Posts Tagged ‘New Jersey RPS’

New Jersey RPS Bill Proposes Pull Forward to Address Oversupply

Posted June 3rd, 2016 by SRECTrade.

Last week, New Jersey Senators Robert Smith (D) and Christopher Bateman (R) introduced a bipartisan energy bill in the Senate, with a broad coalition of support from solar energy owners, installation and development stakeholders, renewable energy advocates, and other environmental groups. S2276, which was referred to the Senate Environment and Energy Committee upon its introduction on May 23, will adjust New Jersey’s renewable portfolio standard (RPS) to address the impending “solar cliff” of oversupply. In addition, the bill establishes a Solar Energy Study Commission to enable the Garden State to evaluate potential paths and long term solutions for the future of solar policy in the New Jersey.

Under the Solar Act of 2012, New Jersey utilized a “pull forward” mechanism to adjust the RPS so that the increased demand could absorb an excess of SRECs in the market; unfortunately, the mechanism created a “valley of death” starting in Energy Year 2019 (June 2018), with initial impact hitting in EY2017 and EY2018. Based on current build rates, the market may build between 80 MW and 231 MW more than the RPS will require in those years. In the EY2019 to EY2025 years, the market may build between 183 MW and 335 MW in excess of the RPS demand. Under current conditions, it is not until EY2026 that retirement impacts will provide relief to the oversupply.

Figure 1 below shows SRECTrade’s projections for three potential capacity growth scenarios, and the resulting oversupply/undersupply, based on the current RPS schedule. Case 2 is the base case, where 15.6 MW per month is the historic trailing twelve month (TTM) average build rate in New Jersey. Case 1 represents the bear case, or 75%, of the TTM average build rate. Case 3 represents the bull case, or 150%, of the TTM average build rate.

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Scenario Chart Before Demand Pull

Percent Scenarios Before Demand Pull

Figure 1.

In an effort to forestall the cliff, S2276 proposes to once again pull forward demand from future years for the EY2019 – EY2021 energy years as follows: in EY2018, pull forward 52 MWs; in EY2019, 122 MWs; in EY2020, 115 MWs; and in EY2021, 115 MWs. This pull forward would accelerate SREC demand by 62,400 SRECs in EY2018; by 146,400 SRECs in EY 2019; and by 138,000 SRECs in each EY2020 and EY2021.  The adjustments will allow for the continued growth of New Jersey’s solar industry, which employs more than 7,100 people across 528 solar companies. To date, New Jersey has installed more than 1.6 GW of solar capacity, which is enough to power 257,000 homes and rank the State 4th in the nation.

Figure 2 below represents the potential oversupply/undersupply scenarios with the demand pull forward, using the same three potential capacity growth scenarios from Figure 1. The RPS demand figures for 2018, 2019, and 2020 have been adjusted upward by the SREC-equivalent demand increases proposed in S2276.

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Scenario Chart After Demand Pull

Percent Scenarios After Demand Pull

Figure 2.

In addition to the short-term solution of the pull forward of RPS demand, the bill aims to stimulate the development of long-term solutions through its establishment of the Solar Energy Study Commission. The Commission will be composed of 22 relevant stakeholders, who will provide policymakers with information and best practices for designing and implementing long term solar policies. Under the proposed amended RPS schedule, which ends in June 2021, the Commission would be charged with presenting policymakers with  recommendations for New Jersey before the end of the 2021 Energy Year.

S2276 has earned support from members of the New Jersey-based New Jersey Solar Energy Coalition, the New Jersey Solar Grid Supply Association, national and regional members of SEIA and MSEIA, and the IBEW. The bill will be heard at the Senate Environment and Energy Meeting on Monday, June 6.

SRECTrade will continue to track and report on the status of the bill as it progresses this summer.

 

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NJ 2011 Energy Master Plan – Solar RPS on Track

Posted June 10th, 2011 by SRECTrade.

On June 7, 2011, New Jersey Governor Chris Christie announced the issuance of the state’s draft of the 2011 Energy Master Plan (EMP). By way of background, the EMP is a road map describing the energy goals of the state’s executive branch. The plan is required to be issued and updated every 3 years.  For details of the 2011 draft please click here. For details on the 2008 EMP click here.

Overall, the report outlines the continued implementation of the NJ Renewable Portfolio Standard (RPS) solar carve-out. As the report stands, there is no commentary made that would indicate a substantial change to the existing program. The following provides more insight into the aspects of the report that touch specifically on the RPS solar requirements.

The currently legislated RPS target in New Jersey is 22.5%. Of the several goals set forth in 2008 EMP, one sought to surpass this RPS target by achieving 30% of the state’s electricity needs from renewable sources by 2020. The recently released 2011 Draft EMP lays out 5 goals, one of which is to “Maintain support for the renewable energy portfolio standard of 22.5% of energy from renewable sources by 2021.”

The 2011 Draft EMP demonstrates support for behind-the-meter PV installations, highlighting solar’s ability to achieve reduction in carbon emissions and supporting a solar industry in the state,  while also taking into consideration the cost associated with solar incentives to ratepayers. The document does not call for a reduction in the existing solar carve-out, but does indicate the following,

“As the all-in capital costs for diverse solar technologies continue to decline, the Board should take action to reduce the SACP through 2025.  Doing so will not undermine new solar projects that are worthwhile, but will reasonably minimize the cost burden borne by nonparticipants.”

The Christie administration explains the benefit of larger scale solar projects while noting that they “…should be considered in addition to, not in lieu of, smaller-scale, grid-connected applications.”

The document highlights the fixed SREC requirements implemented by the Solar Energy Advancement and Fair Competition Act (SEAFCA) introduced in January 2010. Instead of a percentage-based solar requirement, this act insulated the requirement from fluctuating electricity usage by implementing targets in fixed gigawatt-hour terms. This proves beneficial, as part of New Jersey’s energy goals include demand response and energy efficiency initiatives that plan to reduce overall electricity usage.

Solar Alternative Compliance Payment (SACP):

1) The current SACP extends through 2016; the SEAFCA requires the BPU to set the schedule through 2026.

2) No time frame is required, but industry stakeholders suggest the implementation of a schedule to provide certainty to debt and equity investors enabling solar development.

EMP Policy Direction and Recommendations regarding the solar carve-out are as follows:

1) Reduce the SACP: One proposal recommends the reduction of the SACP by 20% in 2016 and 2.54% each year thereafter.

2) Subject Solar Renewable Incentives to a Cost Benefit Test: The EMP mentions, “Solar generation can contribute to the reliability of the grid…” and continues by stating, “…subsidies should enhance job growth and retention objectives and should contribute to reduction in taxes without inadvertently transferring wealth from non-participants to participants throughout New Jersey.”

3) Promote Solar PV Installations that Provide Economic and Environmental Benefit: Support for community solar power is encouraged, allowing economies of scale to give residents access to what otherwise could be an expensive individual solar system. Community solar projects help provide decreased electricity usage through the local utility and can spread the cost of distribution system upgrades among the ownership group.

Overall, the 2011 Draft Energy Master Plan lays out the goals for a diversified mix of energy sources throughout the state of New Jersey. The existing overall RPS targets and specific solar carve-out requirements appear to be a priority of the Christie administration. It is clear that the Governor’s office is focused on reducing the economic impact of implementing the RPS while enhancing electricity security and job creation. The EMP has no substantive proposals that should cause concern for stakeholders participating in the state’s SREC market, but at the same time does not include any discussion of expanding New Jersey’s solar goals to continue adoption beyond the current targets.

Maintain support for the renewable energy portfolio standard of 22.5% of energy
from renewable sources by 2021.