Archive for December, 2016

Gov. Kasich Vetoes Bill Threatening to Weaken OH RPS

Posted December 28th, 2016 by SRECTrade.

Yesterday, Gov. Kasich released his decision to veto Substitute HB554, a bill designed to weaken Ohio’s renewable portfolio standard by converting its compliance standards to voluntary targets for the next three years. The bill, which passed in the Ohio Legislature earlier this month, would follow the state’s two-year RPS freeze, which drastically impacted Ohio’s renewable energy industry, resulting in slow growth and job losses.

Renewable energy and environmental advocates, along with a coalition of Ohio’s business leaders, urged Gov. Kasich to veto the detrimental bill and to focus instead on bolstering the state’s renewable energy economy. Through his veto, Gov. Kasich stood by his position for reinstatement of the RPS, rather than allowing for the GOP to renege on the state’s clean energy goals.

In his veto, Gov. Kasich said that the bill would undermine the state’s progress to date, dealing a “setback to efforts that are succeeding in helping businesses and homeowners reduce their energy costs through increased efficiency” to the tune of “$1.03 billion in savings to date … [and] … $4.15 billion in lifetime savings.” He encouraged the General Assembly to “advance strategies for helping ensure competitive energy costs” and to preserve and expand upon the job growth generated by high technology firms in the renewables industry.

While opponents of the bill hope that Gov. Kasich’s veto sends a message to progress the RPS, the Legislature could override his veto in the next session, which begins on January 9. A three-fifths vote (at least 60 of 99 in the House and at least 20 of 33 in the Senate) would be needed to override the veto. The bill originally passed 56-34 in the House and 18-13 in the Senate.

New Jersey SREC Update – December 2016

Posted December 23rd, 2016 by SRECTrade.

As the calendar year comes to a close, we wanted to take one final opportunity to examine the most recently released solar installation data from the New Jersey Office of Clean Energy. Throughout 2016 the New Jersey SREC market has been profoundly influenced by the implications of the data in these reports. After experiencing the type of price volatility we’ve seen in 2016, our hope is that market participants will welcome some added insight into these numbers and will consider this analysis as they begin to make projections for 2017.

You can find our most recent capacity presentation here.

As of 11/30/2106, the latest NJOCE Solar Installation Report showed an increase of 26.7MW of installed capacity since it was last issued as of 10/30/16.  Almost 20MW of that increase came from reported installations in October and November, with the balance distributed relatively evenly back to June 2015.

  • 10.3MW added in November 2016
  • 9.6MW added in October 2016
  • 4.6MW added July through September 2016
  • 2.2MW added June 2015 through June 2016

**Regular readers of these reports will also notice that a significant amount of capacity was “added” to the period from 2001 to May 2015, although this was simply a reclassification of previously reported capacity in order to improve the accuracy of the information presented. **

Within this report, a trend which we had previously noted has become more clearly defined.  Assuming that the November figure for installed capacity will be revised upward in future reports to a degree similar to the prompt months in prior data releases, we see that the average monthly rate has fallen drastically from the first half of the year to the second.  Through the first six months of 2016, the New Jersey solar market was adding just over 33MW/month.  Assuming the reported November installation number doubles due to future upward revisions, since July that monthly average has now dropped to 20MW/month.  That represents a 40% drop in new installations.

Although there were undoubtedly a range of factors that contributed to this sudden shift, lower SREC pricing almost certainly played a central role in this change of trend.  When extrapolated out into the future, the extremely aggressive build rates observed in Q1 and Q2 of 2016 indicated a market that would very quickly become oversupplied as the pace of development overtook the rate of RPS growth.  This expectation of future imbalance led to a precipitous decline in prices, bringing the NJ SREC spot market down from highs in the $290s to lows in the $200s.  This decline meant developers experienced further difficulty finding adequate funding to support their pipeline of projects.  The consequence has been that many projects that don’t qualify for residential rates of electricity – those projects who would otherwise depend on healthy SREC prices to be economically feasible – simply didn’t get built.  This is clearly apparent when comparing the three month periods ending in July 2016 and November 2016:

julyvsnov

A closer examination of the data reveals another powerful shift in industry trends. Commercial and residential build rates have historically kept a somewhat even balance with respect to one another.  In 2015, commercial and residential capacity made up 41% and 52%, respectively, of total installations in that year.  In the first half of 2016, that balance was 58% and 40%, respectively.  Since July 2016, that balance has now shifted to 23% and 64%.  While the residential market has remained strong, the larger commercial-sized systems have experienced very real difficulty. Again, this shift is not solely due to SREC pricing, but the significant decline in the amount of funding available from the SREC markets undoubtedly played a powerful role.

As always, we want to apply this information to create better informed opinions regarding the future of the market.  The recent slowdown in new installation has further supported the idea that EY2017 will remain fairly balanced in terms of supply and demand.  Across a range of scenarios, 2017 will most likely remain well balanced with a projected oversupply of only 2-3%. Barring a drastic acceleration in new installations, 2018 is also projected to remain fairly balanced.  2019 and beyond, however, take on a much different dynamic.

nj-update-chart

Even under modest growth scenarios, the current RPS can again be overwhelmed by the growth of the New Jersey solar market in a matter of years.  It is important to note that the pricing of all financial products – SRECs included – is determined by a combination of current market conditions as well as expectations of market conditions in the future.  Even though 2017 and 2018 appear to be years of relative balance, a drastic oversupply in the later years of the New Jersey market could easily have an adverse affect on pricing in the near term.  Without some type of legislative amendment to the current state RPS schedule, the New Jersey SREC market could feasibly experience a prolonged period of depressed pricing which would signal a new, harsher economic reality for solar market participants across all segments of solar installation.

It is SRECTrade’s opinion that the market would be best served by proactively supporting any available means of expanding the state’s RPS schedule to account for this future growth.  In order to successfully support the solar market, any such solution will need to focus on the longer term expansion of the SREC program.  There have been several different proposals debated amongst industry participants, all of which have their own merits, but the fact remains that ANY expansion is better than none at all.  If the industry chooses not to take this opportunity to expand the RPS program, developers will face an increasing probability of further market contraction and slower growth.

We will continue to update you with any new data as it becomes available.  Please feel free to reach out to your SRECTrade brokerage coverage with any questions or comments you may have, we are always willing and eager to discuss our analysis with all members of the market.

We wish continued success and happiness to all of our friends and partners in the renewable energy industry, and we look forward to working together again in 2017!

 

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.

Urge Gov. Kasich to Veto HB554 and Revive Ohio’s Renewable Energy Industry

Posted December 16th, 2016 by SRECTrade.

Since early November, the Ohio Legislature has been working on bills to address the imminent thawing of the state’s frozen RPS–which has been stalled at 2014 levels for the past two years. Without legislative action, the standards would resume their upward trajectory moving forward, but members of the Ohio Legislature have instead set forth bills that would weaken the RPS and cause even more harm to the state’s suffering renewable energy industry. On December 15, after passing in the Senate and in the House, 18-13 and 56-34, respectively, HB554 was sent to Governor Kasich’s desk for signature or veto. The bill would make the state’s RPS obligations optional for two years (after which they would resume as mandates), ensuring the continued stagnation of the state’s renewable energy economy for another two years.

During the 2014-16 freeze, utility companies reduced–or in some cases completely suspended–renewable energy and energy efficiency programs and services. Clean energy companies had no choice but to leave Ohio. As a result, Ohio’s wind industry lost more than 1,400 jobs in 2015 alone. Today, Ohio’s projected growth for clean jobs is only at 4.9%. In order to get back on track, the industry needs a jolt of support that can only come from the reinstatement (or better yet, a bolstering) of the RPS and Energy Efficiency Resource Standard (EERS).

While proponents of the bill claim that switching the energy standards to optional would reduce costs, opponents of the bill know that optional standards are the functional equivalent of having no standards at all. Senator Cliff Hite, R-Findlay, who represents a district with hundreds of wind farms, knows that optional standards will not work–for the same reason why good coaches don’t have optional practices.

Earlier this year, while seeking the Republication nomination for President, Gov. Kasich told a New Hampshire crowd that he would reinstate the RPS if the legislature attempted to gut the policies. Now, all eyes are on Gov. Kasich to see whether he sticks to his campaign words from January and helps the renewable energy economy get back on the right track. Environmental advocates and opponents of the bill urge constituents to call the Governor’s Office and urge him to veto the bill. You can call his Office today at (614) 466-3555.

The bill hit Gov. Kasich’s desk late on December 15, so he has until midnight on December 28 to veto the bill.

ICC Issues Final Order on IPA’s 2017 Procurement Plan

Posted December 15th, 2016 by SRECTrade.

On December 13, the Illinois Commerce Commission (ICC) issued its Final Order on the Illinois Power Agency’s (IPA) 2017 Procurement Plan. The 2017 Procurement Plan, which will include two DG procurement events, will govern the final series of procurements held under Illinois’ existing RPS provisions, before the state transitions to its new RPS.

The Plan calls for two DG procurement events, with an allocated $40 million budget for the procurement of an estimated 20 MW of DG resources. The DG procurements under the Plan will be unique from previous DG procurements in that the IPA will allow for speculative bids for systems under 25kW for the first time. This change, made in light of the success of the IL SPV Procurement Plan and in response to public support, is combined with a reduced $4/REC letter of credit for both identified and speculative systems.

The DG procurements will be for 5-year REC contracts for systems under 25kw (“small”) and systems 25kW – 2MW (“large”), with a 50:50 procurement split between small and large systems. Any such new and existing systems interconnected with Ameren, ComEd, MidAmerican (Illinois service territory only), Mount Carmel, Illinois municipal utilities or rural co-ops are eligible to participate in the procurement, including “speculative” (unidentified) projects. There is a 1 MW “bid minimum”, and RECs will need to be offered at a single, blended REC price per bid. Interested participants are encouraged to bid through aggregators in order to meet the 1 MW “bid minimum”.

Speculative systems will have nine months to identify systems, and all systems will have between nine months and one year from identification to commence delivery, depending on the system type.

The timing of the DG procurement event rounds will be contingent upon the IPA’s determination regarding an April 2017 contingency procurement under the SPV Plan and other factors. The final version of the 2017 Procurement Plan and future updates on the Plan will be posted on the IPA’s website here.

MA SREC-II Extension Webinar

Posted December 13th, 2016 by SRECTrade.

Earlier today, SRECTrade hosted a webinar covering the current state of the Massachusetts SREC-II program, key deadlines for qualifying systems under SREC-II, and SRECTrade application processes.

The application window is currently open for all MA systems, regardless of size, although qualification deadlines are approaching. Please feel free to reference SREC-II Extension Application Instructions HERE.

For access to the presentation slides, please click here: MA SREC-II Extension Webinar. To view a video recording of the webinar, please 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.

MA SREC-II Installer Webinar

Posted December 12th, 2016 by SRECTrade.

SRECTrade will be hosting a webinar this Tuesday, December 13th, at 2:00 PM EST. The webinar will cover the current state of the Massachusetts SREC-II program, key deadlines for qualifying systems under SREC-II, and SRECTrade application processes to consider as the program’s close approaches.

To attend the webinar click HERE to register. A recording will be made available on SRECTrade’s blog for those unable to attend.

Illinois Passes New RPS, Comprehensive Energy Package

Posted December 2nd, 2016 by SRECTrade.

Following a whirlwind revival and numerous amendments, both chambers of the Illinois General Assembly voted late on Thursday to pass a comprehensive energy bill to address the state’s RPS, energy efficiency programs, net metering, nuclear plants, and more. SB 2814, the Future Energy Jobs Bill, is a product of nearly two years of negotiations between utilities, renewable energy stakeholders, environmental advocates, ratepayer advocates, and others. The 440-plus page bill underwent nearly 30 rounds of changes before passing 63-38 in the House and 32-18 in the Senate on the final day of the General Assembly’s veto session.

The energy package includes a sizable bail-out for Exelon’s struggling nuclear power plants–providing $235 million a year to Exelon for 13 years to keep the plants up and running. In return, the adjustment will allow Exelon’s utility subsidiary, Commonwealth Edison (ComEd) to spend roughly $400 million a year on energy efficiency programs. Costs to consumers will be capped at 1.3% over 2015 rates for business classes, and at 25 cents per month for ComEd’s residential customers.

In addition to the nuclear bail-out and energy efficiency programs, the Future Energy Jobs Bill will reform the state’s RPS policy. While Illinois’ RPS target will remain at 25% by 2025, the bill provides for new community solar, low-income, and brownfield solar targets. Distributed generation (DG) will be incentivized through an adjustable block incentive program, which will allow DG facilities to receive upfront REC payments in a 15-year contract with the Illinois Power Agency.

Thanks to the advocacy of the solar industry, ComEd’s proposed demand charge was eliminated from the final version of the bill, and retail net metering rates will be preserved with grandfathering up to a 5% statutory cap. Once the cap is hit, net metering rates will be replaced through a commission process to establish fair DG compensation based on locational grid value.

Governor Bruce Rauner (R) has already announced his support of the heavily negotiated bill. After Gov. Rauner signs the bill, it will take effect on June 1, 2017.