Proponents argue that this new OREC market will make NJ a national leader in offshore wind production and create green jobs, just as the high incentives from the SREC market  have made the State a solar powerhouse (In the US, NJ is second only to California in solar installations).  Opponents are skeptical of the costs involved, and estimates from business groups claim the price tag may be as high as $14 billion.  While offshore wind has inherently high fixed costs, due to in part to necessary transmission lines and construction challenges, a market-based RPS is likely the most efficient way to incentivize a promising technology and ease financing concerns of developers.

This legislation reinforces New Jersey’s status as a national leader in renewable energy development.  The New Jersey Board of Public Utilities has 180 days to determine the exact design of the OREC program, including the percentage of energy electricity suppliers must obtain from offshore sources.

The move to an OREC market is another example of the success that the SREC market has had in New Jersey.  Since launching in 2004, New Jersey’s SREC program has become a template for reaching RPS solar goals in several states.  That template is now being applied to other types of renewable energy.  In this case, the off-shore wind industry will benefit.

More information can be found here.

Governor Schwarzenegger had made it clear he would not have signed the bill even if it passed the senate. The governor’s main concerns were that SB 722 did not allow for enough electricity to be imported from out of state. Additionally, the Governor wanted the bill to include a solution to streamline California’s siting and permitting process for renewable energy projects. Back in June, the Governor commented that he would not, “sign legislation mandating a higher requirement without ensuring that the necessary projects can be built.”

The two main arguments here have to do with developing a vibrant renewable energy market in the state of California while also maintaining competitive electricity pricing. Importing electricity from outside of California doesn’t help increase the number of in state jobs required to build the renewable energy projects needed to meet the 33% RPS target. On the other hand, allowing for greater amounts of electricity to come from out of state will increase competition and hopefully keep prices down, something to be mindful of considering the current economic environment in California.

While Governor Schwarzenegger signed an executive order to reach the 33% target, the order could be over turned by any future governor. Although SB 722 didn’t pass, the governor could call a special session of the legislature to pass the bill before the upcoming election. This could be the only chance for the ambitious 33% target as both California Governor candidate Meg Whitman and U.S. Senate candidate Carly Fiorina are opposed to it.

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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

New York has traditionally used solar rebates and utility level solar incentives and is now considering in light of their success in states like New Jersey and Pennsylvania.

The SREC requirement proposed for NY are similar to those enacted in NJ and MD although NY is a significantly bigger population and power consumer. This RPS would dramatically increase the demand for solar renewable energy credits and take some of the pressure of the markets like DC that are currently the only home for the SRECs produce by solar PV installations in New York State.

1. This follows states like NJ and MD who updated their renewable portfolio standards by increasing the SRECs required.

2. PA has a very unique alternative compliance payment which currently resets to twice the average trading price of SRECs in the previous year. This potentially unlimited ACP could potentially be the most forceful incentives to ensure PA utilities actually meet their RPS requirements rather than pay the fine (despite impressive solar development in NJ, NJ utilities dramatically under performed the RPS requirements and paid million in ACP fines last year).

3. It’s unclear whether or not out of state systems currently registered in PA will be grandfathered in and would certainly hinder solar development in states like VA and NC who would likely sell SRECs into PA.

Pennsylvania solar installers, solar trade groups (e.g. msiea.net) and environmental groups (e.g. PennFuture) have all come out in support of the legislation while developer and solar owners within the PJM region (PJM map) might be amongst the naysayers.

Questions arise around the impact such a bill might have on the SREC markets that currently exist.  Our read of the proposed legislation is that it does not impact renewable portfolio standards and would not preclude any established state RPS.  The proposed law does preempt state and regional carbon reduction laws (currently RGGI and AB32), but the renewable portfolio standards would not fall under the definition of that section.

Section 1601 of the bill is essentially a placeholder for federal portfolio standard legislation, which is contained in another senate bill that passed out of the Committee on Energy and Natural Resources some time ago.  That bill specifically allows any state RPS that is stricter than the federal program to continue, so none of the markets where we currently operate would be impacted.  The climate bill the House passed does contain a federal RPS and it has similar language protecting state programs.

The bottom line is that passage of the climate bill is still uncertain, but even if it does pass SREC markets will remain alive and well.  If the overall climate bill doesn’t pass, the energy bill with the federal portfolio standard may be a compromise everyone can agree on, which would be good for SREC and REC markets throughout the country.

The bill can be read here: http://kerry.senate.gov/americanpoweract/pdf/APAbill.pdf

1. The RPS for solar increases through 2026 and will remain at or above the 2026 level indefinitely after.
2. Starting in June, 2010, the SREC requirement will be changed from a percentage to an absolute number of required SRECs each year.
3. The annual SREC requirement will increase by approximately 20% on average over current requirements.
4. The RPS shall increase by 20% in any given year if the SREC requirement is met in the each of the previous 3 years AND the average LSE purchase price decreases in 3 consecutive years.
5. The BPU will be required to establish a new SACP level that shall not reduce previously published SACP levels.
6. As previously reported, the requirement that a facility be below 2MW to be eligible for SRECs has been lifted.
7. In the final version of the bill, the legislation disqualifying public utility solar projects from SRECs was removed in favor of the following:  “For projects which are owned, or directly invested in, by a public utility, the board shall determine the number of SRECs with which such projects shall be credited; and in determining such number the board shall ensure that the market for SRECs does not detrimentally affect the development of non-utility solar projects and shall consider how its determination may impact the ratepayers.”

Here are the new requirements listed by year will be posted here:
http://www.srectrade.com/new_jersey_srec.php

This is a huge step forward for all participants in the SREC market as it not only indicates an increase in the potential of the solar market and the number of SRECs that will be traded in the year, but more importantly that the state is committed to developing a viable competitive market for SRECs. This legislation sets out to ensure that all segments of the market can have access to the value created by the market and limits the influence that any single public entity can have over the market.

The Bill can be read in its entirety here: http://www.njleg.state.nj.us/2008/Bills/A4000/3520_R3.HTM

For an explanation of the bill: DSIRE Massachusetts RPS

1. RPS Solar Carve-Out: The RPS solar requirement distinguishes solar from other renewable energy resources and in most cases will value solar electricity at a higher rate than other renewables. Most states will set a target for solar, either as a percentage of the total electricity sold into the state, as a fixed capacity target in megawatts (MW) or as a solar energy target measured in megawatt hours (MWh) or SRECs produced in a year.
2. Unbundled, Tradeable RECs: A state must allow the SRECs to be owned and traded by the generating facility. In some states, your utility company owns your SRECs. This is a common stipulation in state solar grant or rebate programs. Other states have a budget for solar. For example, California is currently not a viable SREC market because the state requires that utilities purchase the SRECs bundled with the electricity that the system produces. The SRECs cannot be unbundled and sold separately.
3. Penalty for Non-Compliance: Finally, in order to have a robust SREC market, your state must implement some sort of fine or penalty for non-compliance. This is commonly known as a solar alternative compliance payment (SACP). The SACP is what drives the values of SRECs above any other type of REC. Without the SACP, it is difficult to incentivize buyers to pay prices that promote solar growth.

The states with robust SREC markets have the three criteria of a solar requirement, SREC ownership and the SACP. This map shows all the states that have solar requirements and those that specifically have SREC markets. In addition, we’ve added states that don’t necessarily have their own solar requirements, but are eligible to sell into the SREC markets of other states. The states that they are eligible for are listed in the map under each state.