Archive for the ‘Connecticut’ Category

$4.5M solar grant bridges Connecticut’s transition to SRECs (a.k.a. ZRECs)

Posted October 3rd, 2011 by SRECTrade.

After successfully passing Bill 1243, Connecticut will be moving to an SREC-based solar financing program in 2012 (technically referred to as ZREC or LREC for “low-” or “zero-” emission). Per the guidelines set forth in the legislation, the state’s electricity suppliers must propose plans for the SREC solicitation program by the end of this year. Given that the law doesn’t require the first contracts to be signed until the end of 2012, we expect the details for the Connecticut SREC program to be finalized in mid- to late-2012.

In an effort to bridge the time until SRECs launch in Connecticut, the Clean Energy Finance and Investment Authority (formerly CT Clean Energy Fund) has developed a solicitation for solar projects by experienced developers. $4.5M in solar funding is available through the competitive RFP. The solicitation period will be open until December 30, 2011 and results will be announced in March 2012. However, any projects that take the grant will not be eligible for the SREC program commencing in late 2012. The CEFIA will hold an information session at the Department of Energy and Environmental Protection, 79 Elm Street, Hartford, CT on October 12, 2011. See below for more information and check out this website for complete details.

The Clean Energy Finance and Investment Authority (CEFIA), formerly the Connecticut Clean Energy Fund (CCEF), has combined the former Best of Class and Public Buidlings solicitations.  The new solicitation, the On-Site Renewable Distributed Generation (OSDG) Program Best of Class, Public Buildings and Affordable Housing Request for Proposals (RFP) solicits applications from eligible entities working with experienced renewable energy developers. There will be a strong emphasis on evaluating the financial feasibility of proposed projects as well as the ability of applicants to complete project construction in a timely manner. The intent of the funding is to enable owners of eligible renewable energy systems to “break even” over the life of the equipment, with a fair and reasonable return on investment compared to purchasing the equivalent amount of power from an electric utility company.

CEFIA is currently offering OSDG grants through an RFP format. The OSDG Best of Class, Public Buildings and Affordable Housing RFP will be offered to bridge the time until the launch of the Zero-Emission and Low-Emission Renewable Energy Certificate (REC) programs become available to the market and to prepare the market for the transition from a grant-based program model to a REC-based program model. The competitive, solar photovoltaic (PV) only RFP will close at 5:00 p.m. EST on December 30, 2011. The closing date for the rolling submission, other technologies RFP will be announced in early October 2011.

Funding available under this RFP is as follows:

Best of Class, Public Buildings and Affordable Housing

Type of RFP

PV

$4,500,000

Competitive

Fuel Cell

To Be Announced

Rolling Submission

Other Technologies

To Be Announced

Rolling Submission
Competitve, PV-only RFP Timeline Activities
Activity Date
Issue RFP document
September 12, 2011
Issue press release
September 12, 2011
Questions accepted in writing – E-mail only – info@ctcleanenergy.com
September 12, 2011 to
October 12, 2011

Information session – Phoenix Room, Department of Energy and Environmental Protection, 79 Elm Street, Hartford
4:00 p.m. – 6:00 p.m.

October 12, 2011
Final question responses posted on CEFIA Website
October 31, 2011
RFP response due date – Competitive solicitation only
December 30, 2011
5:00 p.m. EST
Eligibility rejection/acceptance letters issued – Competitive solicitation only
January 2012
CEFIA staff recommendations to the Board – Competitive solicitation only
February 2012
Funding authorization letters issued – Competitive solicitation only
March 2012

The timeline for the rolling submission, other technologies RFP will be announced in early October 2011.

Links to Important Information

Competitive Solicitation RFP document – PV only
Competitive Solicitation RFP application – PV only

Connecticut solar bill adds new twist to the SREC concept

Posted June 23rd, 2011 by SRECTrade.

On June 17th, Connecticut passed legislation that consolidates the development and implementation of Connecticut’s environmental and energy policy within a new, expanded Department of Energy and Environmental Protection (DEEP). Although it is still waiting to be signed by the governor, signs point towards approval as he has spoken out in support of the bill.  The bill will affect the solar market on two different levels: residential solar production and commercial facilities less than one megawatt.  The original bill known as “Bill 1243” can be found here (http://www.cga.ct.gov/2011/ACT/Pa/pdf/2011PA-00080-R00SB-01243-PA.pdf ) (see section 106-108) and a summary of the Bill can be found here (http://www.murthalaw.com/files/summary_of_public_act_1180_bill_1243_copy1.pdf) (see page 4 of the summary of the effects of the residential portion of this bill).

Residential

The new Residential Solar Program mentioned in the bill requires the Clean Energy Finance Authority (CEFIA) to create a solar investment program that will produce a minimum of 30 megawatts by the end of 2022, a relatively modest goal, but it is specific to residential solar.

In order to achieve this goal of 30 megawatts by 2022, the CEFIA will offer panel owners the choice between a performance-based incentive or a one-time upfront incentive based on estimated future system performance, known as expected performance-based buydowns.  The actual amount received by panel owners from these incentives will be determined on an individual basis and, if panel owners elect to receive these one-time upfront incentives, panel owners will forfeit the credits they earn from excess energy production.

This expected performance-based buy down program will encourage the buying and installation of new solar panels, but does not set the groundwork for a traditional SREC market. Connecticut’s Renewable Portfolio Standard (RPS), enacted in 1998, mandates that a percentage of retail electricity be renewable, of which a portion is required to be Class 1 (i.e. solar, wind etc.).  These new incentives in combination with low Alternative Compliance Payments (ACP) will result in prices remaining below $55 per REC in the Connecticut market in the future.

In summary, there are three main takeaways from the portion of the new legislation that effects residential solar:

1. There was a “pro-solar” bill passed
2. It’s goals are modest relative to other states
3. The bill doesn’t create a viable SREC “market”

Commercial/Distributed REC Program

The bill also lays out a program that will require energy distribution companies (EDCs) to spend a given amount of money to buy RECs from renewable energy facilities under 1 MW. This is essentially geared towards distributed solar since wind and hydro projects below 1 MW are not as common as for solar. Therefore, we’ll refer to them as “SRECs” for now. According to the bill, electric distribution companies must solicit 15-year SREC contracts from qualified facilities, spending $8M in the first year. Each year thereafter, for the first 4 years of the program, the EDCs must add $8M in annual expenditures through additional solicitations for 15-year SREC contracts. This essentially means that the program will double in size for each of the first 4 years.

At the end of these initial 4 years there are two possibilities: either a) the costs of the relevant technologies have been reduced, or b) the costs have not been reduced.

a)     If the cost of technologies have been reduced (determined by PURA), electric distribution companies will be required to continue the eight million dollar increase in spending per year in years five and six. In years seven through fifteen, the required spending will remain at 48 million per year and will decrease by eight million dollars in years sixteen through twenty-one (as the contracts signed in years 1-4 roll off).

b)    If the cost of technologies haven’t been reduced, electric distribution companies will be required to continue to spend thirty-two million dollars per year in years five through thirteen. In years fourteen through nineteen the required expenditure will decline by eight million dollars per year.

Essentially what this means is that the program will either peak in year 4 and remain at a high of $32M in annual REC purchases or it will be expanded after year 4 to a peak of $48M.

The obligation for electric distributors to buy these RECs will be determined based on the size of their respective distribution system loads and the price of each of these RECs will be capped by the Public Utilities Regulatory Authority (PURA) at $350 per REC.  In addition, PURA retains the ability to reduce this price ceiling by 3-7% per year based on a comparison with actual bid prices from the annual solicitation of contracts and foreseeable reductions in the cost of technologies.

These solicitation plans required of the EDCs will be broken down into three separate categories by facility size: under 100kW, 100-250kW, and 250-1000kW. Systems less than 100kW do not need to participate in the solicitations, but will be eligible to receive a price per REC equal to 10% more than the weighted average in the competitive solicitations for projects in the 100-250 kW range. All systems larger than 100 kW will use a competitive solicitation run by the EDCs and focused on getting the most out of the $8M required to be spent.

For example, if the EDC is required to spend $500,000 a year on the program:
$500,000 / $300 per REC / 1200 = 1.39 MW can be installed

If the price is “bid down” to $200:
$500,000 / $200 per REC / 1200 = 2.08 MW can be installed

As the price gets bid down by producers who are willing to sell their SRECs for less than other producers, the percentage of the EDC’s energy production that is Class I renewable will increase (assuming their overall distribution remains roughly the same).

Finally, if EDCs fall short of spending the required amount of money, they will be forced to make a non-compliance payment of 125% of the difference between what was required and what was spent.

Connecticut election results bode well for the future of CT SRECs

Posted November 8th, 2010 by SRECTrade.

After passing both the state house and senate earlier this year, Connecticut’s energy bill 493 was vetoed by outgoing Governor Jodi Rell. The SREC legislation included in the bill was put on hold at the time. After a close election last week, Connecticut Democrat Dan Malloy will likely bring the energy bill back, with specific support for the SREC legislation. Malloy’s support for the bill was stated and evident during his campaign because it created new jobs and moved towards clean energy.

Malloy also stated on his website that he is committed to “expand[ing] opportunities to finance and invest in energy efficiency and renewable energy”. When asked about the current law that attempts to make 20% of Connecticut’s energy come from green sources, Malloy wrote, “Achieving this “20 by 20″ renewable energy goal would go a long way to reducing costs while also improving our environment and Connecticut’s quality of life”.

This is a very positive sign for the Connecticut solar industry, one that has suffered the highs and lows of inconsistent grant and rebate funding from the state government.  The addition of an SREC market would provide the type of stability that solar companies have thrived on in Massachusetts, New Jersey and other states that have moved towards the market-based incentive program.

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FERC Rules Against Feed In Tariffs

Posted August 19th, 2010 by SRECTrade.

Several states have been exploring an alternative to solar renewable energy credits with laws establishing feed-in tariffs (FIT).  A FIT law works by requiring utilities to purchase electricity from certain sources, like solar, at a fixed rate.  This rate is higher than the utilities normal wholesale electricity purchase price in order to subsidize their higher cost.  Unlike SREC laws, the FIT is a relatively blunt policy instrument.  By setting a fixed tariff, the state legislature must exactly calculate the cost needed to incentivize new solar installations.  If the rate is set too high, ratepayers unnecessarily oversubsidize solar (remember cash for clunkers?) and if it is set too low the solar build-up is too slow.  An SREC program, by contrast, allows the market to determine the exact price necessary to incentivize solar, leading to the desired amount of solar at the minimum cost to ratepayers.

State FIT laws were recently dealt a setback by the Federal Energy Regulatory Commission (FERC) who determined that a California  Feed-in Tariff for combined heat and power (CHP) was preempted by Federal Law.  The ruling specifically determined that  FERC has exclusive jurisdiction to set rates, terms, and conditions for the sale or resale of electricity, and that feed-in tariffs are a means of setting rates for the sale or resale of electricity.  The ruling goes on to state that feed-in tariffs would be allowed for certain facilities in certain circumstances, but not at rates above the utilities avoided cost.  Since avoided cost is far below FIT levels, this ruling effectively ends solar FITs in the U.S.

Existing programs in California, Oregon, Connecticut, and Vermont will probably be impacted immediately, while pending legislation in several states will have to be re-examined.  The  good news is that most of these states have existing renewable portfolio standard laws, they only lack a solar carve-out.  By adding a solar component to these existing laws, they can join states like NJ, MD, DE, DC, PA, OH, and MA using a market based approach to drive solar growth.

Some other coverage:
Full ruling can be found at FERC’s website under dockets EL10-64 and EL10-66

FERC deals blow to above-market rates (Feed-In Tariffs)

SEIA makes plans to appeal to congress to give states authority to implement FITs

Connecticut SREC Program On Hold After Governor Rell Veto

Posted June 7th, 2010 by SRECTrade.

Connecticut Governor M. Jodi Rell vetoed Senate Bill 493, which would pave the way for an SREC Program in the state.  Rell argued that the Bill, titled An Act Reducing Electricity Costs and Promoting Renewable Energy, will fail to accomplish both aspects of its stated intent. The Bill declared that “The Division of Research, Energy and Technology shall, in accordance with the comprehensive plan approved pursuant to section 16a-3a of the general statutes, as amended by this act, (1) increase the state’s energy independence and security by promoting conservation and efficiency and the use of diverse indigenous and regional electric resources; [and] (2) encourage the use of renewable energy resources and new electric technologies, particularly technologies that support economic development in the state and promote environmental sustainability.” While the Bill never directly mentioned SRECs among a wide variety of energy related topics, Rell’s veto will slow the process of the creation of an SREC market in Connecticut.

The Bill’s proponents claim that the legislation would reduce energy costs, spark growth in the state’s renewable energy industry, create jobs, and stabilize the state’s electricity market. Senator Rell argues that these claims are “eerily reminiscent” to those made on a bill in Connecticut a decade ago, which has since failed to reduce utility prices or help spawn renewable energy in the State. Rell claims that the bill “is not in the best interests of the ratepayers or taxpayers of our state.” Rell never directly mentioned any effect on an SREC market, instead attacking the fiscal irresponsibility of the Bill.

The effect of the veto is being felt heavily in the state’s solar power industry. When asked about the prospects of solar power in the state, Mike Silvestrini, president of Middletown-based Green Skies Renewable Energy replied, “There is absolutely zero opportunity in Connecticut without the energy bill. Eventually we will have to make a decision on whether we can remain in this state.” The legislation would have provided the solar industry with incentives to build large projects on commercial facilities, much bigger business than small residential jobs. The idea was to bring in enough business that Economies of scale could kick in and the business could become self-sustaining.

Although Rell has vetoed the Bill, it could still pass if Democrats are able to drum up enough of a majority to override the veto. If they are unsuccessful, any hopes for an SREC market in Connecticut will have to be put on hold until the next round of legislative sessions.

Meanwhile, SRECTrade is exploring ways to help solar owners in Connecticut generate and sell SRECs outside of the state until the government puts a local market together.