Archive for July, 2018

Massachusetts DOER Announces Revised 2018 and Preliminary 2019 SREC Minimum Standards

Posted July 10th, 2018 by SRECTrade.

On July 10, 2018, the Massachusetts Department of Energy Resources (DOER) announced both preliminary 2019 SREC I and SREC II Minimum Standards and a revised version of the original 2018 SREC II Minimum Standard calculation. The 2018 SREC II Minimum Standards were reduced from 2.7802% to 2.6823% for load executed under contract between April 25, 2014 and May 8, 2016 and from 4.1661% to 4.0683% for contracts executed after May 8, 2016.

The DOER estimates a 2019 SREC I Minimum Standard of 1.1189% for load executed under contract prior to June 28, 2013 and, if the auction clears in the first or second round, 1.7809% for load executed under contract on or after June 28, 2013.

The DOER estimates a 2019 SREC II Minimum Standard of 2.3680% for load executed under contract between April 25, 2014 and May 8, 2016, and 3.9697% for load executed under contract on or after May 8, 2016. This also only applies if the auction clears the first or second round.

Details regarding this announcement can be found here. SRECTrade will be assessing the implications of this adjustment and informing our constituents accordingly.

Washington, D.C. SREC Market Update

Posted July 8th, 2018 by SRECTrade.

In recent months, the Washington D.C. SREC market has seen a relative lack of liquidity compared to prior compliance years and a resulting downward impact on pricing. This dynamic has developed as a result of the Renewable Portfolio Expansion Act of 2016, which allowed for electricity load signed under contract prior to October 8, 2016 to be grandfathered under the old Solar Alternative Compliance Penalty (SACP). With the current Calendar Year 2018 (CY2018) SACP at $500/MWh and the old CY2018 SACP at $300/MWh, electricity suppliers with grandfathered load have opted to pay the lower SACP fee instead of purchasing SRECs for each MWh of compliance associated with load under a grandfathered contract. As such, effective SREC demand has been temporarily reduced.

In CY2017, 28.8% of the compliance obligation was met through retirement of DC-eligible SRECs. This implies that 71.2% of the compliance obligation was met through SACP payments and, correspondingly, 71.2% of 2017 load obligation was grandfathered under the old SACP. Details of this can be found in the DC Public Service Commission’s Report on the Renewable Energy Portfolio Standard for Compliance Year 2017 (see pages 15-17 specifically). With each subsequent year up through 2021, a portion of this load will roll off of contract, incrementally increasing SREC demand. The enclosed analysis assumes that these contracts will roll off in equal intervals each year over the next three years. As such, the analysis assumes that beginning in CY2020, there will be no load remaining under a grandfathered contract. While this may not be the case (since it is possible there were five year load contracts signed in 2015/2016), we assume that the majority of grandfathered contracts have a three year term and will expire by CY2020.

Reflective of the $200 difference between the previous program’s and current program’s SACP for CY2018, the price of SRECs have decreased from $470 in February 2017 to approximately $370 in July 2018. Under our assumption, approximately 40% of electric load remains under grandfathered contracts for CY2018. We can gather from this statistic that approximately 40% of compliance from CY2018 will be met through SACP payments and the remainder will be met through the purchase of SRECs. The enclosed analysis demonstrates a likely oversupply in the current 2018 compliance year. At current build rates of 1.14 MW/month, the market would be approximately 30% oversupplied in 2019, nearly balanced in 2020, and move to a state of under supply in 2021, 2022, and 2023. The presentation also demonstrates the expected supply relative to RPS solar demand at greater build rates from the last twelve month average.

Please click on the preview below to see the full analysis:

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

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.

PJM GATS Solar – Registered Capacity Update as of June 2018

Posted July 3rd, 2018 by SRECTrade.

The following post is a monthly update outlining:

  1. The megawatts of solar capacity certified to create SRECs in the PJM GATS SREC markets that SRECTrade serves
  2. The relationship between supply and demand of SRECs in the PJM GATS SREC markets that SRECTrade serves

Solar capacity data is based on the information available in PJM GATS as of June 13, 2018. Certificate data is based on the information available in PJM GATS as of June 29, 2018 (incorporates May SREC issuance data).

Note: In the past, we have used a 1% annual load growth rate to estimate load in current and future compliance years. Taking into account recent load trends, we have come to the conclusion that a flat load growth is more appropriate for all PJM states. As such, load and compliance numbers may be lower than previously estimated to more accurately reflect actual compliance obligations.

PJM GATS Registered Solar Facilities Summary

There are 175,434 facilities across 4,467.3 MW registered in PJM GATS as of June 13, 2018.

506 facilities are 1 MW or larger in capacity, representing 1,966.2 MW or 44.0% of the qualified capacity. There are 104 facilities that are 5 MW or larger, representing 1,194.9 MW or 26.7% of all qualified capacity.

Note: SREC requirements for markets without fixed SREC targets have been forecast based on the EIA Report “Monthly Electric Power Industry Report”. Projected SRECs required utilizes the most recent EIA electricity data with a flat growth rate forecast. The state RPS’s solar carve-out 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 generated per MW of installed capacity per year.

Capacity Update

The chart above compares the megawatts (MWs) registered in PJM GATS as of the date noted (the light and dark blue bars) to the estimated RPS solar MWs needed to be operational through the duration of the current reporting year (the gray bar) to meet each market’s RPS targets. The Estimated RPS MW figure can be interpreted as the amount of capacity that would need to be online throughout the year in order to produce the obligatory megawatt hours of electricity mandated by each state’s RPS schedule. For Delaware, the gray bar represents the estimated EY2017 (Jun ’17 – May ’18) compliance obligation. For Ohio, Washington D.C., and Maryland, the gray bar represents estimated CY2018 (Jan ’18 – Dec’18) compliance obligations. For Pennsylvania and New Jersey, the gray bar represents estimated EY2018 (Jun ’17 – May ’18) compliance obligations.

OH2018: Represents all OH eligible solar facilities. If any facilities were eligible in higher priced markets, such as DC, the capacity was excluded from OH eligibility as it could be sold at a higher price in DC. The drop of OH capacity from last month represents the capacity that was “deactivated” due to non-reporting for 2+ years.

DE2018: Represents all solar facilities eligible for the DE solar RPS requirement. The drop of DE capacity from last month highlights the capacity that was “deactivated” due to non-reporting for 2+ years.

DC2018: Represents all facilities eligible for the DC SREC market. If a facility was eligible in another market, it was not included there given the current pricing for DC SRECs.

PA2019: Represents all solar facilities eligible for the PA SREC market. Please note that ALL out of state facilities previously certified in PA were stripped of their certification in May. You can read more about this policy change here. ALL PA-TIER I ELIGIBLE FACILITIES THAT ARE NOT ELIGIBLE FOR ANY OTHER SREC MARKET ARE NOT INCLUDED IN THIS ANALYSIS. The drop in PA capacity from last month represents the capacity that was “deactivated” due to non-reporting for 2+ years.

MD2018: Represents all MD eligible solar capacity registered in PJM GATS, except facilities that are cross-registered in Washington D.C.

NJ2019: Represents all NJ eligible solar capacity registered in PJM GATS. 

This chart is not meant to be a final representation of SREC supply for a given compliance period, but instead a visualization of the relationship between installed capacity relative to each state’s estimated RPS requirements converted from a MWh to MW basis. Note that the registered MW figures do not consider eligible SRECs carried over from previous reporting years and are only used as one aspect of current market supply drawn from the current MWs registered in PJM GATS. The installed capacity operating over the indicated time period will produce SRECs which, in addition to any eligible unsold SRECs from previous periods, will make up the final supply present in the market.

SREC Supply and Demand

The following charts depict SREC supply and demand dynamics, including banked SRECs available for compliance.

Assumptions:

  • All assumptions for the capacity analysis above apply to the analysis below as well. In addition:
  • The compliance obligation is based on flat load growth from 2017 electricity load data for each respective state. (Source: EIA)
  • Build rates in each state are equal to that state’s Last Six Month (LSM) average monthly build rate.
  • The bulk of EY2017 supply numbers for Delaware and EY2018 numbers for New Jersey and Pennsylvania were issued on June 29, 2018. While some 2018 SRECs may have not yet been issued, this analysis assumes that all 2018 SRECs have been issued as of June 29, 2018.
  • The CY2018 supply numbers for Maryland, Ohio, and Washington D.C. add the actual issued credits through June 29, 2018 to the projected SRECs generated through the end of CY2018.

 

 

 

 

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.