Renewable Energy Certificates (RECs) and Solar Renewable Energy Certificates (SRECs) Revised- June 8, 2013 Preface

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1 Massachusetts Renewable Energy Certificates (RECs) and Solar Renewable Energy Certificates (SRECs) Revised- June 8, 2013 Preface This is our sixth version of this report since RECS and SRECS policy and value are changing. There is at present a market oversupply of Massachusetts SRECs and worries on the clearinghouse auction next month. Formerly all Commonwealth Solar eligible installers were required to inform customers and prospects of the Massachusetts RECS/SRECS incentives. That policy requirement has been abandoned by the state. We continue to provide a thorough disclosure here and in our solar quotes. This report is one of the most popular sections of our website. Thank you for your comments and passing it on to your colleagues and friends interested in the PV production incentives in Massachusetts. We ll start out with a summary update for our frequent website guests. They should read the new program concept comments at the end however and there is new information in several sections. For those un-familiar with the complexities of SRECS and RECS,read on, Basic Facts are for you, then all pages please and follow the end notes for important details: MA SRECs SUMMARY June 2013 SREC Prices have dropped to as low ~$ on the spot market. Surplus of SRECs will continue in 2013 and 2014 the Program Cap was reached last week. Small PV systems installed after Dec 31, 2013 may not be SREC eligible producers. BPVS is modeling financial analyses for new PV projects and counseling owners of SREC eligible PV systems already installed to assume, for now a worst case market where : The July 2013 Clearinghouse Auction fails to clear. SRECS sold on the spot market will average $ $ each through 2015 Eventually ( ) when supply and demand are in balance the Clearinghouse Auction should clear and SRECS value will rise. Thus, $ each, the Clearinghouse Auction estimated price is a safe Ceiling Price to assume for the next two years. State policy makers announced emergency regulations on Friday June 7th. Basic Facts RECs & SRECs use the same metric as electricity, a MWh (megawatt hour). 1,000 kilowatt hours ( kwhs) equals 1 MWh or slightly less than the average yearly output of a 1 kilowatt (kw) photovoltaic system in our region 1 Endnotes. Generally, a Massachusetts SREC can only be produced by a PV system on line after Jan 1, RECS are less valuable and result from various attribute defined technologies : wind, low impact hydro, biomass and from any solar PV system installed prior to 2010 but generally no earlier than Jan.1 st Other solar devices eg. for hot water, air heating or cooking etc. are ineligible. Traded as if they were real electricity, measured as a MWh, a REC or SREC represents the associated renewable energy generation attribute separated from the energy. A Generation Attribute is defined in Massachusetts 225 CMR-14 as a non-price characteristic of the electrical energy output of a Generation Unit including, but not limited to, 1

2 the Unit s fuel type, emissions, vintage, and Renewable Portfolio Standard eligibility. The C stands for Certificate once the attribute is sold although Credit is commonly used to mean the attribute or the official certificate. There is a market for these certificates of renewable generation goodness managed by the New England Power Pool Generational Information System (NE-GIS or NEPOOL -GIS). Utilities and electricity suppliers must meet a state regulated Renewable Portfolio Standard (RPS). RPS compliance allows their purchase of RECs or SRECS in lieu of real renewable electricity. While utilities are the primary buyers of RECs and SRECs, there are also voluntary purchasers who wish to lighten their carbon imprint. Aggregators, SREC/REC traders and brokers, (over twenty five are listed by the state as eligible brokers ) sell these credits on behalf of PV system owners. The actual energy from a PV system measured on the solar kwh meter at the site has a value as net metered generation reducing your electric bill 3. This is the primary value, a different financial benefit from tradable RECS or SRECS. Once a PV system owner sells the RECS or SRECS, the energy from their PV system is just as dirty or unsustainable as the conventional electricity mix. This report is followed by comments on the RECS/SRECS program model for upcoming Massachusetts Department of Energy Resources (DOER ) rule changes and alternative methods to inspire clean energy production. Reasons for the SRECS Program Because Photovoltaic or solar electricity is clean, costly and new, incentives have been created for its adoption. 4 Massachusetts Rebate amounts have fallen since 2002 and stayed flat since RECs for PV were popularized in Their value consistently diminished but is now recovering. A special category of Massachusetts Solar RECs, SRECs was carved out of the full RECS quota to encourage new PV capacity construction. It went into effect in January The (DOER) has developed a program which prompts a floor value for SRECs for a period that has been extended to 2023 and may go longer. The Massachusetts SRECs incentive along with the federal 30% tax credit for investing in PV makes for an attractive return and thus to increased solar capacity in the state. Look to the next revision of this report or go to: for the latest policy pronouncements and program updates. There are many stakeholders in this policy to promote clean energy in Massachusetts; their conflicting interests contribute to its complexity. Our views here and in comments to the DOER regulatory process ( at the end of this report) represent the perspective of early adopters and small PV system owners SREC Eligibility Requirements & Market History 1. Only PV systems which come on-line after and until the program cap of 400 MW is reached are eligible for SRECs. As of this writing, May, 2013, well over 850 MW of PV is planned with ~ 250 MW actually on line producing SRECS in MA. Massachusetts is one of the globe s hottest markets for solar investors because of SRECS and has attracted hundreds of firms. Large scale solar installations have already staked out the majority of SRECS available. Its first built, first enjoined for SREC eligibility but small PV systems still have good prospects once emergency regulations are formalized in the next few weeks. 2. The number of SRECs utilities should purchase to comply with the Solar portion of their RPS (Renewable Portfolio Standard) is adjusted upward each year. In 2013 it is certain that the utilities will enjoy a buyers market. There will be a glut of over 30,000 up to 75,000 SRECS above the RPS requirement. DOER can adjust the SRECS requirement for subsequent years. Again once total capacity reaches 400 MW (or ~ 456,000 SRECS) then new PV capacity will be eligible to sell attributes as SRECS II. New program regulations will be formulated by Dec 31 st 2013 for the SRECS program continuation. Owners must sell SRECS within a year of their creation with one exception 5. 2

3 3. If the utilities do not purchase SRECS to meet their annual RPS mandate then they are subject to pay an Alternative Compliance Payment (ACP) which sets a ceiling price per SREC. In 2010 that amount was $ per SREC. DOER has scaled the 2013 price at $ Their current table extends the ACP rate. In the year 2023, the ceiling price of $330. each is posited. 4. SREC regulations attempt to set a floor price through a complex clearinghouse auction. As designed this auction was to provide that SRECs would have a starting value of $ ( actually $ but there is a $15.00 auction fee) The expectation was that owners would be able to sell their SRECs for more than $ each on the spot market and DOER would not have to offer a clearing auction. 5. Prior to and in March, 2012, SRECS sold at ~$500.- $550.on the spot market In July 2012 they sold for $271. No one deposited SRECS in the auction clearinghouse in July of The auction mechanism is untested. In October 2012 the average price dropped to ~$245. As of February 2013 SRECS sold for as little as $206. each on the spot market. 6. Many people are asking why SRECS are selling below $285.00, the DOER floor price. In July 2012 with spot prices already cut by half, no one chose the auction course. Holding them for a better price in 2013, 2014 or 2015 was not seen as a wise course.one can deposit their SRECS in the July 2013 auction; DOER will attempt to get the full auction block purchased in three calls but there is no guarantee the price of $285. will hold; a portion of the block deposited in the auction may not sell at all. Remainders get re- minted and returned to their owners to sell in two to three subsequent years. These re-minted SRECS cannot be deposited in future auctions. They must be sold on the spot market. Reasons for the SRECS value drop: A glut of new PV capacity came on line in More SRECS were minted 6 than the utilities needed to buy. Utilities however are allowed to buy more on the NE-GIS and bank up to 10% of their needs for a given year. The glut will grow this year and continue. There is a bi lateral, long term, forward market for SRECS. Into this market solar developers have pre sold MA SRECS from their projects to SREC aggregators and brokers even though their PV systems have not produced them yet. These forward SRECS sell now, we hear, for $ or lower. These are complex deals with future SRECS and assets functioning in loans and securities. Solar developers needing cash in a hurry also explains this short selling in potential Massachusetts SRECS. Aggregators/brokers will need to sell these large blocks of SRECS quickly which can cause steep discounting. Massachusetts utilities still have an option to build up to 200 kw of PV they own themselves and earn SRECS on their production. 7 The Market Forward & SREC Price Projection Massachusetts has better safe guards than New Jersey and Pennsylvania where SREC prices crashed hurting many investors. The Clearinghouse Auction can extend the life of surplus SRECS. Regulators can alter factors that will increase SREC demand slightly and legislation can make major changes to increase demand or SREC value. Until policy directives detail a foundation for consistency, BPVS is modeling financial analyses for new PV projects and counseling owners of SREC eligible PV systems already installed to assume a worst case market where : The July 2013 Clearinghouse Auction fails to clear. SRECS sold on the spot market will average $ $ each through

4 Eventually ( ) when supply and demand are in balance the Clearinghouse Auction should clear and SRECS value will rise. Thus, $ each, the Clearinghouse Auction price is the MAXIMUM to expect through \ RECS For small and large PV system owners the RECS incentive was glowingly touted in 2003 as a long term generous production incentive. Pricing began at $50.00 per REC, enthusiasts predicted they would easily reach $ per REC in a few years. It did not happen. Other interests succeeded in widening the energy technologies eligible to generate RECS. RPS compliance could be purchased from generators in other states. $30.00 per REC ( $0.03 per kwh) was the average price Small producers could not renew contracts with aggregators in 2007 and their RECS went unsold and effectively expired. It is not widely understood that the SRECS quota is a percentage of the original RECS full quota. SRECS are a carve out program; as a result the RECS program saw lessened demand. By 2012 however due to the steadily increasing percentage of RECS mandated by the MA RPS and the institution of RPS mechanisms in other states, there was an undersupply, so MA utilities made ACP payments at ~ $62.00 (per REC equivalent) in This has awakened the aggregators and brokers who had left most small PV system s RECS producers orphaned when transaction costs out weighed trading margins in A few aggregators are now purchasing RECS. Pre 2010 PV system owners who gave up trying to find an aggregator should take note if they wish to sell their RECS produced in 2013 and in coming years. Unlike SRECS which can gain an extended life through the DOER Clearinghouse auction, RECS absolutely need to be sold within a year of being produced. We predict RECS will sell at $ each over the next few years. How can I sell my SRECS or RECS? You need to sell your attributes through an aggregator /broker. It is not cost effective for small PV system owners to trade on the NEPOOL GIS. DOER has compiled a list of aggregator/brokers you can contact for detailed offers. If you cannot download the list in a readable form please call or BPVS for a copy. To enable the sale of SRECS/RECS your PV system production must be reported monthly to the Massachusetts Clean Energy Center Production Tracking System (PTS). When BPVS installs your PV system we make sure it is registered on the PTS for you. We ll present options to manually report or to provide automatic reporting equipment installed with your PV system. Automatic reporting is required if your PV system is over 10 kw in capacity. With either choice BPVS installs a revenue grade, new ( not reconditioned) solar kwh meter identical to the best meters utilities use. Manual reporters will receive a username and a password from the PTS administrator. Each month the PTS system sends you notices to enter your production tally from the solar kwh meter. You ll receive multiple notices and have a ten day window to access your PV system page on the PTS and enter the number of solar kwhs. If you ignore notices or forget to make the entry you can catch up the following month. We do not advise you skip months often however because the PTS system is wary of production entries that appear high and will challenge you for an explanation. Automatic reporting equipment uses a datalogger ( Data Acquisition System or DAS) interfaced to the solar kwh meter and hooked into your computer network or to direct internet access. There are many bells and whistles with automatic reporting equipment and brands and they range in cost from a few hundred dollars to several 4

5 thousand. The key part of any DAS is the PTS reporting service. Most customers choose a ten year service plan; the device manufacturer is designated as your PTS reporting representative and is obligated to update your PTS tally each month for ten years. If you re only eligible to sell RECS from your PV system there are conflicting rules from the MASSCEC PTS barring manual reporting 8. If you do not have high speed internet or cell phone access at your site ( you are not alone in Western Mass) and/or if you simply prefer not to use , BPVS can still provide PTS reporting services for you. More about the PTS and its relation to SRECS or RECS may be found at : The PV system usually needs at least one month s tally before it can be registered on the PTS. If you choose to sell your RECs /SRECs to an aggregator you will give them permission to access your production tally on the PTS. A degree of fraud protection is part of the PTS software; it can identify outliers and request clarification if you report more production than is possible or likely given the weather and the tally from comparable PV systems in any given month. There is also a degree of quality control, the PTS alerts you if your PV system is producing below par. Whether you manually report your tally each month to the PTS or it is automatically reported, you too have access to the PTS production tally page on their website. Massachusetts should be proud of the PTS. The aggregator will submit to NEPOOL GIS and DOER a statement of qualification for your PV system 9. All of the technical details you and they need for this document are included in our contract and system design documentation however it s often the case that an aggregator will send you a form then ask us to fill in the technical sections for you; we re happy to do this at any time at no charge. Sometimes our customers switch aggregators after a system has been installed. Our documentation help is still a free service. At this point and after your solar system has made at least 1000 kwh or 1 MWh you re ready to sell SRECS or RECS. The aggregator you select will have a variety of plans you can option to sell the SRECS or RECS and how you will be paid. Unfortunately, neither the DOER nor the Massachusetts Clean Energy Center nor the Office of Consumer Affairs and Business Regulation present any detailed guidance on these important plan variables. At BPVS we know that it is a conflict of interest for us to recommend any aggregator/broker. advise you on their offers or be both an aggregator and design /installation firm. Please read on to understand our policy. BPVS POLICY & DISCLOSURES on RECS/SRECS 1. Our contracts for PV installation, service or repair do not include a clause or clauses with conditionals or any vague language that takes ownership of SRECS or RECS from you, or takes implied equivalents such as Carbon Credits, Emissions Credits, Pollution Offsets, Clean Energy Attributes, Environmental Financial Incentives or Green Tags. 2. BPVS cannot recommend any particular firm or group of aggregators/brokers to you. It is common practice for PV installation firms to represent aggregator/broker firms, and receive commissions from them. Neither the installer nor the aggregator/broker is required to disclose such relationships. Some PV firms are also aggregators. 10 When shopping for a PV system if the PV installation firm, coordinating service firm or leasing salesperson does not disclose your eligibility for RECs or SRECs or suggests that they will take care of that for you...be careful. We supply you with the full list of MA eligible aggregator /broker firms to select one for yourself. 3. It is not that hard to research offers yourself; the sign up process with an aggregator is easy. Typically our new PV customers have been referred to us by a past customer who can provide you guidance. 5

6 4. BPVS supplies new ( not reconditioned) solar kwh meters identical to the best meters utilities use; our meters are digital, that is, easy to read and supplied with tamper indicating seals, unbroken and 0 kwh registered at start. We register the solar kwh meter serial number in your file and add a tamper indicating seal to the meter base hasp. Automatic DAS equipment we supply is from a third party provider unassociated with us or an aggregator/broker. Should the DOER, or the Department of Public Utilities ever challenge the meter readings or DAS reports from your site we re happy to verify the equipment installed is revenue grade. 5. You do not have to sell the SRECS/RECS from your PV system. Not selling them means you have retained the clean energy benefits or generation attribute with the electricity. The BPVS website includes a table to calculate deferred emissions from your personal or on site solar energy use. 6. Aggregator/Brokers typically charge a fee ranging from 2% to 10% of the sale price they get for your SRECS/RECS. For small PV systems the aggregator bundles their SRECS with those of others to trade in large blocks. Consult your tax advisor; generally proceeds to you from SRECS/RECS sales are considered taxable income. 7. This report includes values for SRECS and RECS based on public information at the time of the report date. BPVS provides this price information, projections and analysis in a conservative light as a service to our customers assessing risk. Some solar sales pitches suggest once all MA SRECs eligible projects are installed, because the demand is pre destined to equal the supply, prices will stay above $ each. They predict this to occur in 2015, SRECS prices they say will then tend towards the ACP ceiling value which is $ in 2015 and maintain that pattern as the ceiling rate declines to $ in RECS history, SRECS recent history causes us to refrain from such charming optimism for this complex market. We re hopeful the tweaks DOER can make in coming years will work. SRECs/RECS Pricing Conclusion Despite the unevenness of RECS and SRECS values in Massachusetts the financial benefit of owning a PV system is still compelling. Our quotes analyze this for you at uniform present worth. Policies will continue to change, if our civilization is serious then incentives for solar should improve. This is why forfeiting ownership of the green attributes or environmental financial incentives etc. or settling for a low price for the duration of a ten or more frequently 20 year contact is not prudent. Endnotes: 1. Between 11:30AM and 12:30PM, on a bright sunny day a 1 kw (kilowatt) system will generate 1,000 watthours or 1 kwh(kilowatt hour). If you leave a 100 watt light bulb on for ten hours it will use 1 kwh. The average New England home without an electric hot water heater uses 650 kwhs per month. In twelve months it will use 7,800 kwhs, or 7.8 MWhs and need a 7 kw PV system to offset its utility purchases of electricity. 2. Certain PV systems which were installed in 2008 & 2009 may be eligible if those system owners did not receive rebates or grants from the Commonwealth Solar I program or its predecessors funded by the Massachusetts Renewable Energy Trust (MRET). Pre installed photovoltaic generation systems are not eligible for the SRECS program. All post 1997 PV systems are still eligible to produce and trade their RECs as Class I RECS. Solar PV systems installed before January, 1998 are not retroactively included by RPS legislated incentives for Class I RECS even though they have been and are generating solar kwh on the grid. With DOER special permission they can qualify to sell attributes as Class II RECS. Class II RECS are even less valuable. The Classifications of RECS by vintage and technology would take another essay to discuss. The Electricity Restructuring Act of 1997 established the Renewable Portfolio Standard, (RPS) with annually increasing goals for cleaner generation on the grid from regulated utilities. Graduated in price for the cleanliness of the renewable 6

7 energy source, utilities and suppliers purchase these from a free market at prices, more often than not, well below the ceiling or penalty price. 3 Net Metering Keep in mind that the real solar electricity is used within your building as it is generated and this defers you buying its equivalent from the utility. Sometimes, the power generated from the PV system can exceed your needs and the extra is automatically exported to the grid. Since Jan. 1st 2010 every exported kwh you send to the utility grid is compensated at almost the same retail rate you pay for electricity. Formerly, exported power was compensated at the utilities wholesale rate approx. $0.03-$0.06 per kwh. Now in MA the value of your exported kwh is at the retail rate (approx. $ $0.145 per kwh) minus two small system benefit charges per kwh of ~ $ to the Massachusetts Renewable Energy Trust administered by the Massachusetts Clean Energy Center of the Department of Energy Resources & ~ $ to the Energy Conservation fund administered by the various utilities. The compensation rate is changing as utilities de-couple electricity pricing and temporary charges ( such as Storm recovery surcharges) appear and disappear. Consider $0.125 a safe export kwh value for As part of a PV interconnection application and agreement with the utility, we also help you fill out their Schedule Z. This form designates how exported kwhs are credited; most of our customers carry the credit over from the sunny summer months and bank them to reduce their winter month s electric bills, others apply their credits to separate utility accounts. 4 Costly as in relative economic value under present regulations. The externalities not valued under present law are calculable through categories as varied as reduced health care costs, environmental clean up and defense appropriations and more. Properly analyzed, PV generation is a bargain. New as in energy market acceptance. Terrestrial Photovoltaic installations have a long history in Massachusetts going back to the 1970s. 5. See MA CMR RENEWABLE ENERGY PORTFOLIO STANDARD CLASS 1 ; there is an exception; you can deposit attributes in the DOER Solar Credit Clearinghouse Auction and depending on how the auction clears or fails to clear they gain an extended life to sell in up to three subsequent years. 6. Minting: The process of depositing Attributes on the NEEPOOL GIS to turn them into immediately tradable SRECS. Re- minting: Depositing attributes in the DOER Clearinghouse Auction to create extended life SRECS. 7. A provision added very late to the Green Communities Act of 2008 allowed utilities to own and build up to 200 MW of PV generation, financed through all ratepayers. Utility owned PV capacity counts towards SRECS compliance. Some is built ; utilities can exercise their capacity build out plans quickly and are actively petitioning to accelerate multi MW installations. Utility ratepayers are charged by their utility for project capital costs. Regulators have set provisions for the utilities to confer benefits of these installations back to their customers. 8. MASSCEC- PTS has reported that pre PV systems which now want to qualify to sell RECS and report to the PTS monthly must have automatic reporting even if their PV system is under 10 kw in capacity. BPVS is trying to have this policy changed as it is a costly burden for small PV owners, some of whom do not have reliable internet access. Pre 2010 PV owners who wish to increase their PV capacity now face unnecessary complications. Expansion capacity has to be separately metered so REC and SREC tallies are isolated which involves greater expense in power conditioning units, switchgear and solar kwh reporting. 9.DOER publishes on its website a list of all SREC eligible PV systems copying information from this statement of qualification that identifies your site by name, the aggregator representing you, system costs and technical details. 7

8 10. Most Solar Lease or Power Purchase Agreement firms are aggregators/brokers as are some solar contractors. The Concept of RECS /SRECS and Attributes ( Abridged from BPVS comments letter 3/1/2013 to DOER).. Separating green attributes from the energy of solar electricity was bound to be messy but the model is now in place in several states along with Renewable Portfolio Standards (RPS). It has to evolve to be replaced. An enduring principle in formal logic is the attribute of a thing lags behind it. Just a shadow of reality, it is not supposed to have a life of it s own. When it does, paradoxes multiply. The Massachusetts Regulation 225 CMR defines a Generation Attribute as A non-price characteristic of the electrical energy output of a Generation Unit including, but not limited to, the Units fuel type, emissions, vintage and RPS eligibility. We have to assume that something without a price value will form the basis of a market in which it is monetized and becomes an instrument in a specialized financial sector. Attribute is correctly denoted to mean characteristic. Property would be another synonym. A part of the definition is the word output meaning that it can be measured as if it was electricity. The singular, attribute is not limited in the definition; the plural attributes in the market and in the text of the regulation is used interchangeably for: qualities of the generation and, quantity of the price- added, megawatt hours of the attributes. This begs the question: How many attributes can dance on the head of a NEPOOL GIS certificate? It is tempting to digress and compare this model with the excesses of Scholasticism and then discuss the financial similarity of RECS/SRECS to medieval indulgences. Marrying the obligation of environmental healing to a volatile speculative market is also not a match made in heaven. The win win deal is the signature utopian concept of our times. This attribute program is not immune to that background belief; in the foreground are some disenchanting facts. PV systems produce their electricity and thus attribute(s) daily. Whether RECS or SRECS eligible their energy is equal. Age discrimination, that is, age of the PV installation makes a REC as much as ten times less valuable than a SREC. This duality was excused by stating that pre PV installations received more generous rebates. The SRECS higher value is supposed to make up for that. In fact pre-2010 PV costs were dearer, equipment costs have come down since. Many owners were not eligible for the present 30% federal tax credit favor in Policymakers waived the SRECS eligibility calendar for some PV systems built with federal ARRAS grants in 2008 and 2009 so long as that funding was less than 67% of the PV systems total cost. Very, very few of the pre 2010 or pre nearly fourteen megawatts of PV systems installed in Massachusetts received more than a 40% subsidy. The SRECS quota in Massachusetts is a carve- out from the original RECS quota. Thus the total renewable energy in MWhs required of Massachusetts electricity suppliers did not increase, only the cost utilities pass on to all ratepayers ratcheted up, albeit, slightly for any account holder s individual bill. Other consequences were more serious. RECS having lost value, aggregators/brokers abandoned serving small pre 2010 PV system owners. Their transaction costs were too high to handle RECS selling for less than $ The introduction of SRECS meant that value was subtracted from RECS. What s worse, pre 2010 PV system owners who planned to add increments of new capacity as they could afford it, were faced with added costs, in some instances to duplicate power conditioning equipment, but in all cases of new array capacity, to install a separate solar kwh meter circuit. Further reporting and transaction costs to assure SRECS eligibility have been their burden too. Imagine explaining this policy change, consider how absurd it is for a PV owner to have two identical solar kwh meters in their basement, the pre one pays $0.03 per kwh,the new one pays as much as $0.55 per kwh. One meter was sufficient to measure the clean electricity generating any day. Vintage, a characteristic the regulation reserves for some non -PV generation units became a determining price attribute of the generation attribute for PV. What we understand by attributes of PV renewable energy are, environmental, societal and technical excellencies of the same order. One important sub set is deferred kilograms of CO2, NoX and SoX, grams of mercury and a host of 8

9 other heavy metals and particulates affecting all organisms, disrupting climate progressively. Real price values calculated for human health, local jobs, and grid reliability to name just a few are inherent. The emissions index from conventional grid electricity did not get suddenly worse in 2010 when SRECS were introduced nor did it get much better in the Summer of 2012 when their value crashed. Maybe we mean that clean energy goodness is not part of the attribute sold at all. Its either a valueless, fleeting appearance of no urgency or the opposite; it s one of enduring usefulness.. Green status value and bragging rights, many people who ve sold RECS/SRECS believe its a win win deal wherein they can claim the environmental virtues of their PV production and the money. The metric of a megawatt hour for the attribute however is the same. Whatever is being sold, when Massachusetts policy changes, history proves the market complexion for PV will frown on the old and smile on the new. The lesson to RECS eligible PV early adopters ( pre 1998 PV pioneers fare even worse) and then to SRECS eligible PV owners and leasers and power purchase parties and those contemplating PV development since the price crash in 2012 is that buyers regret or wariness is not only one of missteps in market timing but trusting policy changes to not be disruptive. This polemic is not questioning the sincerity of policy intent or the earnestness of policymakers. Contrition is due of all stakeholders since the late 1990s for not thinking of alternate ways to reward PV production. We need to recognize that the renewable generation technology has within itself, the genome, if you will, for it s attribute(s) consistent market value. PV succeeds as no other in that appraisal but CMR has to evolve to be progressive, here are suggestions to signal market consistency through those changes: Subsume all ineligible MA PV capacity since 1970 under the SREC Classification effective Jan 1, Apply any upward combination of adjustments in the SRECS Cap tally( from capacity factor review or use of ACP funds in market support) to accommodate early adopter inclusion first. Honor the trailblazers in policy pronouncements. Set a goal to differentiate PV production incentives tiered to Interconnection Capacity class by the end of the SRECS term. The first step, by 2015 require all utility owned net meters to register and utilities to record, export solar kwh from interconnection sites 25 kw or less. Begin to allow in 2014, customers who already have this regimen of metering from their utility to receive a positive solar bonus credit on their billing equal to deferred kwh price x 2 + ½ the kwh value of the net metering recovery surcharge for any site exported solar kwh in addition to the SREC for the total solar kwh tally. Follow up in 2015 to extend the bonus to all utility PV customers in this capacity class. Require utilities to compensate by check upon request of any PV owner in this capacity class for carry over billing credits that exceed $ This could be called the Transitional Production Incentive, that is, the transition to re-uniting the energy and the attribute(s). It will foster conservation during PV peak production hours and seasons and relief for some PV Host accounts. Obviously some reckoning should prohibit lessees and PPA payers from having to hand over this incentive to the PV equipment owner. These changes to increase the incentive in this class during the SRECS term should be funded by a combination of ACP credits and the rate base. Beginning in 2023 a utility direct bonus credit will be the single state incentive for PV generation ( exports and used on site kwh ) in this class representing the energy and its attribute(s). Other PV Interconnection Capacity Classes need a different schedule and program to transition to a unified incentive formulated as a bonus credit and may welcome valuation consistency. 9

10 BPVS Comments to DOER at the June 7 th 2013 Stakeholders meeting at the Statehouse: Michael Judge, RPS Program Manager BPVS,Berkshire Photovoltaic Services Department of Energy Resources 46 Howland Avenue 100 Cambridge Street, Suite 1020 Adams, Ma Boston, MA Christopher Derby Kilfoyle June 7, 2013 Dear Mr. Judge, Thank you for the opportunity to make these comments at the Massachusetts Solar Policy Stakeholders meeting today for consideration of an Emergency Regulation or change pertaining to 225 CMR and on policy considerations for the Governors expanded goal for achieving 1600 MW of PV capacity in the Commonwealth by the year On behalf of BPVS and our PV customers the broad framework for an emergency regulation and review of the SRECS oversubscription crisis expressed in the solar industry letter to Commissioner Sylvia of June 6, 2013 is supported and I co- signed this letter with the same deep concerns of many solar colleagues for a prompt and fair remedy to assure authentically ready PV projects are eligible for the initial SRECS program capacity. In particular we consider the 60 MW set aside for small systems as noted in Section C of the updated, May 22, 2013, RPS Solar Carve-Out Assurance of Qualification Guideline released by DOER must be maintained, if not expanded in the Emergency regulation pertaining to 225 CMR Among many PV systems of this category in progress of installation and permitting by my firm, there are farm projects in Berkshire, Hampden, Hampshire, and Franklin counties which have been planned for as long as four years. These farm projects leverage grant funding from competitive USDA REAP and MDAR Ag Energy grant programs. Farm applicants have typically secured personal funds and bridge loans to demonstrate in application documentation their certain financial viability to achieve project completion and the farmers ownership of the PV capacity. Applications have been accepted by these agencies under the May 30 th 2013 and March 30 th 2013 deadlines ( many just made it) and are under review through the summer with awards expected in September. The strict requirements of these farm renewable energy programs include: modeling the SRECS production incentive as part of financial payback and technical design performance, proof of site control, jurisdictional approvals, environmental approvals and review and associated site maps, engineering studies, utility notification, construction drawings and wire diagrams. REAP applications are often at least 125 pages long. Several of the family farms we work with have been putting aside savings dedicated for proving eligibility for the program for many years. Several have also, with great effort, over the last few months worked with local banks to secure the promise of bridge loans to assure program application compliance. None of these farms have either a secured SQA or one pending and that is the case also for other small PV systems in process through our firm. The expectation was there was enough time this summer to 10

11 meet the RPS Solar Carve-Out Assurance of Qualification Guidelines for these small systems. Thus we hope DOER will pay special consideration to projects which meet the set aside, small capacity, requirement and exceed all and any criteria for readiness to proceed to construction within the year. The Patrick administration, the legislature and DOER and MASSCEC deserve the highest praise for their efforts to support renewables in a fiscally balanced and fair process. Massachusetts leads the nation in policy to accelerate environmental healing. In no small way the global technical excellence of Photovoltaics depends on the innovations nurtured and demonstrated here since the 1970s by early adopters including our private and public academic institutions, PV component manufacturers and integration firms, our utility companies and our citizens. The initial solar carve out RPS program in many ways penalized some of these early adopter PV capacity owners. These inequities have been addressed in detail in my earlier comments on this process. Going forward lets re-dress this unfortunate policy omission by extending eligibility for a new production incentive to this group which represents a relatively small ( ~ 14 MW) but historically seminal increment of capacity still producing daily emission deferral benefits. The confidence of future investors in Massachusetts solar capacity will be enhanced by a policy that says we ve left no trailblazers behind. The post 400 MW program policy should honor PV ownership by Massachusetts ratepayers. The community supported solar power plant model and small system loan program models have not received the policy emphasis they deserve in recent years. This vacuum has led to opportunistic lease and ppa finance schemes gaining ascendancy in the municipal and residential markets. Objective financial guidance and education from state agencies needs to be deployed quickly so towns and citizens can understand the benefits of ownership and the pitfalls of allowing long term financial returns flowing to third party, non rate paying, often out of state investors cashing in on our progressive programs. Lets simplify access to a new production incentive for small systems at the very least so the ownership model can be presented without excessive transaction costs for citizens and a reasonable return can be achieved from a consistent factor per kwh,one without the volatility only large investors can bear hedging. It s also time to honor the primary motive for small system ownership, environmental responsibility. The charade of separating attributes from electrons or btus for that matter does not fit the sensibility we need to initiate for the consciousness of successor generations in this and the next century who will finalize the clean energy adaptation. That adaptation also depends on professional solar installations. An important function of sustainable systems is durability and safety. Along with an ambitious capacity goal by 2020 should be the establishment of a licensed solar contractor category in Massachusetts. Thank you again for this forum and listening to these policy suggestions. Respectfully, Christopher Derby Kilfoyle In verbal reply DOER spokesperson Dwayne Breger courteously acknowledged these good folks meaning the early adopters who have been shut out of the SRECS program and reiterated the DOER stance that they went ahead with their PV investment based on the economics of the time. In follow up I pointed out the numerous changes and waivers DOER has made in the economics and eligibility policy since 2010 when the SRECS program was initiated which have favored early and late- coming large scale PV investors. There was no response except assent as applause from veteran PV experts in the room. We will persist in seeking a fair production incentive policy as the SRECS II program regulations are debated this year through December of