Archive for April, 2018

PA PUC Issues Final Implementation Order of Act 40 – Impacts Out-of-State PA Certified Solar Projects

Posted April 19th, 2018 by SRECTrade.

On Thursday, April 19th, the Pennsylvania Public Utilities Commission (PUC) issued its Final Implementation Order of Act 40 of 2017. The Order amends the qualifications to certify Tier I solar photovoltaic facilities under Pennsylvania’s Alternative Energy Portfolio Standards (AEPS) Act. As summarized in our previous blog post, ambiguous language in Section 2804(2)(i) and Section 2804(2)(ii) of Act 40 made it unclear whether certified but out-of-state facilities would retain their certifications under the AEPS. The Order clarified the PUC’s interpretations of Section 2804(2)(i) and Section 2804(2)(ii) which are as follows:

  • Section 2804(2)(i) – “[a] certification originating within the geographical boundaries of this Commonwealth…” shall mean a facility located within PA having received an AEPS Tier I solar photovoltaic certification.
  • Section 2804(2)(ii) – shall only permit out-of-state facilities that are 1) already certified as AEPS Tier I Solar Photovoltaic and 2) entered into an SREC contract with a PA electric distribution company (EDC) or electric generation supplier (EGS) serving PA customers to maintain certification until the expiration of the contract.

Solar facilities that meet the two Section 2804(2)(ii) criteria listed above are limited to maintaining certification only for the applicable amount of Solar Renewable Energy Credits (SRECs) contractually committed to an EDC or EGS. EDCs and EGSs seeking to qualify SRECs under this interpretation must file a Petition with 60 days of the entry date of the Order.

In addition, the Order clarified that SRECs generated by certified but out-of-state facilities prior to October 30, 2017 will retain their Tier I solar qualification for their standard banking lifetime (current reporting year and following two). The Order did not clarify whether SRECs generated by such facilities after October 30, 2017 will also be able to retain their Tier I solar qualification.

At this time, it is unclear how implementation of these interpretations will be administered. SRECTrade will continue to monitor the proceedings and provide updates as they become available.

NJ Solar RPS Increase – New Jersey Assembly and Senate Pass AB-3723 / SB-2314

Posted April 13th, 2018 by SRECTrade.

On Thursday, April 12th, the New Jersey Assembly and Senate passed Assembly Bill 3723 (AB-3723) and Senate Bill 2314 (SB-2314). The bill now sits on the desk of Governor Phil Murphy (Dem) waiting to be signed, after passing the Assembly by a margin of 49-20-2 and the Senate by a margin of 29-8. The bill requires a number of action items to be carried out, including:

  • Requiring the New Jersey Board of Public Utilities to:
    • Administer an energy storage analysis
    • Advance, increase, and extend the solar carve-out schedule and reduce and extend the solar alternative compliance payment schedule
    • Introduce structural changes to the state SREC program
    • Implement energy efficiency and peak demand reduction programs
    • Implement a “Community Solar Energy Pilot Program”
    • Offer tax credits for specified offshore wind facilities
  • Requiring the Department of Labor and Workforce Development to establish job training programs for professionals in manufacturing and maintenance of offshore wind facilities

The bill requires 21% of statewide electricity sales to be derived from Class I renewable energy sources by January 1, 2020, 35% by January 1, 2025, and 50% by January 1, 2030. The cost of this requirement shall not exceed 9% of the electricity purchased by all NJ ratepayers for each energy year 2019-2021 and shall not exceed 7% in each energy year thereafter. In addition, all facilities filing SREC applications after the bill’s enactment date will be subject to a reduced SREC eligibility term of 10 years, down from 15.

No later than 180 days after the enactment of the bill, the board will implement rules to close the SREC program to new systems upon reaching the 5.1% solar carve-out target. The legislation intends to close the existing SREC program to new projects on or before June 1, 2021. Within 24 months from signing the legislation, the Board of Public Utilities will be required to conduct a study that evaluates how to modify or implement a new solar incentive program. A variety of market stakeholders will be consulted in the process to determine the next best steps forward for the NJ SREC market.

As shown below, the bill brings forward and raises the state’s solar carve-out requirements beginning with EY2019 and extends the requirements through EY2033. The requirement peaks at 5.10% in EY2021-2023 before gradually declining through EY2033. The reduction mechanic was introduced to account for solar facilities that will be reaching the end of their SREC production eligibility term.

The bill also reduces the solar alternative compliance payment (SACP) beginning with EY2019 and extends the SACP schedule through EY2033. The SACP level drops to $268 in EY2019 and then gradually decreases by $10 each year following.

For more information on the historical progress of the bill, please view our previous blog post on the topic here. SRECTrade will be publishing an updated New Jersey Supply and Demand Analysis to its blog shortly in consideration of this bill.

Changes to PTS SREC Production Reporting to NEPOOL GIS

Posted April 13th, 2018 by SRECTrade.

On April 5th the Production Tracking System (PTS) announced that it would update the process for reporting SREC production to the New England Power Pool Generation Information System (NEPOOL GIS). Previously, PTS rounded down production to the nearest MWh before reporting to NEPOOL GIS. This meant that even if a system had produced 1250 kWh (the production amount needed to receive an SREC after the 0.8 factor is applied), the system would not have received its first SREC until it produced 2000 kWh.

This change took effect on the Q4 2017 NEPOOL GIS reporting period (which was due on April 10th). PTS will no longer roll over month-to-month fractional MWh production. Total monthly production in MWh, rounded to the nearest whole kilowatt-hour will be reported to the NEPOOL GIS. For example, if a system produces 1775 kWh in a quarter, PTS will report 1.775 MWh to NEPOOL GIS, whereas previously PTS would have reported 1.0 MWh. The NEPOOL GIS will then apply the SREC-II Factor to the aggregate generation.  NEPOOL GIS will continue to carry-forward the partial SREC due to the SREC Factor.


Massachusetts SREC-I and SREC-II Update

Posted April 10th, 2018 by SRECTrade.

With the Q4 2017 NEPOOL GIS renewable energy certificate (REC) issuance nearly upon us, we figured it would be a good time to provide an update on the Massachusetts SREC-I and SREC-II markets. The SREC-I market is not subject to any new installed capacity and is capped at 653.3 MW of eligible capacity. The main factors driving supply and demand in the current state of the market are the 1) annual RPS SREC-I compliance obligations, 2) prompt year solar production and any eligible banked or reminted SRECs from prior years, and 3) total electric load served throughout the state. Given current RPS demand, as provided by the Massachusetts Department of Energy Resources (MA DOER) the 2017 compliance year for MA17 SREC-I is likely to be slightly over supplied by approximately 14,000 SRECs, less than 2% of estimated compliance obligation. For more specific details see our full presentation here. Note, this estimate is still subject to change due to final 2017 electricity supply figures and Q4 2017 SRECs issued. Pricing for MA2017 SREC-Is since the beginning of the year has ranged between $300 and $310, with recent transactions trading at the lower end of the range. Our enclosed presentation also provides a preliminary estimate for MA2018 SREC-I supply and demand. The analysis currently suggests under supply of approximately 85,000 SRECs, a little over 10% of the estimated obligation. Pricing for MA2018 SREC-Is since the beginning of the year for has ranged between $330 and $345, with recent transactions executed around $340/SREC.

With regards to MA SREC-II supply, the market is in the final stages of new solar capacity additions. The program will be capped to any new installed capacity once the Solar Massachusetts Renewable Target (SMART) program is finalized and implemented, expected for late Q2 / early Q3 2018. Recent capacity added has slowed month over month, but continues at a decent pace considering the market is limited to new commercial and reduced SREC factors for all project typees. During the last 6 months of 2017, installed capacity has been 37.2 MW per month on average and 92.1 MW for Q4 2017.

The outlook for the MA2017 SREC-II market is one of oversupply for 2017, with an estimate of more than 186,000 SRECs exceeding the estimated compliance obligation by almost 16%. For more details see the presentation here. Pricing for MA17 SREC-IIs has ranged between $265 and $270 as of late. While 2018 is still subject to capacity additions, the compliance period will also be impacted by the SCCA auction and banked SRECs from 2017 and prior. Our estimated outlook for 2018 is one of slight oversupply, almost equilibrium. Estimates point to over 17,000 SRECs in excess, exceeding the estimated compliance obligation by approximately 1%. Pricing for MA18 SREC-IIs has ranged between $270 and $280 since the beginning of the year.

Should you have any questions about the enclosed analysis or need transaction and management services, please contact us.