Archive for the ‘Maryland’ Category

Urge Maryland Legislature to Override Gov. Hogan’s Veto on RPS Bill HB1106

Posted January 17th, 2017 by SRECTrade.

In May 2016, Maryland Governor Hogan vetoed the Clean Energy Jobs – Renewable Energy Portfolio Standard Revisions bill (SB0921/HB1106). This month, the Maryland State Legislature will commence its discussion on overriding Gov. Hogan’s veto and passing into law legislation that would increase the state’s RPS to 25% by 2020. The expanded RPS will allow for the continued growth and success of the state’s renewable energy economy by increasing supply demands and creating new clean energy job opportunities. To address program costs, HB1106 reduces the SACP levels beginning in 2017 as shown below.

 

You can support the override efforts by urging the Maryland State Legislature to override the Governor’s veto and protect the Maryland solar industry. Sign MDV-SEIA’s Override Letter here today. In addition, we encourage Maryland residents and businesses to contact their local representatives in support of HB1106. You can find your local representative here.

SRECTrade at Solar Focus 2016: Maryland SREC Update and Pennsylvania RPS Overview

Posted November 21st, 2016 by SRECTrade.

Last week, members of the SRECTrade team attended MDV-SEIA’s Solar Focus Conference in Washington, D.C.  The conference’s focus was on “cracking the code for East Coast solar”, and the subject matter covered a wide variety of issues relevant to the solar industry across the Mid-Atlantic region.  In particular, the conference provided a forum for in-depth conversations around the future of critical, although challenged, state markets such as Pennsylvania and Maryland.

SRECTrade’s Director of Environmental Markets, Brett Waikart and our Director of Regulatory Affairs and General Counsel, Allyson Browne were invited to speak about the Maryland and Pennsylvania markets, respectively.  Brett’s presentation covered the fundamentals of the Maryland SREC market and laid out hypothetical future scenarios assuming various RPS carve-out schedules and build rates.  Allyson’s presentation focused on the composition of Pennsylvania’s electricity market and emphasized different aspects of the state’s Alternative Energy Portfolio Standard (AEPS) structure that could be adjusted in order to improve market conditions.  Their presentations are included below, along with a brief synopsis of the analysis provided.

Maryland SREC Update – November 2016

Little has changed in the overall degree of oversupply in the Maryland spot market since our last post in September. There have been no changes to official RPS policy, and supply continues to far outstrip the demand levels set by the RPS compliance schedule.  As can be seen in the snapshot below, as of November 15th there were approximately 156k CY14 and CY15 SRECs still available for sale and another 477k CY16 SRECs that had been generated in the current year.  Assuming that recent build rates continue through the end of 2016, we anticipate another 89k SRECs to be generated before the year is over.  When compared to the MD16 RPS obligation of  approximately 431k SRECs, these numbers indicate that we are oversupplied by a little more than 291k SRECs, or 68% of the current RPS demand requirement. MD16 snapshot

While this degree of oversupply is substantial, the monthly build rate numbers confirm that weaker project economics, caused by depressed SREC prices, have indeed slowed the installation of new capacity significantly.  The average amount of new capacity added over the last three months has slowed to just less than 10MW/month, as compared to just less than 30MW/month in the first quarter of 2016.  Also notable is that we have not seen the installation of a single asset greater than 1MW in capacity reports since June.  You can clearly see the trend lower in the graph below, which illustrates the quarterly sum of new capacity brought online over the last year.

Q4_15 to Q3_16

With the MD SREC market now fully reflecting the current degree of oversupply, and the effects now being felt by the asset development industry, stakeholders can agree that the time has come to find a solution.  The Maryland market has now fully outgrown the trajectory previously laid out for it through the current RPS schedule.  With that in mind, we now present a third scenario in our MD Capacity Presentation.  In addition to our typical supply and demand projections under the current RPS and the RPS proposed through HB1106, we now include an analysis illustrating the potential market conditions that would result from a more aggressive RPS schedule.  You will find our results in the slide deck provided below.

Our full capacity presentation can be found here.

Pennsylvania Policy Update

The concept of oversupply is even more familiar to Pennsylvania’s SREC market. Although the state’s AEPS targets exceed those of other PJM state RPS targets on an absolute basis, the state has been fundamentally oversupplied for years due to the design of its program.

In her presentation, Allyson takes a holistic look at Pennsylvania’s electricity market and generation mix and applies this foundation to the state’s AEPS design. The result is a structural oversupply that will require several supply- and demand-side adjustments before the market will be able to rebound and achieve supply-demand balance.

After providing this framework for the panel’s discussion, Allyson addresses Pennsylvania’s work towards compliance with the EPA’s Clean Power Plan (despite its now uncertain future) and identifies possible routes for reinvigorating Pennsylvania’s solar market.

Allyson’s full presentation can be viewed here.

 

As always, please feel free to reach out to your coverage on the SRECTrade brokerage desk to discuss any observations or comments you may have regarding our analysis or your view of the SREC markets.  We will continue to update our analysis and provide you with any new information we receive as it becomes relevant.

 

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.

Maryland SREC Update – September 2016

Posted September 15th, 2016 by SRECTrade.

As the growth of the Maryland solar market continues to outpace the state’s RPS framework, the Maryland SREC market has become more and more challenging to navigate.  The SREC market is clearly oversupplied and the market is trading in line with expectations that this will continue well into the future.  In order to better inform the conversation around the true state of the MD SREC market we’ve taken a closer look at data made available by the PJM GATS regarding the rate at which new solar capacity is being brought online in the state.

You can find a copy of our updated Maryland capacity presentation here.

Through August 2016 there were 157,377 SRECs left over from compliance years 2014 and 2015.  Thus far in 2016 (through July 2016 generation), 344,792 CY2016 SRECs have also been issued.  Assuming that the observed average monthly build rate of 21.4 MW/month continues through the year, we project that 293,183 additional SRECs will be generated in compliance year 2016.  Taking together the existing inventory of available prior-period SRECs together with the projected production for the remainder of 2016, we foresee an oversupply of 363,600 SRECs, or approximately 84% over the total 2016 RPS requirement, by the end of the year.

untitled

There are a few important trends to note here.  First, while the trailing twelve month (TTM) average monthly build has technically increased since our last Maryland capacity update in June (21.4MW/month now vs. the 19.6MW/month reported in June) this is actually due to the lower build rates of Q2 2015 falling out of the TTM measurement.  The most recent data shows that the build rate actually peaked in the three months of December 2015 through February of 2016.  Those three months averaged a 35.9MW/month build rate, while the three months immediately following dropped to a significantly less aggressive 17.5MW/month average.  This shows that the rapid growth witnessed in the Maryland market has indeed begun to slow due to weaker support from the SREC market.

Secondly, this recent slow down also has significant implications for the likely path the Maryland market will follow over the coming years.  As we have already seen monthly build numbers retreat from their Dec15-Feb16 highs, we are more confident that the Maryland market will fall into a long term trend somewhere between 50% and 75% of the current TTM average of 21.4MW/month. The enclosed analysis includes two scenarios, the first with the RPS requirements as currently set and the second with the RPS increase as proposed under SB0921/HB1106 The RPS increase proposed was vetoed by Governor Hogan in May of 2016. While industry stakeholders continue to advocate for an RPS increase, it is uncertain what form a new piece of legislation could take. For purposes of showing the state of the market under current and the vetoed legislation (i.e. some form of increase), supply and demand scenarios have been presented under both RPS requirements. Assuming a build rate decline of 50-75% of current TTM average, the market will be in a persistent state of oversupply within the range of approximately 50% to 115% through 2018 under both RPS requirements.

We want to emphasize that these projections are derived entirely from available historical data based on observations of assets built and registered with PJM GATS.  The monthly build rates remain subject to change for some time into the future as the registry receives and processes new project registrations.  Also, these numbers do not incorporate data from the PJM interconnection queue.  While this queue is noteworthy due to the presence of multiple relatively large utility-scale installations, it is impossible to predict which of these will indeed come online and which will fall away because of deteriorating project economics.  We acknowledge that if even one of the largest five projects listed in the interconnection queue comes online with SREC eligibility our projections would need to be significantly revised.

We will continue to track the state of the Maryland SREC market as more data is made available.  Please feel free to reach out to anyone on the SRECTrade brokerage team to discuss this analysis or any of the assumptions used herein.

 

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.

Maryland SREC Update – June 2016

Posted June 10th, 2016 by SRECTrade.

Much has been made of Governor Hogan’s recent veto of the Clean Energy Jobs – Renewable Energy Portfolio Standard Revisions bill (SB0921/HB1106) and its implications for the long term health of the state SREC market.  Market weakness due to fundamental oversupply has been exacerbated by uncertainty as to the likelihood of the Maryland legislature to expand state renewables markets in step with increasing supply.  With the Maryland SREC market trading at all time lows, we feel that it is important for market participants to be able to base their opinions on accurate empirical data.  As such, we have updated our supply and demand scenario models to reflect the most recent available capacity information made available by PJM GATS.

Our updated Maryland capacity presentation can be found here.

Through May 2016 there was approximately 156,682 SRECs left over from compliance years 2014 and 2015.  Thus far in 2016, 144,133 CY2016 SRECs have also been issued.  Assuming that the observed average monthly build rate of 19.6 MW/month continues through the year, we project that 556,507 additional SRECs will be generated in compliance year 2016.  Taking together the existing inventory of available prior-period SRECs together with the projected production for the remainder of 2016, we foresee an oversupply of 425,535 SRECs  by the end of 2016.

In this latest capacity analysis update we have included parallel analyses for the projected supply/demand balance in future years.  Looking out to 2022, we demonstrate how that balance would evolve under both the currently adopted RPS as well as under the recently proposed RPS.  We have also made a slight change to the range of scenarios we present.  Whereas we typically present this analysis extending the current trailing twelve month average build rate through the full term of the analysis, and two more scenarios where the build rate both increases and decreases slightly, we have chosen to adjust our methodology.  The current build rate of 19.6 MW/month is quite strong relative to historical averages, influenced primarily by above average build numbers for December 2015 through February 2016.  This increase may have been caused by the “ITC cliff” confronted at the end of 2015 or by stronger SREC prices in the summer and fall of 2015.  Whatever the cause, those factors are no longer relevant for the purposes of this analysis, and it is reasonable to believe that monthly build numbers will decrease from here.  Our case 1 and 2, therefore, are reflective of a build rate that is 50% and 75% of the trailing twelve month average.

While the market is clearly oversupplied under almost all scenarios we think it is important to note that the proposed RPS significantly decreases the percentage oversupply in later years, decreasing the oversupply by almost half in some instances.  We point this out to illustrate that the current state of the market may not be as dire as some market participants believe.  We maintain that an oversupplied market is not necessarily a broken market.  One of the advantages of a market-based mechanism is that price fluctuations provide price signals to market participants considering whether to initiate additional projects.  Ideally, the low level of SREC pricing today will lead a significant portion of the current project queue to wait on adding new capacity until the supply and demand balance normalizes.

With that said, the greatest uncertainty as to the future health of the Maryland SREC market is what portion of the PJM interconnection queue will ultimately be built.  There are several large utility scale projects with nameplate capacity of 100 MW or more that could drastically change the supply and demand balance to a point where the only solution would be legislation to either increase the state RPS or restrict eligibility to the existing market.  Our analysis does not account for this potential outcome but we acknowledge that it is certainly a plausible scenario.

We will continue to monitor the state of the Maryland SREC market as more data is made available regarding trends in monthly build rates and new projects that are awarded SREC eligibility.  We will also continue to publish information regarding the Maryland legislative process and the status of the solar carve out.  Please reach out to the SRECTrade team with any questions or feedback.

 

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.

Maryland Governor Vetoes RPS Legislation

Posted May 27th, 2016 by SRECTrade.

Earlier this afternoon, Maryland Governor Hogan vetoed the Clean Energy Jobs – Renewable Energy Portfolio Standard Revisions bill (SB0921/HB1106). Gov. Hogan’s letter to the Speaker of the House regarding the veto can be read here, wherein the Governor sites “tax increases” as his sole reason for vetoing the RPS legislation, which would have increased the State’s Renewable Portfolio Standard to 25 percent by 2020 – up from the current obligation of 20 percent by 2022 – and allowed for the continued growth of solar and other renewables in the State.

Maryland Carve-Out - 2


Maryland SACP

The RPS bill passed in the House and the Senate earlier this year with veto-proof majorities, so there is potential for the bill to become law despite the Governor’s veto. In response to the veto, proponents of the RPS bill will look to meet with House and Senate leaders to discuss a strategy for moving forward with the bill.  Unfortunately, the veto override vote will not take place until January 2017 unless a special session is held before then. However, since a special session would require the Governor’s approval, it is unlikely that a special session will be held.

SRECTrade will continue to provide updates on the status of the Maryland RPS as we acquire new information. For more information about the Maryland SREC market, please visit our Maryland Market page here.

Maryland RPS Bill Passes in the Senate

Posted April 7th, 2016 by SRECTrade.

On Wednesday, April 6th, Maryland’s Senate passed SB0921 31-14 with a bipartisan vote. The “Clean Energy Jobs – Renewable Energy Portfolio Standard Revisions” increases the Renewable Portfolio Standard to 25 percent by 2020 – up from the current obligation of 20 percent by 2022. The House version of the bill, HB1106, passed on March 21st. The consolidation of these two bills is anticipated to occur by Monday, April 11th, before advancing to Governor Larry Hogan’s desk.

On a related note, Gov. Hogan signed the Greenhouse Gas Emissions Reduction Act (SB0323) into law on Monday, April 4th, requiring the state to decrease greenhouse gas emissions by 40 percent from 2006 levels by 2030.

Maryland RPS Bill Passes in the House

Posted March 21st, 2016 by SRECTrade.

On Monday, Maryland’s House of Delegates voted to pass HB1106 with a 92-43 vote. The bill previously known as the Maryland Clean Energy Jobs Act of 2016 was divided into two bills last week, and HB1106 was distilled to focus on the RPS components of the original bill. HB1106, which was retitled to “Clean Energy – Renewable Energy Portfolio Standard Revisions”, schedules an increase to the state’s existing Renewable Portfolio Standard (RPS), including slight increases to the solar carve-out. The increases to the solar carve-out would result in increased demand for MD SRECs. Now that the bill has passed in the house, it will cross over to the Senate for review by the Senate Finance Committee. If SB0921 comes out of the Senate Finance Committee with a favorable report, it will go to the Senate Floor for a vote.

HB1106 was bifurcated from the jobs appropriation component of the Maryland Clean Energy Jobs Act of 2016 last week. On March 16th, the Maryland Public Utilities Subcommittee of the Economics Matters Committee passed three significant amendments to HB1106 to narrow the bill’s focus to the RPS. Notably, these amendments involved:

  • Dividing the RPS increase and workforce development components of the bill, leaving the Clean Energy Jobs Act as a stand-alone RPS bill. The Cove Point settlement funds, which would finance the workforce development processes, would be parsed into another bill, HB1404. HB1404 aims to provide funding for construction and vocational work through a new “Center for Education and Innovation.”
  • Excluding the Choptank Cooperative from state RPS requirements.  This is an extension of the RPS’s current language and allows Choptank to meet its contractual obligations with Old Dominion Electric Cooperative (ODEC), a power supply co-op in Virginia.
  • Adding sponsors to the new stand-alone RPS bill, in an effort to achieve bipartisan support of the bill.

The isolation of the RPS legislation from the workforce development components of the bill was received favorably in the House, and the bisection may help to secure the bill’s passage through the Senate Finance Committee and on the Senate Floor.

SRECTrade will continue to provide updates on the status of the Maryland RPS as we acquire new information. For more information on the Clean Energy Jobs Act, please view our previous blog post on the topic here.

Maryland SREC Update: March 2016

Posted March 1st, 2016 by SRECTrade.

Recent public discussion of Maryland’s proposed increase to the state’s RPS requirements, as well as the introduction of the Clean Energy Jobs Act to the Maryland general assembly, has brought widespread attention to the status of Maryland’s environmental commodity markets.  Due to this focus we updated our capacity models for Maryland to account for the latest generation data available in GATS.

Our updated MD capacity presentation can be found here.

Through December 2015 (the last reliable month of data due to reporting lag) there was approximately 113,240 SRECs left over from compliance years 2013, 2014 and 2015.  This assumes that the 349,917 available 2015 SRECs are put towards the CY15 compliance requirement of 308,419.  Assuming that the observed average monthly build rate of 10.9 MW/month continues to hold, we project that 534,776 additional SRECs will be generated in compliance year 2016.  Taking together the existing inventory of available prior-year SRECs together with the projected 2016 production, we foresee an oversupply of 216,229 SRECs  by the end of 2016.

As we look into future years, the degree of oversupply begins to vary widely depending on the assumptions made regarding monthly build rates.  In 2017 we see a range of market conditions between a 42% and 82% oversupply, and in 2018 conditions between a 15% and 77% oversupply.  These projections do not take into account the RPS increases currently under legislative review in the Maryland general assembly, as covered in our recent post from February 10th.

We will continue to monitor the state of the Maryland market as more data continues to be made available regarding reported build rates through early 2016.  Please reach out to the SRECTrade team with any questions or feedback.

Clean Energy Jobs Act Introduced to Maryland’s General Assembly

Posted February 10th, 2016 by SRECTrade.

Since its introduction to the public on December 8th, 2015, the Maryland Clean Energy Jobs Act has made its way to the front doors of the Maryland General Assembly, with the recent introduction of the bill into the Senate under SB0921 and the upcoming introduction into the House of Delegates this coming Friday, February 12th. The Act proposes an increase to the state’s existing Renewable Portfolio Standard (RPS), which would include slight increases to the solar carve-out. The Act schedules a gradual increase in the state’s RPS obligation to satisfy 25 percent of its energy needs with Tier 1 renewable energy sources by 2020 – a significant advancement of the current goal of 20 percent by 2020. The solar carve-out is scheduled to increase incrementally from the current goal of 2.0 percent by 2020 to 2.5 percent by 2025.

Senator Majority Leader Catherine Pugh (D-Baltimore), Delegate Dereck Davis (D-Prince George’s), Senator Brian Feldman (D-Montgomery), and Delegate Bill Frick (D-Montgomery) have championed the concept of the bill since its inception months ago. The bill was first filed in the Senate by Senator Pugh, and was referred to the Finance Committee in its First Reading on February 5th. The bill’s introduction to the House will be this Friday, which will just beat the state’s House Bill Introduction Date, allowing the bill to bypass referral to the House Rules and Executive Nominations Committee.

While we monitor the progress of this bill on the House and Senate floors, we are continuing to project and analyze the impact that its passage could have on the Maryland solar renewable energy credit (SREC) market. Increasing the annual RPS obligation schedule will also increase the demand for SRECs and support prices in the market. In addition, the Act is anticipated to source $40 million from unallocated contributions from the state’s Strategic Energy Investment Fund, create an estimated 2,000 additional clean energy jobs, and help Maryland address climate change with clean energy.

For more information on the early stages of the Clean Energy Jobs Act, please reference our previous post on the topic from December 11th, 2015.

2015 SREC Pricing – Year in Review

Posted December 24th, 2015 by SRECTrade.

2015 was a dynamic year in the SREC markets. SREC prices experienced highs and lows. In order to understand and clearly present pricing data, SRECTrade offers a subscription product – Market Insights. Login to your SRECTrade account and get started for free.

Please see the Year in Review video here: