A virtual problem with Massachusetts Renewable Energy

MASSACHUSETTS SOLAR RENEWABLE ENERGY CREDIT EXTENSION (SREC)

Recently, Massachusetts took a big and overdue step in saving clean energy development in the Commonwealth by extending and reforming the Solar Renewable Energy Credit (SREC) program. Previously, the state’s solar impasse delayed more than 500 solar projects in Massachusetts worth $617 million. Now Massachusetts is poised for a record year statewide in clean energy with the 3% increase to the net-metering caps and 7% total for private projects). The extension unfroze hundreds of megawatts of commercial projects previously stuck in limbo. Unfortunately, one MAJOR component in renewable energy reform in Massachusetts was neglected during the negotiations which threaten the industry as a whole in Massachusetts. This component is Virtual Net Metering (VNM) which is a newer technology quickly being tested and adopted around the country and the world. In fact, most energy experts insist that these types of projects happen to be the biggest drivers of near-term growth. By neglecting to fully address Virtual Net Metering after 2017, the overall solar community and other virtual net metering projects are at serious risk in the Massachusetts renewable energy sector because more than 50% of the current SREC II pipeline is virtual net metering (see chart below).

FIGURE: SREC-II Commercial Pipeline by Market Subsector

A virtual problem with Massachusetts

What is Virtual Net Metering anyway? It’s a fairly simple concept…

It’s meant for commercial real estate owned by the same person (or entity) who can’t put solar on one property for reasons such as shading, crappy roof, etc. Basically, you can put solar on one building and credit it to the other buildings you own. It also doesn’t have to be close in proximity either, just the same utility. Pretty cool stuff! Seems like a logical step in clean energy development, right? Well,…here’s the problem…bureaucrats and politicians suck. They don’t listen very well to experts. Just interest groups that fund their campaigns. But guess what…Massachusetts is a mecca for clean energy funding. And funding doesn’t just go to operations and research. They go to campaign contributions too. It’s only a matter of time before these “policy makers” follow the money and switch sides.

So what happened exactly with VNM to set it back so much?

Simple – for virtual net metering projects where PV production is 100% offsite, all of that system’s production will be considered surplus generation and therefore valued 40% less than under current Net Energy Metering (NEM) rules after 2017.

So what’s next for Massachusetts?

Massachusetts is not as in as bad of shape as many other states, which is weird from a weather stand point because if you have been to Boston for an extended period of time, sunshine is a luxury. It’s probably the most progressive state socially and commercially. It’s always set up for practical, reasonable, and quick reform. Not surprisingly being the home of MIT, Harvard, and the likes of Fidelity. It’s full of smart, reasonable people.

Massachusetts is set to install over 400 megawatts (DC) between 2016 and 2017 due to the current pipeline of projects that qualify for net metering. Unfortunately, the makeup of project types will likely change as we move through 2017. Specifically, virtual net metered projects will diminish. But Massachusetts needs to lead the way, something they are phenomenal at e.g. The Revolution!. Massachusetts is certainly set up to lead the way for the clean energy revolution, not just socially or financially, but also politically. Just about every President of the United States since 1776 has strong roots in the Commonwealth. It pays to have the Commander-in-Chief on your side. They go out of their way to make sure things are moving in the right direction where they were born, or got their degree.  And like we said, Massachusetts has a TON of private money. More than enough to make politicians and bureaucrats reconsider making illogical decisions, or at least get off their asses and fix the Virtual Net Metering Program. And guess what else, The President and Congress don’t have to set aside money for Massachusetts. This moves the process much much faster.

We’ll just have to wait and see what Massachusetts comes up with for the successor SREC program and how it incentivizes virtual net metering. Sharing is caring!

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