to ramp up only over the past two years, after PV module prices had already started to fall and the manufacturing boom had ended.

“The U.K. has really just started to grow its PV industry, and the [country] has virtually no manufacturing for PV, so all the jobs are in the downstream in [engineering, procurement and construction services] and installation,” Colville explains.

Also helping matters is the U.K.’s overall economic and political conditions, which are viewed as “much more stable and transparent” than some of the country’s neighbors in southern Europe, Colville notes. Therefore, global investors interested in PV consider the market lower risk and more attractive.

Overall, last year’s FIT drama notwithstanding, the U.K. solar market has enjoyed a remarkable amount of stability so far, and Solarbuzz predicts this success will continue.
 “The U.K. has actually learned by watching some of the other boom-and-bust events of the PV industry in Europe, so it has been able to get its FIT scheme under control and also make deployment attractive, so long as the system prices come down slowly,” Colville says.

“There is now a very strong level of cooperation between the PV industry in the U.K. and the government - this is key,” he adds.

- Jessica Lillian

 

Department Of Interior
Sued Over Solar Zones

Three public-interest environmental organizations have filed a legal challenge against the U.S. Department of the Interior’s (DOI) establishment of solar energy zones in the U.S. Southwest, as described in the DOI’s Programmatic Environmental Impact Statement for Solar Energy Development in Six Southwestern States (PEIS).

Ken Salazar, who recently stepped down as DOI Secretary, approved the PEIS last fall. According to the lawsuit plaintiffs, the Western Lands Project, the Desert Protective Council and the Western Watersheds Project, the plan keeps 19 million acres of public land open to industrial solar applications.

In their complaint, the organizations cited the government’s failure to consider alternatives that would focus solar development on degraded lands and in the already-built environment. The government’s analysis under the National Environmental Policy Act allegedly ignored alternative approaches - such as a distributed-generation alternative - that would be less damaging to the environment, more efficient and less costly to taxpayers and ratepayers.

“The administration is opting to needlessly turn multiple-use public lands into permanent industrial zones,” says Janine Blaeloch of the Western Lands Project. “Solar development belongs on rooftops, parking lots, already-developed areas and degraded sites, not our public lands.”

 

CPUC Requiring
50 MW Of Storage

The California Public Utilities Commission (CPUC) has unanimously approved a long-term procurement decision ordering Southern California Edison (SCE) to procure between 1,400 MW and 1,800 MW of energy resource capacity in the Los Angeles basin to meet long-term local capacity requirements by 2021. Of this amount, at least 50 MW is required by the CPUC to be procured by SCE from energy storage resources, as well as up to an additional total of 600 MW of capacity required to be procured from preferred resources - including energy storage resources.

According to the California Energy Storage Alliance (CESA), under the CPUC’s final decision, energy storage resources must be considered “along with preferred resources.” These preferred resources include energy efficiency, demand response and distributed generation, consistent with the clean energy resource procurement priorities embodied in California’s Energy Action Plan.

“This landmark decision represents a major breakthrough for energy storage market development in California and nationwide,” says Janice Lin, executive director of the CESA and managing partner of Strategen Consulting LLC.

“Required energy storage procurement under this decision provides a much needed market signal that energy storage will be considered as a key asset class to help California address its long-term local reliability and environmental quality needs for clean energy resources,” Lin adds.

CPUC Commissioner Michel Peter Florio, the assigned commissioner responsible for the CPUC’s long-term procurement planning rulemaking, described the decision as “monumental” during the discussion. “We need to move beyond paralysis by analysis with respect to energy storage,” Florio said.

The CESA adds that this ruling will have an essentially immediate impact because SCE is ordered by the CPUC to file an application to the CPUC seeking approval of negotiated contracts with energy storage resource providers before the end of the first quarter.

 

Pennsylvania May
Increase RPS

Pennsylvania State Rep. Greg Vitali has introduced H.B.100, which would increase the amount of electricity that the commonwealth’s utilities must obtain from solar and other renewable energy sources. H.B.100 would amend the Pennsylvania Alternative Energy Portfolio Standards (AEPS) Act by requiring Pennsylvania electric companies to obtain 15% of their power from renewable sources by 2023. The AEPS now requires electric companies to purchase 8% of their power from renewable sources by 2021. For 2013, Pennsylvania’s AEPS requires 4% to come from renewable energy sources.

Currently, 0.05% of Pennsylvania electricity must come from solar energy - a figure that would increase to 0.5% under the AEPS in place by 2021. Vitali’s bill would increase that amount to 1.5% by 2023.

This is the second bill Vitali has introduced this legislative session to increase the amount of renewable energy that Pennsylvania uses. His first piece of legislation, H.B.200, would provide $25 million per year for the PA Sunshine Solar Program, which helps residents and small businesses install solar systems. The program has nearly exhausted its funding, and the governor’s administration has announced the program would stop taking applications by the end of the year, Vitali notes.

 

Minnesota Considers
10% Solar Standard

State lawmakers in Minnesota have unveiled the Solar Energy Jobs Act, which would implement a 10% solar renewable energy standard that the state’s utilities would be required to meet by 2030.

The measure is sponsored by State Sen. Chris Eaton, DFL-Brooklyn Center, and State Rep. Will Morgan, DFL-Burnsville. Implementing the policy would result in 80 MW of installed solar capacity in the first year, 1,000 MW (2%) by 2023 and more than 5,300 MW by 2030.

More than 100 businesses already exist throughout Minnesota in the solar sector, according to the lawmakers. Implementing the Solar Energy Jobs Act is expected to create more than 2,000 permanent jobs in the first year after the standard is passed and thousands of jobs over the life of the policy.

Passing the standard would also bring more than $230 million in value-added investments in the state in just the first year and much more over the life of the policy, Eaton and Morgan add. In the U.S., 16 other states have already enacted solar energy standards.

 

Palo Alto To Use
Clean Energy

The city council of Palo Alto, Calif., has adopted a Carbon Neutral Plan that commits the city to pursuing only carbon-neutral electric resources, such as solar power.

Palo Alto owns all of its utilities, including the electric utility that was founded back in 1900. According to the city, this local control is enabling it to make this decision regarding the source of its electrical power.

The city has in place many contracts for renewable resources in its electric portfolio, including electricity from wind farms, solar arrays and renewable gas captured from landfills. In addition to these renewable resources, about 50% of the city’s electric supply portfolio comes from non-carbon-emitting hydroelectric generation.

The city’s recent decision to make all its power purchases carbon-neutral will involve continued promotion of energy efficiency, taking advantage of existing carbon-free resources, contracting for new short- and long-term new renewable resources and, if needed, balancing any small percentage of non-renewable power purchased with renewable energy certificates.

The economic impact of being 100% carbon-neutral is estimated to be under $3 annually on the average Palo Altan’s electric bill, the city adds. R