The Massachusetts Department of Energy Resources (the “DOER”) final regulation pertaining to the RPS Solar Carve-Out program recently took effect on January 7, 2011. The Solar Carve-Out program is part of the larger Massachusetts Renewable Portfolio Standard (“RPS”) that was established in regulations issued by the DOER in 2002. The RPS Solar Carve-Out is a market-based incentive program created to support development of 400 MWs of residential, commercial, public and non-profit solar PV installation across Massachusetts.

The final Solar Carve-Out regulation included certain changes to the proposed final regulation issued on August 20, 2010, including increasing the maximum size of eligible solar PV projects from 2 MW to 6 MW per parcel of land. Another notable revision now requires that all projects participating in the Solar Carve-Out program that are larger than 1 MW to obtain applicable state and local permits before such projects will be awarded a statement of qualification allowing the project to generate Solar Renewable Energy Credits or SRECs.

In order to participate in the Solar Carve-Out program, the system must (i) have a capacity of 6 MWs or less, (ii) be located in the Commonwealth of Massachusetts, (iii) use some of its generation on-site and be interconnected to the utility grid, and (iv) have a commercial operation date of January 1, 2008 or later.

Also recently announced by the DOER, the Alternative Compliance Payment (or ACP) rate pertaining to the Solar Carve-Out program was reduced from $600 to $550, effective as of January 31, 2011. This new rate is effective for Compliance Year 2011 and thereafter (unless further reduced by the DOER). The DOER has stated that the reduction in the ACP rate is due, in part, to declining installation and equipment costs.

For more information or questions regarding the RPS Solar Carve-Out program or any related topic, please contact Craig Kline at 212-704-6150 or Roger Mok at 212-704-6264.