In this Nov. 10, 2010 photo, solar panels at a 1.8 megawatt facility run by the Western Massachusetts Electric Company are shown in Pittsfield.
AP FILE PHOTO
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Capped landfills have grown synonymous with green energy in recent years, as many developers began covering them with solar panels to harvest electricity.
Fewer landfills may go under such makeovers from now on. The state Department of Energy and Resources is ready to adopt a new set of regulations that put a limit on the construction of larger-scale solar facilities, which are typically seen on landfills and other underused open space.
Instead, the agency hopes to encourage the use of smaller spaces, such as rooftops, to produce energy, which will be consumed on-site.
Some industry experts warn that the policy shift will dampen, if not stall, solar movements, compromising the goal to have 1,600 megawatts of solar panels installed across the Bay State by 2020.
Russell Aney, CEO of Holden-based Avid Solar, said solar installation activities, which picked up momentum in recent years, will “significantly slow down” if new regulations are adopted as proposed.
“It’s too bad because we have seen a double-digit (rate) growth in jobs” in solar installation and related sectors in Massachusetts, Aney said.
Christopher Smith, secretary of the Massachusetts Solar Owners Association, said he believes focusing on small systems without sufficient financial assistance for homeowners toward purchase of panels would help only large panel-leasing companies and will “wipe out” small solar businesses in the state in three years.
“If you want to kill solar, you are on your way here. You really are,” Smith said.
Old regulations expired
The Department of Energy and Resources recently released its final draft for a revised solar-incentive program, called Solar Carve Out II.
The revision comes months after the total capacity of all solar panels installed across Massachusetts surpassed the state’s previous goal of 400 MW amid a solar-farm construction boom, triggering the older regulations to expire.
Investors rushed to construct solar farms because they can generate many Solar Renewable Energy Credits, or SRECs, each of which sells for hundreds of dollars. As more SRECs began floating in the market, however, the price plummeted from $570 each in May 2011 to $200 in August 2012, making it difficult for investors to figure out their potential profits from running solar farms.
Also, large-scale solar projects came to a standstill as developers waited to see how the regulations and incentives would change.
30 percent fewer SRECs
Many industry experts say the new regulations address various issues, including the burden on utility ratepayers that SREC costs can have.
They were surprised and puzzled, however, to see the Department of Energy and Resources’ plan to provide 30 percent fewer SRECs for large-scale systems typically seen on landfills than it did previously.
Also, only up to 26 MW of managed growth projects can go online this year and 80 MW in 2015.
Smith said the total capacity of commercial-scale projects has increased by about 180 MW annually.
In a feedback letter to the DOER, some industry professionals told the Department of Energy and Resources that there are already more projects in the pipeline than could fit in the 2014 and 2015 caps.
“We believe Managed Growth Sector will continue to provide the lion’s share of the state’s 1,600 MW solar goal and, due to economies of scale, will provide it at the lowest cost,” Dennis Loria, senior vice president of project development for New York-based Greenwood Energy, wrote in the company’s letter to the DOER.
“In order to maintain the good-paying jobs that have been created here in Managed Growth and the strong competition that will ultimately lead to lower costs for ratepayers, the annual goals the Managed Growth Sector need are comparable to the recent build rate,” the letter continues.
Not what state envisioned
Dan Berwick, director of policy and business development for Borrego Solar Systems, a commercial and government solar-system installer with a regional office in Lowell, agrees with other industry professionals that the 2014 cap of 26 MW is too low.
But he said the state is being responsible by redirecting the incentive program toward smaller units for on-site energy use.
A rapid solar capacity with commercial-scale solar farms funded by large investment institutions isn’t what the state had envisioned when launching Solar Carve Out, Berwick said.
The Department of Energy and Resources told The Sentinel Enterprise in a statement that the annual caps are set to “throttle the growth of the total solar capacity installed to smoothly meet the goal of 1,600 MW by 2020.”
The agency also plans to soon announce a new financing program for homeowners interested in buying solar panels.
“DOER commissioned a study on the relative benefits of third-party and direct-owned systems to homeowners and the commonwealth generally, which found that substantially greater benefits accrue from direct ownership,” the agency said in the statement.
Berwick believes the new regulations are designed to balance various competing priorities, including protection of ratepayers, and will help smooth solar growth over time.
‘Not all doom and gloom’
Avid Solar’s Aney agreed the new regulations are “not all doom and gloom” and provide room for solar capacity to grow. He pointed out, however, that all panel buyers get a federal tax credit equal to 30 percent of purchase prices. The state should be taking advantage of the federal investment to maximize solar installations, he said.
The new regulations are based on the DOER’s idea that the solar industry should grow by 5 percent each year, according to Aney, because the agency wants to promote all types of renewable energy, he said.
In addition to solar, DOER requires a certain amount of electricity sold in the state to come from other renewable sources, such as wind and hydropower.
DOER believes it cannot allow solar to grow that much faster than other types, Aney said. The 5 percent and other figures that give a basis for the regulations are chosen arbitrarily, he added.
Aney said the new incentive program is just as complex as the previous one, making it difficult for people to project profits from solar projects.
“What really disappointed me about (the new) SREC II is that the program did not do enough to limit the perceived risk” for investment, Aney said.
While the annual caps for managed growth projects are small, the DOER says there will be a mechanism through which qualified projects will receive the state’s assurance to move forward in the approval process, which should help developers secure financing for their projects.
But Smith, of the Massachusetts Solar Owners Association, said the state has yet to explain how that mechanism or the financing assistance for panel ownership will work. He said nearly two-thirds of residential solar systems are owned by companies that sell electricity to homeowners at locked-in rates in exchange for use of their rooftops.
“Is this a trick to help (these companies) take even more of the money that goes into solar?” Smith said of the new regulations.
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