Posts Tagged ‘MA SREC’

MA16 SREC-I Market Review

Posted November 3rd, 2016 by SRECTrade.

With the October issuance of Q2 2016 SRECs behind us, we are now approximately halfway through the 2016 energy year in Massachusetts. This blog post will take into account observed issuance numbers from the first half of the year and use projections for future issuance periods to understand what caused the fall in MA16 SREC-I prices from $450+ in January to more recent bids of $380. We will look at the supply and demand balance in order to survey what may be coming in the months ahead.

Recall that demand is driven by retail electric sales in the State. The latest data we have comes from 2014, a year in which 48,129,294 MWh were sold. If we assume that retail electricity sales are flat and we apply the obligation of 1.76% and then adjust for exempted load, we derive a total estimated demand of 833,780 SRECs:

MA16 SREC-I Demand

On the supply side of the market, the simplest analysis assumes the market generates nearly 784,000 SRECs and when combined with the re-minted volumes from this year’s SCCA (1,898), then we get a total supply of 785,886. When compared to the demand outlined above, we conclude the market is short nearly 48,000 SRECs.

MA16 REC-I simple supply

What would explain falling prices in a market that is potentially under-supplied? The quick answer is that perhaps retail sales of electricity are falling instead of flat, which would lower the demand. Alternatively, perhaps the supply of SRECs is higher than detailed. We’ll examine some supply scenarios first.

One component of supply is the banked SRECs from prior years. Retail suppliers can bank up to 10% of their annual obligation for use in future years. The maximum volume of banked RECs in the market is estimated at 65,382 – the sum of the total obligation in 2014 and 2015 multiplied by 10%. If all of those SRECs were brought to market in 2016, then we would see the market long by 17,488 SRECs. We see that scenario as unlikely since 2015 was short and the bank may have been used to avoid paying Alternative Compliance Payments (ACPs). On the other hand, it’s possible that between re-minted SRECs from the 2013 and 2014 SCCCA and banked volumes, that upwards of 15,000 SRECs from prior vintages may impact the 2016 market. This source of supply would help to tighten the balance of supply and demand, but not necessarily push to over-supply.

Examining a different scenario on the demand side, even if retail sales were down 3%, the total SREC demand would still sit at 808,414, leaving a tight, yet still under-supplied market based on the simpler supply analysis.

Another element worth mentioning is liquidity. While a healthy market needs liquidity from both buyers and sellers in order to function properly, we will direct our attention to the buy-side. Because there are far more sellers than buyers in this market, an absence of even a handful of buyers is far more impactful to the efficiency of the SREC markets than the absence of an equivalent number of sellers.

In recent months we have observed a noticeably subdued level of activity from buyers. What happens when SRECs are issued and a bunch of sellers come into a quiet market? As evidenced from pricing over the last month, bids start to retreat:

Market_Insights___SRECTrade

A simplistic read of the current state of the market is that prices have dropped due to the possibility of oversupply. However, deeper examination of current supply and demand in SREC-I markets points towards a tighter, more balanced market. The bearish sentiment reflected in recent weeks may actually reflect a lack of activity from natural compliance buyers in the face of a glut of supply coming to market after Q2 issuance. These two scenarios mean very different things for medium to long term “equilibrium” pricing in the SREC-I market. A structural and persistent oversupply, a scenario we do not perceive as likely, would mean that lower prices are justified and here to stay. A mismatch of liquidity due to trading preferences of buyers and sellers however would point towards short term volatility but longer term stability in supportive SREC prices.

As always, we will continue to provide follow-up analysis as more information becomes available.  Feel free to reach out to your contacts on SRECTrade’s brokerage desk with any questions you may have.

 

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The Next Massachusetts SREC Program

Posted August 14th, 2013 by SRECTrade.

On Monday, the Massachusetts Department of Energy Resources (DOER) held a Stakeholder Meeting to discuss the most recent updates to the RPS Solar Carve-Out II Proposed Design (SREC II). Our CEO, Brad Bowery, was in attendance. The specific details of the program can be found in the presentation posted on the DOER website. Here we’ll take a crack at understanding each of the design elements.

Declining ACP and Price Support Schedules
Like the original RPS Solar Carve-Out (SREC I), SREC II will have a declining ACP schedule that projects 10-years forward and sets an upper bound for the market. However, instead of a flat lower bound of a $285 Last-Chance Clearinghouse Auction price, SREC II will have a 10-year declining auction price schedule. The schedule initially drops from $285 to $271 in 2017 and continues down to $189 in 2024.

Auction and ACP Schedule

 

Analysis: The auction price is intended to provide price support for the market, but it also has the potential to lead to artificially inflated prices if the costs of installing solar drop dramatically over this period. In the last proposal, the DOER introduced a schedule for a declining SREC factor as a solution for addressing decreasing costs. This change reduces the complexity of the SREC factor (as we’ll see) while the decreasing upper and lower bounds of the market guides SREC prices downward over time, which is reasonable given that installation costs are expected to decrease over time.

Market Segments and SREC Factors
Unlike SREC I, SREC II will create 5 market segments that are treated differently in the market. Generally speaking, the segments are: 1) residential (<25kW, as well as parking canopies and emergency energy backup projects), 2) all commercial used on-site, 3) landfills/brownfields, 4) small-commercial off-site use (<500kW) and 5) large-commercial off-site use (>500kW). To qualify for on-site, 67% of the production must be used at the site. Each segment will have its production adjusted by a factor that ranges from competitively bid (segment #5) to 0.7 to 0.9 for the other segments. Once established, the SREC Factor remains fixed for the life of the project. So, for the residential segment, 90% of the generation counts towards SRECs. Any remainder is ineligible for RECs.

SREC Factors

Analysis: The idea here is that different segments of the market have different cost structures. This is similar to the underlying idea behind the concept of an SREC market. Since other renewables have different cost structures, it is unfair to force them to compete on the same playing field, so a solar-specific SREC market is created. In this case, the various segments of the solar industry also have different cost structures. Instead of creating separate markets for each segment, the SREC Factor is used to even the playing field. Considering the alternative of separate markets for each segment, this is the simplest way to address the underlying issue. This proposal includes a couple other changes. Most notably, the declining SREC Factor schedule was removed in favor of the aforementioned declining Auction price schedule to address declining costs. In addition, the remainder of generation that is factored out of SREC production no longer can be counted towards RECs. This was an onerous twist to the program that would have required participants to follow both the REC and SREC markets. To account for the potential loss of revenue, the DOER increased the SREC Factors across the board in this proposal.

SREC Factors and New Projects
With 3 months notice, the DOER can reduce the SREC factor for new projects only if the program is reaching its cap, or if substantial external forces are putting downward pressure on costs. Inversely, the DOER can also increase the SREC Factor immediately to respond to external forces that dramatically increase costs. One example is if the federal tax incentive were to go away.

Analysis: This tool allows the DOER to slow or speed up growth of supply in the market in response to external forces. It should serve to reduce volatility in boom and bust times. The key here is that under no circumstances can the DOER change the SREC Factor for an existing project. So each potential project affected will know of any changes before it is completed. That said, this does complicate things for larger projects that take more time to plan.

Managed Growth Segment
As mentioned above, the segment of the market above 500 kW where less than 67% of the production is used on-site will have their SREC factor competitively bid. For these projects, the DOER will host no fewer than 2 solicitations per year for a capacity amount determined by the DOER based on the existing supply in the market.

Analysis: Previously, the SREC market in Massachusetts was limited to 6 MW projects or less. With this rule in place, the DOER has shifted the focus away from size and towards whether or not the project is built to service it’s own on-site needs or if it is designed to sell power into the grid like any other electricity generator. This latter segment seems to be most likely to drive significant capacity growth, so this tool could be a very effective way to reduce volatility in the market, without throttling the majority of solar projects. It leaves room for these projects, while also forcing them into a competitive process in order to qualify for the program.

Forward Minting of SRECs for Residential
Residential solar projects will be allowed to create 10 years worth of SRECs at the onset of the project. The forward-minted production will be based on PV Watts estimates and the facility owner will be required to report production and fall within 80% of the estimate or face a penalty. The DOER may discount the number of SRECs that are forward-minted. Sellers will have 3-years to sell their forward-minted SRECs.

Analysis: This rule was put in place to promote more direct ownership at the residential level, which according to the DOER, has seen a drop off in penetration. If your system is estimated to produce 10 SRECs per year for 10 years, you can opt to receive them all in one batch of 100 SRECs (or less as determined by the DOER discount) to sell in the market in one of the next 3 years. This will greatly simplify the offering to residential customers for a few reasons. First, they won’t need to analyze the long-term prospects of the SREC market. At a minimum, a seller can estimate what the forward-minted SRECs can sell for in today’s market. Second, it effectively converts a long-term, uncertain cash payment into a rebate that will most-likely be paid back within 12-months. This should help considerably with cash-financing systems. The tricky part will be the impact that forward-minting has on the market. That said, if 100% of the cash-financed residential systems forward-mint and sell all their SRECs in year one, none of them will have SRECs to sell in any subsequent year. Given the small portion of the market that this applies to, it shouldn’t be a significant factor. In this simplified scenario, while the SREC capacity of other segments will grow cumulatively, the forward-minted potential of the residential sector will reset every year and will only grow based on the incremental growth of residential solar in any given year. When modeled out, it shouldn’t have as much of an impact as one might suspect on the surface.

Compliance Obligation Schedule
Based on DOER assumptions of installation weights, solar factors and forward-minting, the compliance obligations for 2014 and 2015 are proposed to be set in regulation at 129,338 SRECs in 2014 and 256,686 in 2015. Beyond that, similar to SREC I, a formula will be used to set the requirement by August 30 of the previous year.

Analysis: This is a positive development for projects currently planned that were unable to qualify for SREC I as it provides certainty that there will be a requirement for SREC II in 2014. The requirement allows for 143 MW to be added in 2014 and another 152 MW in 2015.

Summary
We were a bit concerned with the complexity of the last proposal, particularly around the introduction of forward-minting and SREC factors. It appears that the DOER is sticking with these concepts, but has made some changes that reduce complexity and move this proposal in a positive direction, without compromising the underlying benefits of the new design. While we will leave the specifics of appropriate values for ACPs, Auction prices, SREC factors, forward-minting discounts and compliance obligations to the solar finance experts, our comments will focus on the implementation and mechanics of the marketplace.

The biggest difference between SREC I and SREC II is that the newer program seeks to address the different cost structures of the various types of solar installations. To this effect, structurally, the most-recently proposed SREC factoring scheme accomplishes this in a relatively simple way considering the alternative of creating separate SREC markets for each segment. While the alternative would be the purest way to promote a fair, competitive market for each segment, the administratively set SREC factors allows the state to maintain one SREC market that caters to all segments. That is the beauty of this proposal. All the complexity occurs before the point at which SRECs are created. Once the SRECs are created, they will trade, unencumbered in an open market. Every participant will be able to point to the same set of market rules and the very same SREC prices. How they interpret those prices will vary based on the SREC factor of the project, but once a participant has his or her SRECs, the monetization of those SRECs will happen in a uniform, increasingly liquid market.

Now there are two caveats to that statement. First, re-minted auction SRECs from 2012 (and any other year moving forward) have a different set of attributes, that would result in buyers valuing them differently than normal SRECs. This could lead to a separate market for re-minted SRECs in 2013. Similarly, the forward-minted SRECs, could also carry a different set of attributes since they will be good for 3 years. This could lead to a 3rd market price for Massachusetts SRECs. In an ideal world, a MA 2012 SREC is a MA 2012 SREC is a MA 2012 SREC. There is one market, one price and one large pool of liquidity. When that isn’t the case, there will be one large pool of liquidity and two smaller pools of compromised liquidity. This is the only area of the current proposal where the complexity plays out AFTER the SRECs are created.

Next Steps
DOER is interested in receiving public comments on the final proposed design. Comments are due by August 26th and can be sent electronically to DOER.SREC@state.ma.us. In the Subject line, they ask that you put “Comments: SREC-II Final Proposed Design”

IMPORTANT ANNOUNCEMENT FOR MASSACHUSETTS SOLAR GENERATORS

Posted August 16th, 2011 by SRECTrade.

The Massachusetts DOER has revised their application schedule by moving up the deadlines for generation eligibility. The new schedule states that in order for systems generating electricity prior to June 30th (Q2) to get SREC credit for that generation, their applications must have been submitted by August 15th, though there is expected to be some leniency around this first deadline. We strongly urge all unregistered MA customers to submit their EasyREC applications AS SOON AS POSSIBLE (i.e. the next few days) if their systems were generating prior to June 30th. Future deadlines are listed below.

Q2 generation (systems online before June 30th): must apply by 8/15/11

Q3 generation (system online before September 30th): must apply by 11/15/11

Q4 generation (system online before December 31st): must apply by 2/15/12

Please email your completed MA EasyREC application to easyrec@srectrade.com or fax to (732) 453-0065.

Final SRECTrade Auction for MA 2010 SRECs is Friday, June 3rd

Posted May 27th, 2011 by SRECTrade.

The trading year for 2010 Massachusetts SRECs is coming to a close. The deadline to opt-in to the Massachusetts Department of Energy Resources (DOER) administered auction is June 15th, however there is still time to sell through the SRECTrade MA auction! SRECTrade’s final 2010 MA SREC auction closes on Friday, June 3rd at 5 pm EST and is open to any market participant. The May 2011 SRECTrade auction posted a $570/SREC clearing price (95% of the MA SACP) and is indicative of the high demand for unsold MA SRECs.

Participants in the June 3rd Massachusetts SRECTrade auction will be notified of the auction results by Wednesday, June 8th- well before the opt-in period for the DOER auction. SRECs sold in the DOER auction will receive a maximum price of $285/SREC after DOER administrative fees. After the SRECTrade June 3rd auction any unsold 2010 MA SRECs that are not placed in the DOER auction by June 15th will be retired and will no longer be eligible for sale.

Massachusetts SRECs are created on a quarterly basis following a January 1st to December 31st energy year. According to the rules outlined by the DOER, SRECs created from generation in Q4 of each year (October, November, December) are first available for sale on the open market at the beginning of Q2 (April 15th) the following year. Following the same cycle, SRECs created from solar generation in Q1 of 2011 are not available until the beginning of Q3 (July 15th). For this reason SRECs created at the end of 2010 are still being traded in SRECTrade’s monthly auctions through the June auction. Due to high demand for unsold SRECs there should be little activity, if any, in the DOER auction.

Please visit www.srectrade.com for more information on SRECTrade and Massachusetts SREC pricing.

How long will projects be eligible for the Massachusetts Solar Carve-Out?

Posted March 16th, 2011 by SRECTrade.

Understanding the length of time that Massachusetts solar facilities can generate and sell SRECs as part of the Solar Carve-Out is key to financing solar in the state. In an earlier post, we explained the Massachusetts Last-Chance Auction in great detail. The purpose was to help stakeholders understand the conditions, if any, that would result in the SREC market dropping below $285. From there, it is also important to understand how long a facility can bank on the floor price set by the auction.

The Opt-In Term is the length of time a facility is eligible for the Last-Chance Auction
There are a few misconceptions regarding the “10-year” Opt-In Term and the 400 MW Minimum Standard Cap. For example, it might seem that the program is slated to last 10 years or until it reaches 400 MW, after which the SRECs go away. This is most definitely NOT true. The Opt-In Term actually represents the length of time that a facility that is approved for the SREC program can opt into the Last-Chance Auction, i.e. the amount of time a facility is guaranteed a floor price in the market. Once a facility is approved, this term cannot be changed – though the Opt-In Term for future projects may be adjusted by the DOER (see below).

The 400 MW Cap is a limit to the amount that will be approved for the Solar Carve-Out
Meanwhile, the 400 MW cap is actually just a limit to the capacity of projects that can be eligible for the Solar Carve-Out. The 400th MW approved for the SREC program will be eligible for the full-length of the published Opt-In Term. This means that if Massachusetts reaches 400 MW in 2015 and the Opt-In Term is still 10 years, then the Solar Carve-Out will fade out in 2025. In simple terms: the state will accept 400 MWs into the program and every accepted facility will be guaranteed a floor of $285 for “X years” from the time it is installed. “X years” will vary based on the Opt-In Term established in the year of installation.

The Opt-In Term may change for future projects
Today, the Opt-In Term is 10 years and that will not change for any existing projects. However, every year, the DOER may make a change to the Opt-In Term for NEW facilities based on the results of the last-chance auction. If there is an oversupply, then the Opt-In Term may be decreased by as much as 2 years to a minimum of 5 until 2017, and a minimum of zero thereafter. If there is a shortage, the Opt-In Term may be increased to a maximum of 10 years.

The Solar Carve-Out expires when the Opt-In Term ends for the final project approved under the 400 MW Cap
Finally, facilities can continue to sell SRECs after the Opt-In Term as long as the Solar Carve-Out program is still in place. The only difference is that those facilities will no longer be eligible for the Last-Chance Auction and therefore are not supported by the $285 floor price. The Solar Carve-Out will expire after the Opt-In Term for the final project registered under the 400 MW Cap has concluded AND all remaining SRECs created during that time have either been sold or expired. After this time, all facilities will be transferred to the RPS Class I REC market (which by that time could be worth very little).

Here are the key paragraphs taken from the DOER Solar Carve Out website worth reading carefully:

Minimum Standard Cap and Termination of the Program
The Minimum Standard is capped at 455,520 MWh (sufficient to enable the installation of approximately 400 MW of solar PV). When DOER qualifies 400 MW of solar for the program, qualification of all additional solar installations is transferred to the RPS Class I Program. Once the cap has been met, the Minimum Standard for the RPS Solar Carve-Out will be set annually per regulation to maintain market balance. The RPS Solar Carve-Out program remains in effect until all the Auction Opt-In Terms of the qualified projects and the full shelf-life years of any Re-Minted Auction SRECs have both expired, thereby maintaining the price certainty promised to all solar generators. For the year after the final Compliance Year, when the Solar Carve-Out Minimum Standard is set to zero SRECs shall cease to exist, and all generation from qualified Solar Carve-Out Renewable Generation Units shall produce RPS Class I Renewable Energy Attributes.

Opt-In Term
The Auction Opt-­In Term is defined as the number of years (expressed in calendar quarters) that a project is eligible to deposit SRECs into the Solar Credit Clearinghouse Auction Account. For all projects qualified in 2010, this is set at 10 years, or 40 quarters. Any SRECs generated in this span of 40 quarters will be eligible to participate in an auction that will potentially be held each July, where they will be assured a price of $300/MWh for their SRECs (minus a $15 auction fee assessed by DOER). This mechanism sets a floor price for SRECs and gives projects long-­term price assurance should they be unable to sell them directly to LSEs or there be an oversupply of SRECs. Once a project’s Opt-In Term has expired, its owner may continue to sell their SRECs until the program officially ends, but will not have the price assurance guaranteed by the ability to Opt-­In to the auction.

Adjustments to Auction Opt-In Term
Long Market (SREC Oversupply) Adjustment: The Auction Opt-In Term is reduced by 4 quarters for each full 10% of the year’s Compliance Obligation that is deposited into the Auction Account. The maximum reduction per annual adjustment is two years. The minimum Auction Opt-In Term is 20 quarters or 5 years for the first 7 years of the program (through Compliance Year 2016). After that time, the minimum term is reduced to zero years, unless otherwise set by the Department of Energy Resources (DOER). Short Market (SREC Shortage) Adjustment: The Auction Opt-In Term is increased by 4 quarters for each full 10% of the year’s Compliance Obligation that is met through Alternative Compliance Payments. The maximum reduction per annual adjustment is two years. The maximum Opt-In Term is 40 quarters.

In conclusion, we will monitor the Opt-In Term as it is published each year by the DOER. The term will not change for existing projects once established, but it will impact new projects. Solar developers should consider this as they do project finance for facilities that may not be completed this year. Given the shortage in the SREC market in 2010, we do not foresee any changes to the Opt-In Term in 2011.

SRECTrade continues to offer long-term Fixed-Price and Upfront SREC payments for solar projects in Massachusetts.

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Solar Capacity in the SREC States – February 2011

Posted March 2nd, 2011 by SRECTrade.

SRECTrade SREC Markets Report: February 2011

The following post outlines the megawatts of solar capacity certified and/or registered to create SRECs in the SREC markets SRECTrade currently serves.

Blog Table Image JPG more pixels

PJM Eligible Systems

As of the end of February, there were 12,995 solar PV (12,747) and solar thermal (248) systems registered and eligible to create SRECs in the PJM Generation Attribute Tracking System registry. Of these eligible systems, 43 (0.33%) have a nameplate capacity of 1 megawatt or greater, of which only 3 systems are greater than 5 MW. The largest system, currently located in Ohio, is 12 MW,  and the second largest, located in Chicago and eligible for the PA, DC, and MD markets, is 10 MW. The third largest system, located in NJ, is 5.6 MW.

Massachusetts DOER Qualified Projects

As of February 18, 2011, there were 220 MA DOER qualified solar projects; 204 operational and 16 not operational. Of these qualified systems, 10 (4.5%) have a nameplate capacity of 1 megawatt or greater, of which only 3 are between 1.5 and 2 MW. Only one of the projects greater than 1 MW is currently operational.

Capacity Summary By State

The tables above demonstrate the capacity breakout by state. Note, that for all PJM GATS registered projects, each state includes all projects certified to sell into that state. State RPS programs that allow for systems sited in other states to participate have been broken up by systems sited in state and out of state. Additional detail has been provided to demonstrate the total capacity of systems only certified for one specific state market versus being certified for multiple state markets. For example, PA includes projects only certified to sell into the PA SREC market, broken out by in state and out of state systems, as well as projects that are also certified to sell into PA and Other State markets broken out by in state and out of state systems (i.e. OH, DC, MD, DE, NJ). PA Out of State includes systems sited in states with their own state SREC market (i.e. DE) as well as systems sited in states that have no SREC market (i.e. VA). Also, it is important to note that the Current Capacity represents the total megawatts eligible to produce and sell SRECs as of the noted date, while the Estimated Required Capacity – Current and Next Reporting Year represents the estimated number of MW that need to be online on average throughout the reporting period to meet the RPS requirement within each state. For example, New Jersey needs approximately 255 MW online for the entire 2011 reporting year to meet the RPS requirement. Additionally, the data presented above does not include projects that are in the pipeline or currently going through the registration process in each state program. This data represents specifically the projects that have been approved for the corresponding state SREC markets as of the date noted.

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Solar Capacity in the SREC States – January 2011

Posted February 2nd, 2011 by SRECTrade.

SRECTrade SREC Markets Report: January 2011

The following post outlines the megawatts of solar capacity certified and/or registered to create SRECs in the SREC markets SRECTrade currently serves.

SREC Supply January 2011

PJM Eligible Systems

As of the end of January, there were 12,240 solar PV (12,001) and solar thermal (239) systems registered and eligible to create SRECs in the PJM Generation Attribute Tracking System registry. Of these eligible systems, 38 (0.3%) have a nameplate capacity of 1 megawatt or greater, of which only 3 systems are greater than 5 MW. The largest system, currently located in Ohio, is 12 MW,  and the second largest, located in Chicago and eligible for the PA, DC, and MD markets, is 10 MW. The third largest system, located in NJ, is 5.6 MW.

Massachusetts DOER Qualified Projects

As of January 10, 2011, there were 206 MA DOER qualified solar projects; 183 operational and 23 not operational. Of these qualified systems, 9 (4.4%) have a nameplate capacity of 1 megawatt or greater, of which only 2 are between 1.5 and 2 MW. None of the projects greater than 1 MW are currently operational.

Capacity Summary By State

The tables above demonstrate the capacity breakout by state. Note, that for all PJM GATS registered projects, each state includes all projects certified to sell into that state. State RPS programs that allow for systems sited in other states to participate have been broken up by systems sited in state and out of state. Additional detail has been provided to demonstrate the total capacity of systems only certified for one specific state market versus being certified for multiple state markets. For example, PA includes projects only certified to sell into the PA SREC market, broken out by in state and out of state systems, as well as projects that are also certified to sell into PA and Other State markets broken out by in state and out of state systems (i.e. OH, DC, MD, DE, NJ). PA Out of State includes systems sited in states with their own state SREC market (i.e. DE) as well as systems sited in states that have no SREC market (i.e. VA). Also, it is important to note that the Current Capacity represents the total megawatts eligible to produce and sell SRECs as of the noted date, while the Estimated Required Capacity – Current and Next Reporting Year represents the estimated number of MW that need to be online on average throughout the reporting period to meet the RPS requirement within each state. For example, New Jersey needs approximately 255 MW online for the entire 2011 reporting year to meet the RPS requirement. Additionally, the data presented above does not include projects that are in the pipeline or currently going through the registration process in each state program. This data represents specifically the projects that have been approved for the corresponding state SREC markets as of the date noted.

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First Massachusetts SRECs created!

Posted July 21st, 2010 by SRECTrade.

The first set of SRECs eligible for the Massachusetts solar carve-out were created in the SRECTrade aggregation on July 15, 2010. These SRECs represent Q1 2010 generation and over 50% of the total share of SRECs created in NEPOOL GIS for Q1 2010 can be attributed to customers of SRECTrade.  With partners like SunBug Solar, Alteris Renewables, Sunlight Solar, My Generation Energy and more, the SRECTrade marketplace is quickly becoming the platform of  choice for installers searching for an efficient, transparent and cost-effective way to serve the SREC needs of their clients.

One key benefit of SRECTrade’s aggregation is that the customer owns and controls their SRECs until sold to a buyer in the auctions or the forwards market.  Each SREC created in the SRECTrade aggregation is attributed to a single facility. Other aggregations may require a contract that does not allow for flexibility because the generation from multiple facilities is lumped together to create a single SREC.  You don’t have your own SRECs, but your electricity gets counted toward a portion of the aggregate’s SRECs.  With SRECTrade’s aggregation, you own your SRECs until you tell us what to do with them. Our goal is to provide the most effective platform in Massachusetts along with the best customer service in the business.

Now that Q1 2010 SRECs are created, SRECTrade will close the first MA SREC auction on August 6, 2010. Auctions will be available monthly, but since SRECs are generated quarterly, the first auction after quarter-end will always have the most volume.  Q2 2010 SRECs will be available on October 15, 2010 and available starting with the November auction.

Massachusetts DOER Raises Solar Requirement for 2011

Posted June 17th, 2010 by SRECTrade.

The Massachusetts DOER made its final changes pertaining to the implementation of the solar carve-out program in the state’s RPS class I revised regulation. Most noteworthy of the changes, the DOER increased the solar requirement for the 2011 energy year to 69MW, or a total of 78,577 MWh. The increase in the solar requirement is a welcome development for SREC markets in Massachusetts, coming on the heels of the TransCanada legislation, which reduced the solar requirement for Massachusetts (more information on the TransCanada legislation here). This is a good indication that the state has levers it can pull to ensure the state supports a thriving SREC market, providing the market with some stability.

This should serve to counterbalance the change prompted by the TransCanada settlement that exempts certain buyers from the solar carve-out.

To see the all the changes made to the legislation see the RPS Class I Revised Regulation with Tracked Changes.


Massachusetts SRECs 101

Posted June 8th, 2010 by SRECTrade.

What is an SREC? Solar Renewable Energy Certificates (SRECs) are created for every megawatt hour of electricity produced by solar generators. A 10 kW system produces about 12 SRECs a year. SRECS are sold separately from electricity, and the solar power generated does not need to be used for the SREC to be created.

Who buys SRECs? Electricity suppliers must buy SRECs to meet the Massachusetts RPS requirement. Threatened by a Solar Alternative Compliance Payment (SACP) of $600 per megawatt hour if they do not comply, these companies will pay up to this price for SRECs.

How do I sell SRECs? Since individual solar owners do not produce enough SRECs to sell direct to buyers, an intermediary mechanism must exist. SRECTrade created the SREC auctions to connect sellers directly to the buyers in the market in a simple, efficient and effective way. The closing price of each auction represents the fair market price based on supply and demand.

Massachusetts SREC Pricing: State has set up a controlled market for SRECs that creates a price range of $300-$600 per SREC. There are several levers available to the state to ensure that pricing stays within this range.  First, the electricity suppliers who fall short of their SREC requirements must pay a fine of $600 per SREC. This sets a ceiling price of $600. In years where there is an SREC shortage, pricing will be close to $600. If there is an oversupply of SRECs, then market prices will be at or near $300. The state ensures this floor price by having a last chance fixed-price auction at the end of the year. Buyers can bid to purchase the SRECs that are available at $300 per SREC. If there are still unsold SRECs remaining after this auction, the state will adjust the capacity requirements for the following year to compensate for this surplus and allow increase the life of the unsold SRECs from 2-years to 3-years. This will ensure a stable SREC price and give solar owners an assurance that prices will be above $300.

Massachusetts Solar Requirement: The state has set the requirement for the SREC program at 30 megawatts of solar in 2010. That is the equivalent of approximately 36,000 SRECs that need to be produced and purchased by suppliers in 2010.

Massachusetts SREC Program Logistics

  1. SRECTrade will submit PV project application to the DOER. Once this application is approved, their solar facility will be added to the NEPOOL GIS tracking platform, where SRECs will be created and transacted.
  2. Solar electricity generation is reported to the Production Tracking System (PTS).
  3. SRECs are generated quarterly in NE-GIS and are then posted in the SREC auctions.
  4. The state has committed to the program for 10 years. Each SREC is valid for 2 years, so an SREC created in 2010 can also be sold in 2011.

SRECTrade Aggregation Logistics

  1. Fill out the forms to enroll in EasyREC
  2. SRECTrade will submit your application to the DOER for approval and set up your SREC account – this takes a few weeks
  3. Once set up, SRECTrade will collect your readings at the beginning of each month using an online form or internet-enabled inverter
  4. SRECs are generated quarterly by NE-GIS
  5. SRECTrade hosts monthly auctions on the first Friday of each month. You will be notified of the result after each auction. Possible results include:
    1. Successful: X SRECs sold at Y Price
    2. Unsuccessful: Y Price was below minimum, X SRECs not sold
    3. No SRECs: None were available in this auction
  6. If successful, payments will be delivered by the end of the month via direct deposit or mailed check. If unsuccessful SRECs are carried forward to next auction

EasyREC customers own their SRECs until sold in auction or contracted in the Forwards Exchange.

For More Information: http://www.srectrade.com/massachusetts_srec.php