Archive for the ‘Pennsylvania’ Category

Pennsylvania SREC Bill’s Hearing Offers PA Citizens An Opportunity To Show Support

Posted November 14th, 2011 by SRECTrade.

The much discussed PA Solar Jobs Bill (HB 1580) goes up for review in the PA House Consumer Affairs Committee on Thursday, 11/17/2011 (the hearing date was rescheduled after this post was originally published to Wednesday, December 8th at 10 am)*. This is a critical juncture for the bill. In order for HB 1580 to make it out to the PA State House of Representatives for general vote, it must first pass out of the House Consumer Affairs Committee. The Committee is chaired by Rep. Bob Godshall of the 53rd District. PennFuture, a grassroots Pennsylvania advocacy group, has put together an e-petition for contacting members of the House Consumer Affairs Committee and voicing support for HB 1580.

For more information on the state of the PA SREC market click here. For historic PA SREC pricing click here.

If you are a Pennsylvania resident and you’d like to show your support for HB 1580 click here.

*This announcement was made on 11/16/2011 by Rep. Godshall’s office.

Pennsylvania Legislative Update: HB 1580 Still in Committee and In Need of Support

Posted October 28th, 2011 by SRECTrade.

Over 90 members of the Pennsylvania solar industry lobbied Pennsylvania legislators on Monday, 10/28/11 to voice their support HB 1580 an SREC bill. The effort was part of an official “Pennsylvania Solar Advocacy Day” event put on by PennFuture, Solar Alliance, Vote Solar, PASEIA and others. By the end of the day more than 108 members of the Pennsylvania House (of a required 100) had offered to sponsor the legislation should it make it out of committee.

House Bill 1580 (sponsored by Rep. Chris Ross, R-Chester) proposes to move the total requirement of SRECs forward by three years to increase the number of SRECs Load Serving Entities (utility-scale “dirty” electricity producers) must purchase. The rapid implementation of Pennsylvania SREC eligible facilities over the last year has led to an SREC over-supply of more than double the amount of SRECs needed by utility-scale electricity producers. This over-supply is responsible for low SREC pricing in Pennsylvania.

SREC markets are driven by the fundamentals of supply and demand. However in Pennsylvania demand (the amount of SRECs required for a given year) is significantly lower than the number of SRECs available. The Pennsylvania SREC market is designed in such a way that every year there is a set goal for amount of power that comes from renewable energy sources and any adjustment to the yearly goal requires legislative action.

In order for the bill to move forward it needs the support of Rep. Bob Godshall, Chairman of the House Consumer Affairs Committee for Committee vote. PennFuture has asked the Pennsylvania solar community to write Rep. Godshall to show their support of the bill. However, even if the bill gets out of Committee in its current form it still needs to pass the House and Senate.  With 108 state Representatives co-signing the bill it is expected to pass the House, but it’s unclear how it will fair if it reaches the Senate.

Stay tuned for more HB 1580 Updates.

PA State Rep. Chris Ross Introduces HB 1580

Posted October 4th, 2011 by SRECTrade.

State Representative Chris Ross’ (R-Chester) long awaited House Bill 1580 was formally introduced on Monday, 10/4/2011. Solar industry advocates interested in stabilizing SREC prices are closely watching the progress of HB 1580, hoping that the bill will receive widespread support within the Pennsylvania House and Senate. Christina Simeone of PennFuture mentioned that the bill currently has the support of 104 co-sponsors, over half of the 203 member PA House (40 of the co-sponsors are Republicans).

The amendment would modify the solar carve-out requirements for energy years 2013, 2014, and 2015 would increase from approximately 71 MW, 118 MW and 205 MW to 207 MW, 238 MW, and 290 MW, respectively. Language in HB 1580 also proposes changes to the eligibility criteria so that only in-state systems registered after January 1, 2011 would be able to sell SRECs in the PA market.

Once HB 1580 is submitted to committee it must contend with other pressing issues before the House and Senate such as state budget deliberations. Given the current issues before the House, it may be several months before the bill can go to vote, however local advocacy groups are committed to raising the profile of the bill over the next several weeks to ensure that it receives the full attention of House members in these critical initial stages. SRECTrade will continue to closely monitor the bill as it moves forward.

For more information on HB 1580 please go here and here.

The Vote Solar Initiative has put together a “contact your Representative” link for HB 1580.

Pennsylvania Solar Advocacy Day (Monday, Oct. 24th)

Posted September 27th, 2011 by SRECTrade.

On Monday, October 24th PennFuture, Vote Solar, the Solar Alliance, and SUNWPA will hold a Solar Advocacy Day and Evening Reception at the Capitol building in Harrisburg. If you are part of Pennsylvania solar community this is an opportunity to educate policymakers and the media about solar in your state. The main focus of the advocacy day will be the support of the Solar Jobs Bill, which we’ve written a few blog postings about.

Here are the websites for the participating groups:

Vote Solar: national grassroots solar advocacy group
PennFuture: Pennsylvania environmental advocacy group
Solar Alliance: state-focused solar industry group
SUNWPA (Solar Unified Network of Western Pennsylvania): sub-group of PennFuture without a formal website

Click here to take action. Use the link to let your local PA state representative know that you support solar in PA.

If you have an advocacy event that you’d like SRECTrade to know about please email installers@srectrade.com

PA Market Update

Posted July 28th, 2011 by SRECTrade.

The Pennsylvania 2011 SREC compliance year has seen a substantial amount of solar development. Solar capacity registered within the state has lead to a significant oversupply resulting in an 85% decline in spot market trading throughout the course of the 2011 reporting year.

Since September of 2010, PA SRECs have dropped from $300/SREC to $50/SREC.  As of July 25, 2011, the 115.7 MW of registered generation has far outpaced the 2011 RPS requirements of 18 MW.  This has been the result of additional PA solar incentives, on top of the SREC program, and a large influx of out-of-state systems; of the 115.7 MW registered in PA, 24.7 MW are located out-of-state.

Fortunately, Representative Chris Ross has proposed an amendment to the PA Alternative Energy Portfolio Standard.  The amendment would modify the eligibility criteria so that only in-state systems could register in Pennsylvania after January 1, 2012.  Furthermore, the solar carve-out requirements for energy years 2013, 2014, and 2015 would increase from approximately 71 MW, 118 MW and 205 MW to 207 MW, 238 MW, and 290 MW, respectively.  These proposed changes should strengthen the market by increasing solar requirements and closing off out of state supply.  However, the oversupply of SRECs in 2011 and 2012 will carry over into the 2013 solar year and may keep prices low.  Given the legislature is out of session until October, further development will not occur until late 2011.

If new legislation does get passed, the market may shift from an oversupplied market to an undersupplied market.  This shift could result in an increase in future SREC pricing. One of the determining factors for price is the Alternative Compliance Payment (ACP).  In some states, NJ for example, the ACP is set by law and is known for future years.  Buyers know exactly what the alternative payment will be, and thus have a basis for the maximum value of an SREC.  In PA however, the future ACP is not known.  The ACP is calculated based on the average price paid for an SREC during the current year with weighting to include solar rebates.  For Chris Ross’s amendment to be truly successful, it will not only have to address the oversupply, but the ACP price as well.

To get involved with advocating for solar legislation, the Pennsylvania Division of the Mid-Atlantic Energy Industries Association (PASEIA) is a group of solar professionals who advocate for the interests of solar energy and a strong local PA industry.  Their blog has some good information on the status of the bill.

PA SREC Market – Proposed Legislation and Current Capacity

PA MW Forecast

Note: Capacity (MW) forecast based on PA RPS requirements and SRECTrade estimates.  Capacity (MW) figures presented for May 2010, May 2011, and July 2011 based on registered systems in GATS as of date listed. The current requirements (i.e. green line) as of July 2011 demonstrates the capacity (MW) required for the 2012 reporting year; approximately 44 MW. Figures for 2013-2015 represent the estimated amount of installed capacity (MW) needed on average throughout the compliance year.

DC Closes Borders to Out-of-State Solar Systems

Posted July 12th, 2011 by SRECTrade.

The Council of the District of Columbia unanimously voted, today July 12th, to close the DC SREC market to out-of-state systems. The Distributed Generation Amendment Act of 2011 (Bill 19-10) increases the SREC requirement in 2011 as well as establishes an SACP schedule through 2023.  Once in effect, the bill will allow out-of-state systems registered prior to 1/31/2011 to continue to sell SRECs in the DC market. The DC Public Services Commission has not provided clarification on how the bill will affect out of state systems that have already granted DC registrations after the January 31st 2011 grandfather date. For more information on the bill please refer to our previous blog postings here and here.

The bill is not yet law. It first must go through a 30-day Congressional Review process before it can go in to effect. Given these mechanistic delays we don’t expect the bill to go in to effect for at least another month.

The following chart illustrates which out-of-state systems will be effected by the legislation.


State Eligible Markets (after B19-10 is effective)
DE DE, PA
IN OH; PA (if in American Electric Power territory)
IL PA (if in Com Ed territory)
KY OH; PA (if in American Electric Power territory)
MD MD; PA
MI OH; PA (if in American Electric Power territory)
NC NC; PA (if in Dominion Electric Territory)
NJ NJ, PA
NY -
OH OH; PA
PA PA; OH
TN PA (if in American Electric Power territory)
VA PA
WV OH; PA
WI -

Pennsylvania legislature commences efforts to fix SREC program

Posted May 30th, 2011 by SRECTrade.

The Pennsylvania SREC market has had its design flaws. After HB 2405 and HB 1128 fell by the wayside last year, the Pennsylvania SREC market took the expected turn for the worst. SREC prices have dropped from a high of $310 to a low of $80 per SREC. Representative Chris Ross, who spearheaded the initial Alternative Energy Portfolio Standard in Pennsylvania has proposed an amendment to address some of the issues facing the Pennsylvania solar industry. Here are the two major changes that he is proposing as an amendment to the original Act:

1. After January 1, 2012, PA will no longer register solar technologies from out-of-state

2. The requirements for the 2013, 2014, 2015 Energy Years will increase from approximately 70 MW, 118 MW and 205 MW to 207 MW, 238 MW and 290 MW respectively.

These two changes would make a positive impact on the market. Closing the doors to out-of-state facilities would allow Pennsylvania to focus the opportunities created by the program on local businesses and local projects. Though the wording is a bit vague, it also seems that facilities registered prior to 2012 will be allowed to continue to sell their SRECs in the state market. This is an important distinction for the facilities that have been financed and accepted into the PA program with the expectation of participating in the market. Meanwhile, the increase in the requirements is a necessary step in order to make SRECs relevant again, though it may not be enough.

The market has been flooded with SRECs from facilities throughout the PJM region. The 2011 Energy Year SREC requirement only had room for about 18 MW of solar. To date, there is 78 MW registered to generate SRECs, with more facilities built and awaiting approval. 33 of the 78 MW are located within Pennsylvania. With the requirement only growing to 44 MW and 70 MW in the next two years respectively, the SREC market in Pennsylvania will face a prolonged collapse in pricing. Even with the proposed increases in 2013-2015, this could still be a problem. The oversupply from the 2011 and 2012 Energy Year will carry into the 2013 Energy Year, meaning that even with an increase to 205 MW of needed capacity in 2013, unsold SRECs from previous years will keep downward pressure on SREC prices.

One of the more fundamental flaws with the SREC program in Pennsylvania was reported on recently by the Central Penn Business Journal. The article accurately highlights how, in addition to out-of-state supply, local incentives skewed the role that SRECs were playing in the solar economics. The most-obvious culprits in the Pennsylvania SREC collapse are the out-of-state facilities that were flooding the market, but if you look at the numbers, Pennsylvania would still be over-supplied if you excluded all the out-of-state facilities. When attractive upfront incentives mitigate the influence of SRECs in the decision to go solar, many facilities will be built without SRECs in mind. When these projects enter the market, they undermine the credibility of the market and out-compete facilities that need to factor in a value for SRECs, driving prices below sustainable levels.

To promote a healthy SREC market, the long-term solution (once the current oversupply has been addressed) is, ironically, to shift towards a greater reliance on SRECs. A greater reliance on SRECs means that market prices will track closely with the value needed to cover the gap between developing solar and utilizing other electricity sources. When that happens the market will act as it should, trending downwards as costs come down, while remaining at levels that sustain development. If Pennsylvania continues to put upfront incentives in front of developers, the SREC market will never rebound.

In contrast, New Jersey has moved away from upfront incentives and promoted the SREC-only concept. The importance of SRECs in financing solar projects in New Jersey is why the market won’t see the collapse that some of the skeptics are predicting. Growth in the market will have to slow, but it is unlikely that SREC prices collapse the way they have in Pennsylvania. This is because when SREC prices come down in New Jersey and contracts become scarce, solar projects won’t be built (assuming rational behavior). In Pennsylvania, overly-attractive upfront incentives over the past two years have made SRECs an afterthought. If the market is ever going to function properly, the state will need to either come up with the appropriate combination of SREC values and incentives to promote solar at a rate in alignment with the growth of the RPS, or it will have to take a cue from New Jersey and shift away from the upfront incentives all together.

PA Solar Bills HB 2405 and HB 1128 Are Done

Posted November 22nd, 2010 by SRECTrade.

Pennsylvania House Bill 2405 and House Bill 1128 are no longer on the table in Pennsylvania. The Bills were intended to strengthen the PA SREC market but both included critical flaws such as the exclusion of previously qualified facilities in HB 2405 and incredibly low ACPs in HB 1128.  At this point it is unlikely that there will be any changes to the PA SREC market any time in the near future.

HB 2405 was sponsored by Democratic Representative DePasquale who confirmed that the recent election squashed any chances that the Bill would be up for a vote any time soon. The Bill had proposed to strengthen the Pennsylvania Renewable Portfolio Standard solar carve-out to require 3% of the state’s electricity supply to come from solar generation facilities by the 2025 reporting year. This would have increased the current requirement by 6 times the 2025 reporting year target. In addition to the increase in capacity, HB2405 also intended to set the solar alternative compliance payment at a level of $450/MWh in the 2012 reporting year and slowly decline the SACP each year over the life of the program.

HB 1128 was created as a watered down version of 2405. It was viewed as a Bill that had fewer contentious points and was initially focused on simply increasing the solar requirements in the state moving forward. The Bill garnered the support of the solar lobby until it was amended by the Department of Environmental Protection (DEP) to include a drastic decrease in the ACPs paid out by non-compliant energy company. This decrease would have devastated the SREC market in Pennsylvania.  As a result of the DEP’s changes, HB 1128 was dead on arrival.

What’s Next?

The open SREC market in Pennsylvania is vulnerable to a collapse in pricing. Unlike in states like New Jersey (approximately 255 MW required) where requirements are high enough to outpace significant growth, the PA SREC market (approximately 27 MW required) is still small enough to be vulnerable to oversupply, especially given the influx of solar from the entire PJM region.  There is a growing disconnect between the supply in the market relative to demand that could create challenges for the solar industry. Facilities are being built based on current SREC pricing that may not be available at the current pace of installation in the state and surrounding regions.

The PA legislature needs to take into consideration bringing another Bill forward to continue to support the solar industry and SREC market in the state. The key issues would need to focus on increasing the solar capacity requirement, setting a competitive alternative compliance payment, similar to other SREC states, restricting the size of SREC eligible facilities in the early years and allowing for electricity suppliers to meet their compliance requirements through the most efficient means possible. In addition, real-time, transparent information regarding the rate of installation and SREC pricing paid by utilities needs to be addressed along with steps taken to prevent a market collapse.

If there is any good news coming from the demise of these two Bills, it is that buyers that have adopted a “wait and see” approach can now move forward with business as usual.  There is no reason to think that out-of-state SRECs in Pennsylvania will be excluded any time soon, nor is there any reason for buyers to hope for a lower ACP payment. If anything, the demise of HB 1128 is an indication that attempts to set below market ACPs will not be successful.

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PA’s Latest Attempt to Increase Solar Requirements – HB 1128

Posted November 12th, 2010 by SRECTrade.

At the end of September, Pennsylvania lawmakers introduced HB 1128. The main focus of the bill is to amend the requirements under PA’s Alternative Energy Portfolio Standards (AEPS) by increasing the amount of renewable energy to come from Tier I alternative energy sources and Solar Photovoltaic technologies. In addition to increasing the requirements, HB 1128 attempts to amend the program by introducing a fixed alternative compliance payment (ACP) for the Solar PV portion of the AEPS. Currently, the ACP under the PA solar carve-out is derived based on 200% of the average SREC price paid by buyers during the reporting year. The ACP in RY2008 and RY2009 was $528.17 and $550.15 per MWh, respectively. The table below demonstrates the the key changes to the solar requirements, attempting to increase the total requirement 3 times the current level by the 2022 energy year.

HB1128 Table_Crop

Positive Impacts of HB 1128
The increase in PV capacity would help support the growing solar economy in Pennsylvania and provide more room under the current requirements for more solar to come to market. The current PA market has over 2,900 solar projects registered and eligible for the AEPS program. The total nameplate capacity of these projects is equal to 51.8 MW. Of these 2,900 projects only four projects are greater than 1 MW. In addition to being eligible for the PA SREC market, many of these facilities could also be registered in other states such as Ohio and Washington D.C.

The current capacity of solar projects eligible for the PA market is greater than the requirements for the current energy year. The implementation of HB 1128 would allow for the solar market to continue to grow and support the development of projects of all sizes, from small rooftop residential to larger multi-MW utility scale solar systems. Pennsylvania’s inability to implement some sort of amendment to increase the solar RPS requirements could result in a migration of PA’s solar industry to other surrounding states such as New Jersey, Maryland, and Delaware which have all recently increased the requirements of their solar RPS programs and maintain fixed alternative compliance payment schedules. It has been estimated that the increase in the AEPS program could create at least 14,000 jobs over the next ten years. A stronger solar policy in PA will not only help create new, clean energy focused jobs, but will help move the state towards a more energy independent future.

Compared to HB 2405, the treatment of out-of-state facilities is not addressed in HB 1128. Though the future acceptance of out-of-state facilities can be left up to the lawmakers to debate, the major problem with HB 2405 was that it excluded existing facilities from neighboring states that have been financed based on being accepted into the SREC program in Pennsylvania. This disregard for the existing out-of-state facilities is unacceptable. Fortunately, HB 1128 does not address this issue. Any future Bill to address this topic should at the very least grandfather in any previously approved facilities.

Negative Impact of HB 1128
Despite the need for an increased requirement, PA HB 1128 may not be the answer because of the low ACPs that are included in the Bill.  It could depress SREC market pricing to levels that could be prohibitive to the economics of solar today.  There are few financeable projects at SREC values below $200, especially when there is limited access to long-term contracts. Compared to other state markets, PA would have the lowest ACP and be heading in the opposite direction of states like Delaware, Maryland and New Jersey that have increased the fines to encourage growth and discourage electricity suppliers from paying the ACP.

Pennsylvania’s Current ACP
Meanwhile, the current ACP in Pennsylvania has not been implemented the way it was intended, which could have an impact on the market in the long run.  The way the law was written, the intent was to fine electricity suppliers 200% of the average SREC purchase price in the PJM region. i.e. keeping them in check with neighboring state markets.  Most likely because this was somewhat vague and difficult to calculate, the ACP was interpreted differently by the organizations implementing the program. Instead of being fined based on neighboring state markets, the interpretation of the ACP was that since Pennsylvania accepted SRECs from throughout the PJM region, it was a fair indication of the average price in the region. Therefore, Pennsylvania uses an ACP of 200% of the average price paid for compliance in Pennsylvania. Instead of keeping buyers in the PA market in check with other states, the ACP in Pennsylvania keeps buyers in check with themselves. The goal for buyers in Pennsylvania is to keep the average price down, so that the fines will remain low in non-compliance years. In reality, the price paid will ultimately have to be just enough to get a project done, though the market would be far more stable if the ACP were implemented as it was originally intended.

Click here for a link to the HB 1128 summary.

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How To Improve Pennsylvania’s Solar House Bill 2405

Posted September 20th, 2010 by SRECTrade.

Last month Governor Edward Rendell wrote an opinion piece supporting an increase to the existing SREC program in Pennsylvania. The Bill is currently off the table, but will likely resurface later this year.  Though we are hopeful that Pennsylvania steps up its solar goals, this Bill, as written sets a scary precedent: it essentially disqualifies any solar facilities from out-of-state that have been previously approved to generate and sell SRECs in the Pennsylvania market.

There is no doubt that the Solar Renewable Energy Certificate programs in Pennsylvania and other states, such as New Jersey, have been a major catalyst for solar development.  Despite the success of these programs, one key challenge remains prominent in the daily efforts of installers and integrators looking to develop projects: long-term SREC financing. This is particularly the case for larger projects that require lending from banks.  Without a long-term SREC project with an accredited buyer, many of these projects do not get done.  Load-serving entities are the only credit worthy counter-parties in this market since they ultimately need to buy the SRECs to comply with state laws.  The problem is that they only have short-term electricity supply contracts into the state and therefore are loath to enter into long-term SREC contracts for risk of exposure to the liability should their electricity supply contracts not be renewed.

Meanwhile, the only projects getting done on a regular basis are small commercial and residential systems that are finance-able without long-term SREC contracts.  Absent a long-term SREC contract, the key to the success of the solar industry in Pennsylvania and other states with similar programs is the faith that the solar owners and financiers place on the SREC market. It is all too easy for someone to walk away from a solar investment because he or she does not trust the government to stand behind the law that created the market-based SREC program.  This is why when Maryland, Delaware and New Jersey recently updated their SREC laws to increase the requirements and raise the fines, the greatest outcome of these changes was not the quantitative effect but the impact it had on the psyche of the industry. These three states all said loud and clear that the SREC program is here and it is here to stay.

Pennsylvania, in many ways, is doing the same with House Bill 2405 by setting a schedule of fines and increasing requirements. However, there is one piece of the legislation that is a step back for the solar industry in general.  When the original SREC program was created in 2004, the law included SRECs from out-of-state facilities. In a pragmatic move to place an emphasis on the local Pennsylvania solar industry, the new Bill, if passed would exclude out-of-state facilities. This is a perfectly fine change for solar projects moving forward… and it may actually be a good thing for the PA SREC market.

However, as written, the Bill would also exclude out-of-state facilities that have already been financed, built and certified by the Pennsylvania AEPS Program to sell SRECs in the state’s market.  These are solar facilities that have been financed to produce SRECs for the Pennsylvania state market, expecting the payback to come from the proceeds of these sales.  They will be shut out of the Pennsylvania SREC market.

Now if you’re a PA resident or legislator, you may not care since it really does not affect you in any tangible way. Out-of-state facilities increase supply, driving cost down, but excluding them opens up opportunity for local solar projects.  If you’re a PA installer, you will likely be happy just to have it passed as it will be a great thing for the PA solar industry.  However, if you are a solar industry advocate in general and/or someone with a penchant for fairness, you are probably holding your breath alongside the solar owners and installers in Virginia, West Virginia and other states that have been lured to solar by Pennsylvania state law.

It would be a setback to SREC programs everywhere to see the first real example of a change to a state law promoting SRECs that leaves its earlier adopters in the dark. Though we’re hoping for an improved solar legislation in Pennsylvania, we are rooting for legislators to not only do what is good for SREC markets, but also what is just plain right for the people who have made an investment based on the 2004 law. The implementation challenges won’t get any easier if you give the skeptics a reason to doubt the program.

In conclusion, Pennsylvania should most definitely pass HB2405, increasing solar requirements, but it should also grandfather in all facilities that were built on the promise of its predecessor.

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