Archive for October, 2015

Maryland SREC Update: October 2015

Posted October 28th, 2015 by SRECTrade.

Last week, attention focused on the Maryland SREC market. On Monday, 10/19/15, Maryland regulated utilities awarded load auction bids for electricity supply. Electric load was contracted for anywhere between 3 and 24 months into the future. Once load suppliers begin to lock in their load obligations, attention naturally turns to the REC markets to begin planning for the corresponding compliance obligations.

Given the additional attention on the recent load auction and the consequent trading activity in the MD SREC market, we have refreshed our capacity scenarios to get a stronger sense of the current balance between supply from recently built projects and demand from RPS compliance obligations.

Our most recent MD SREC capacity presentation can be found here.

As of our last MD capacity update, Last Twelve Month (LTM) monthly build rates were 5.8 MW per month. Due to a remaining balance of approximately 73,400 CY 2013 and 2014 SRECs and a strong Q4 2014 build, the market was expected to be slightly oversupplied in the short term (2015 and 2016) by about 10%-30%; depending on forecast monthly solar build rates. Despite this short term oversupply, the market was projected to return to balance by 2017 with significant under supply in 2018 and 2019. At the time, supply/demand balance and observed build rates justified the thesis that the MD solar market had the ability to digest more project build.

Since the late spring / early summer, the PJM GATS renewable generators report shows Maryland experienced a strong uptick in new build during the summer, with build rates from June through August increasing 34% from the previous three months ending in May.

Average LTM build rates now stand at 10.6 MW per month.  At this increased pace, the Maryland SREC market will experience over supply in the coming years. Across three scenarios – 75%, 100%, and 150% of LTM solar build rates – the market is forecast to be oversupplied through 2019.

What this means for MD SREC pricing 

If these observed build rates continue into the future, downward pricing pressure will result as more and more supply is brought to market. This is particularly relevant now, as electricity companies who have sold electric supply for the next 24 months will be looking to buy their SREC exposure for a similar time period.  Market participants can look at forward structures such as multi-year SREC strips as an opportunity to lock in forward pricing to protect from any future price movement.

As always, this analysis is informational only in purpose in order to help explain the emphasis on MD SREC markets last week. We will continue to watch the markets closely and stay on top of new MD capacity data as it is updated by PJM-GATS.

 

Disclaimer. This document, data, and/or any of its components (collectively, the “Materials”) are for informational purposes only. The Materials are not intended as investment, tax, legal, or financial advice, or as an offer or solicitation for the purpose or sale of any financial instrument. SRECTrade, Inc. does not warranty or guarantee the market data or other information included herein, as to its completeness, accuracy, or fitness for a particular purpose, express or implied, and such market data and information are subject to change without notice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Any comments or statements made herein do not necessarily reflect those of SRECTrade, Inc. SRECTrade, Inc. may have issued, and may in the future issue, other communications, data, or reports that are inconsistent with, and reach different conclusions from, the information presented herein.

Copyright. This document is protected by copyright laws and contains material proprietary to SRECTrade, Inc. This document, data, and/or any of its components (collectively, the “Materials”) may not be reproduced, republished, distributed, transmitted, displayed, broadcasted or otherwise disseminated or exploited in any manner without the express prior written permission of SRECTrade, Inc. The receipt or possession of the Materials does not convey any rights to reproduce, disclose, or distribute its contents, or to manufacture, use, or sell anything that it may describe, in whole or in part. If consent to use the Materials is granted, reference and sourcing must be attributed to the Materials and to SRECTrade, Inc. If you have questions about the use or reproduction of the Materials, please contact SRECTrade, Inc.

New Jersey SREC Update: October 2015

Posted October 17th, 2015 by SRECTrade.

This week the NJ SREC market experienced sustained buying in both the OTC New Jersey SREC markets as well as in the NJ EDC Spot auction.  Tuesday and Wednesday spot markets were bid higher as well as noticeable buying in forward markets for the NJ17, NJ18, and NJ19 vintages.  In Thursday’s EDC  auction, the final price ($243.30) settled a little more than three dollars above the session’s offer price.

With all this focus on New Jersey SREC markets, we believe this is an opportune time to share our updated capacity models and provide additional information on what drove price action this week.

Our New Jersey SREC Update presentation can be found here.

A consistent trend observed in the New Jersey SREC market is the impact of the annual BGS auction, held in February of each year.  As the New Jersey Electric Distribution Companies use the auction to procure large amounts of power supply, a corresponding number of SRECs must also be procured in the market in order to satisfy the new compliance requirements.  As the market has come to understand this relationship, it is possible SREC buyers are entering the market earlier and earlier in an attempt to secure supply ahead of the BGS-induced rush.  It could be inferred therefore that participants may now be using the liquidity supplied by other market events (in this case, Thursday’s EDC spot auction) as an opportunity to position even further ahead of any future price appreciation.

Regarding the buying activity in farther dated NJ SREC energy years, we revisited our capacity model which tracks state supply and demand fundamentals.  Slides 6 and 7 of the NJ SREC Update presentation start with currently available 2015 market data, then examine three different build scenarios, based off of current LTM build rates, and observe the impact each has on the future balance of supply through 2020.  Although the market is predicted to be fundamentally oversupplied, to some degree, across some of the build scenarios, even the greater per month build rates result in oversupply by ~27.6% in RY2019.  While not insignificant, a 27.6% oversupply on its own does not guarantee the type of consistent selling pressure that would lead to a sustained selloff.  If that 27.6% of the market decided to wait and hold off selling SRECs, or if the market experienced a build rate more in line with the current trend (~16.0 MW/month), the market could find support from a more balanced supply and demand dynamic.

To be clear, this is informational in purpose to assist in explaining the focus on NJ Solar RECs this week.  We will, however, be watching the markets closely through year end to see if these trends continue to develop.

 

Disclaimer. This document, data, and/or any of its components (collectively, the “Materials”) are for informational purposes only. The Materials are not intended as investment, tax, legal, or financial advice, or as an offer or solicitation for the purpose or sale of any financial instrument. SRECTrade, Inc. does not warranty or guarantee the market data or other information included herein, as to its completeness, accuracy, or fitness for a particular purpose, express or implied, and such market data and information are subject to change without notice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Any comments or statements made herein do not necessarily reflect those of SRECTrade, Inc. SRECTrade, Inc. may have issued, and may in the future issue, other communications, data, or reports that are inconsistent with, and reach different conclusions from, the information presented herein.

Copyright. This document is protected by copyright laws and contains material proprietary to SRECTrade, Inc. This document, data, and/or any of its components (collectively, the “Materials”) may not be reproduced, republished, distributed, transmitted, displayed, broadcasted or otherwise disseminated or exploited in any manner without the express prior written permission of SRECTrade, Inc. The receipt or possession of the Materials does not convey any rights to reproduce, disclose, or distribute its contents, or to manufacture, use, or sell anything that it may describe, in whole or in part. If consent to use the Materials is granted, reference and sourcing must be attributed to the Materials and to SRECTrade, Inc. If you have questions about the use or reproduction of the Materials, please contact SRECTrade, Inc.

 

SRECTrade Markets Report: September 2015

Posted October 8th, 2015 by SRECTrade.

The following post is a monthly update outlining the megawatts of solar capacity certified to create SRECs in the Solar REC markets that SRECTrade serves. All PJM data is based on the information available in PJM GATS as of the date noted. All MA data is based on the information provided by the DOER as of the date noted. This analysis does not include projects that are not yet registered and certified with the entities noted herein.

A PDF copy of this table can be found here.

Capacity_September2015

Overview of PJM Eligible Systems Through 9/28/2015

There are 69,266 facilities registered in GATS as of 9/28/2015. See below for a more detailed breakdown.

STH and SUN projects sept15

There are 328 projects over 1 MW in capacity, representing 1,043.6 MW or 43.9% of the qualified capacity. The largest projects in PJM are concentrated in NC and MD. There are 52 projects that are 5 MW or larger. These make up 21.7% of all qualified capacity in PJM. The top 5 largest projects are listed below.

Sept15 top 5

NJ Office of Clean Energy Estimated Installed Capacity Through 9/30/15

On October 13, 2015, the New Jersey Office of Clean Energy (OCE) announced total installed solar capacity reached 1,546.2 MW through 9/30/15; an increase of approximately 11.8 MW over the total capacity reported through the end of August 2015. The average last six month build rate per month, according to the OCE data, is 12.8 MW. Note that this data does not directly tie to GATS registration data because of a lag between NJ Office of Clean Energy certifications and GATS registrations.

Overview of MA DOER SREC-I and SREC-II Eligible Systems

SREC-I Program

The Massachusetts SREC-I program was capped on June 30, 2014. As of 10/14/2015 the DOER reported that 6.7 MW of solar is still listed as Qualified but not operational. In total, 653.8 MW of capacity is listed as qualified, of which 647.1 MW is operational.

SREC-II Program

The SREC-II program opened on April 25, 2014. The program is broken in to Market Sectors. For a detailed overview of the regulations regarding SREC-II please visit here. As of 10/14/2015, 420.5 MW of capacity is currently qualified under the SREC-II program, but only 249.3 MW is operational.

Starting May 15, 2015 the DOER began publishing data showing generation units under review in the SREC-II Program.  Total capacity under review is 14.5.0 MW, of which 1.2 MW is operational.

How to Interpret The Capacity Table at the Top of this Post

The tables above demonstrate the capacity breakout by state. Note, that for all PJM GATS registered projects, each state includes all projects certified to sell into that state. State RPS programs that allow for systems sited in other states to participate have been broken up by systems sited in-state and out-of-state. Additional detail has been provided to demonstrate the total capacity of systems only certified for one specific state market versus being certified for multiple state markets. For example, PA includes projects only certified to sell into the PA SREC market, broken out by in-state and out-of-state systems, as well as projects that are also certified to sell into PA and Other State markets broken out by in state and out of state systems (i.e. OH, DC, MD, DE, NJ). PA Out-of-State includes systems sited in states with their own state SREC market (i.e. DE) as well as systems sited in states that have no SREC market (i.e. VA). Also, it is important to note that the Current Capacity represents the total megawatts eligible to produce and sell SRECs as of the noted date, while the Estimated Required Capacity – Current and Next Reporting Year represents the estimated number of MW that need to be online on average throughout the reporting period to meet the RPS requirement within each state with only that particular compliance period vintage. For example, New Jersey needed approximately 496.7 MW online for the entire 2013 reporting year to meet the RPS requirement with 2013 vintage SRECs only. SRECs still available from prior eligible periods can also impact the Solar RPS requirements. Additionally, the data presented above does not include projects that are in the pipeline or currently going through the registration process in each state program. This data represents specifically the projects that have been approved for the corresponding state SREC markets as of the dates noted.

Note: SREC requirements for markets without fixed SREC targets have been forecast based on EIA Report “Retail Sales of Electricity by State by Provider” through 2013. Projected SRECs required utilizes the most recent EIA electricity data applying an average 1.0% growth rate per forecast year. The state’s RPS Solar requirement is then multiplied by forecast total electricity sales to arrive at projected SRECs required. Projected capacity required is based on a factor of 1,200 MWh in PJM states and 1,160 MWh in MA, generated per MW of installed capacity per year.

October 6, 2015 Illinois Supplemental PV Procurement Program (Round 2) – Introduction Webinar Slides and Recording Available

Posted October 6th, 2015 by SRECTrade.

On October 6, 2015, SRECTrade hosted a webinar for the second round of the Illinois Supplemental PV Procurement Program. The webinar covered the following:

  • Overview of the IL SREC program
  • June 2015 procurement results (Round 1)
  • Summary of the registration and bid process
  • Example aggregate bid groups
  • Procurement timeline
  • Q&A

The application window is currently open and closes on October 21, 2015 at 5 p.m. central. To finalize your registration please login or create an account on SRECTrade.

For access to the slides please click here: SRECTrade IL Procurement Webinar. For a video recording of the webinar, click the image below.

This document and recording is protected by copyright laws and contains material proprietary to SRECTrade, Inc. It or any components may not be reproduced, republished, distributed, transmitted, displayed, broadcast or otherwise exploited in any manner without the express prior written permission of SRECTrade, Inc. The receipt or possession of this document does not convey any rights to reproduce, disclose, or distribute its contents, or to manufacture, use, or sell anything that it may describe, in whole or in part. If consent to use these materials is granted, a link to the current version of this document on the SRECTrade website must be included for reference.