Posts Tagged ‘North Carolina SRECs’

What Happened to the North Carolina SREC Market?

Posted June 23rd, 2011 by SRECTrade.

Since its inception last summer, the North Carolina SREC market has not materialized into the type of market seen in other states like New Jersey, Maryland and Massachusetts. There are several factors lending to the stagnation of this market, many of which were covered in our blog post “Where is the NC SREC Market?” published last August. Since then, the nascent NC market has continued to dwindle. Most small solar facilities in North Carolina have been selling their SRECs into the DC market, an opportunity that will be closing as new legislation in DC shuts the market to out-of-state facilities.

A few factors  impair the viability of the North Carolina market:

1) The absence of both an SACP and transparent market prices make it difficult for projects to find viable SREC-based financing.

2) There is a shortage of buyers. The two main buyers, Duke Energy and Progress Energy, which serve 65% of NC utility customers and provide 71% of the state’s electricity, have both met their NC REPS compliance needs for solar, with Progress locking out SRECs until 2014 and Duke having ample supply through 2018, the final year of RPS compliance.

3) North Carolina accepts 25% of its SRECs from out of state sited facilities.

In an effort to curb these seemingly premature accomplishments by utilities, legislators in North Carolina introduced two important clean energy bills in the last few months: the Solar Jobs Bill (HB495/SB473) and the Energy Independence and Job Creation Bill (SB694). The former aspired to increase the solar requirement for utilities from .2% to .4% of retail electric sales by 2018 in an effort to further develop the state’s solar industry, while also requiring that no more than 12.5% of the RECs applied towards the RPS requirements come from out-of-state generators. If this bill were to pass, it would help catalyze an NC SREC market as utilities would need to find additional sources of SRECs to meet new compliance targets. To create more flexibility, the Energy Independence and Job Creation Bill allowed for “third party sales” of renewable energy, or the ability for facilities with third-party owned renewable systems to buy electricity directly from the third-party without classifying them as utilities, so long as their capacity is under 2 MW. This bill would open the North Carolina market up to third-party financing companies like SunRun, SolarCity and Sungevity, which would foster the development of solar leasing and PPAs.

Unfortunately, neither of these bills were taken up by legislators by the crossover deadline on June 9th, effectively rendering them dead until the start of the 2013 session. For now, the future remains unclear for a more active SREC market in North Carolina.

Additional Resources:

Relevant Utility Rebates

NC Sustainable Energy Association – legislative news

NC GreenPower – non-profit created by the NC Utilities Commission

Where is the NC SREC Market?

Posted August 31st, 2010 by SRECTrade.

The SREC market in North Carolina has gotten off to a sluggish start and it appears that a thriving state SREC market may be a long way out.  Several aspects of the program have hindered the development of a market in the state, as a result, many SREC aggregation firms and market-makers have gotten out of the state. The two key problems include a non-existent mechanism for compliance and a buyer market dominated by a few large energy producers that are not participating in the market. Local installers and developers that were hoping SRECs would be a key driving force in promoting a North Carolina solar industry are now finding themselves shut out of the market.

Enforcing Compliance
The North Carolina law did not require that the North Carolina Utilities Commission (NCUC) set a Solar Alternative Compliance Payment (SACP) which is the fine that any energy supplier who falls short of the solar requirement would have to pay.  This is a standard aspect of any SREC market where SACPs vary from as low as $250 in Delaware to as high as $675 in New Jersey.  The SACP does not set the price, but acts as a cap in the market.  More importantly, it creates an indication for what the SRECs are worth in years where there is an undersupply.  In North Carolina, there is little incentive to offer higher SREC prices to promote growth in the industry and buyers are best served by holding prices down.

Utilities Locking Up Their Own Supply
Many investor-owned utilities claim to have locked in their own supply through the next few years and are therefore not participating in the market.  Part of the reason this is happening is that North Carolina places no restrictions on the amount of solar that utilities can produce themselves.  In addition, the other incentives and tax breaks combine to make solar an attractive investment for utilities.  Even Green Co Solutions, the company handling NC-REPS requirements for many of North Carolina’s electricity cooperatives is already well-positioned with respect to their SREC needs. This is a stark contrast to New Jersey and other states, where the incentives are prohibitive for investor-owned utilities and, in some states, completely excluded from the SREC market. New Jersey for example will only approve solar projects from investor-owned utilities if it is determined by the Board of Public Utilities that these projects will not impact pricing in the SREC market.

What are SRECs trading for?
Utility-run programs such as Progress Energy’s Sun Sense program and Duke Energy’s Distributed Generation program provide a structured means for generating solar electricity and selling it back to the grid along with the SRECs that are produced. These programs offer prices of $120 to $180 for bundled electricity and SRECs, resulting in SREC valuations in the $60-$120 range.  These programs limit projects to 25kW to 210 kW, a range that is too large for residential solar companies and too small for most commercial developers.  Although there have been SREC contracts struck with these large utilities, any agreements have all been done behind-closed doors with little or no transparency as to what pricing is being offered.

Who is faring well in North Carolina?
Despite the relatively non-existent NC SREC market, smaller solar systems in North Carolina have found successful ways to take advantage of SREC programs. Most notably, these systems have the opportunity to sell their SREC production into a small but more favorable Washington DC SREC market.  In addition, systems under 10kw in North Carolina are also automatically eligible for NC GreenPower, a voluntary retirement program which offers $150 per SREC bundled with electricity.  The most sensible path today for residential solar owners is to register in DC while the market continues to deliver SREC prices of $290. Meanwhile, since the market in DC is small and will likely be oversubscribed, the NC GreenPower program represents an excellent fall-back option.  Customers do not need to register for NC GreenPower right away and may choose to register later on, perhaps some time in the future after a price drop in the DC market.

What can be done to get the NC SREC market going?

  1. Set an SACP. For starters, the North Carolina Utilities Commission has the power to establish a compliance mechanism in the state.  Doing so would create some indication of what the willingness is to pay on the part of the buyers.  Sellers would then be able to properly compare the fixed-price programs being offered by Duke and Progress Energy to the alternative of selling in a market.
  2. Limit Investor-Owned Utility Solar Development. This is a much broader debate behind the purpose of subsidizing solar. New Jersey has, in no uncertain terms, made it very clear that the intention of the SREC program is not simply to ensure that the state is running on renewable energy. The intention behind the New Jersey SREC program is to a) diversify energy resources by promoting distributed, customer-sited generation (i.e. residences and businesses producing their own electricity) and b) create jobs by developing the most robust state solar industry in the nation.  Meanwhile, in North Carolina, the ultimate goal of acquiring solar energy at the lowest cost possible will likely be achieved. However, if the solar is owned and developed by a few large utility companies that in many cases outsource the development to firms in other states, then a vibrant industry will most likely not develop in North Carolina the way it has in other states.  Meanwhile, electricity generation in North Carolina will continue to remain the responsibility of and under the control of a few large firms, rather than distributed across the communities, the way solar resources are meant to be utilized.
  3. Create Transparency. The unbundled SREC contracts that are currently available are handled behind closed doors with no transparency. There is no publicly available information on the prices offered and the period of time in which these prices are being offered. The more the state can do to create transparency around pricing, the easier it will be for local developers to build projects based on SREC sales.  In addition to pricing transparency, if Investor-Owned Utilities continue to develop their own solar, information around their plans should be readily available so that the rest of the SREC market understands what the TRUE market demand will be.  Without this, it is nearly impossible to predict the forward price curve for SRECs and build projects based on those projections.
  4. Create Access to the Market. Limiting Investor-Owned Utilities from developing their own solar would turn them into active buyers within the market.  Combined with an SACP and few restrictions around procurement, more buyers, motivated by compliance obligations, will result in easier access to the market for solar projects of all sizes.


North Carolina Systems Able to Sell SRECs into DC

Posted July 20th, 2010 by SRECTrade.

The DC Public Service Commission is accepting applications for facilities in ALL of North Carolina.  This word comes after some initial confusion regarding the eligibility of areas adjacent to territories directly served by PJM.  The DC market provides an alternative means for selling SRECs for small commercial and residential facilities in North Carolina.

Although prices in the DC market are close to $300 per SREC, the market is small.  In 2010, a total of approximately 3 megawatts must be installed in order to meet the requirement.  That number grows to 15 megawatts in 5 years (dwarfed in comparison by North Carolina which grows from 23 MW to 85 MW in 5 years).  Considering that facilities in the entire PJM region are eligible for the DC market, it is quite possible that this market becomes oversubscribed in the future. We foresee the DC market as a viable option for smaller facilities (under 250 kW) for now, but in the long-run, it will be difficult for the solar industry in North Carolina to rely on DC legislation. The long-term solution for the North Carolina solar market hinges on the state making some changes to the current legislation that encourage the development of a real in-state SREC market.

In the meantime, SRECTrade is accepting applications from solar facilities in North Carolina.  We will register the facilities in both DC and NC.  SRECs will be sold in the market with the best pricing.  To get your NC system signed up, just fill out our EasyREC forms here.

More on North Carolina soon. You can always check our North Carolina page.

North Carolina launches NC-RETS for tracking SRECs in state

Posted July 8th, 2010 by SRECTrade.

The North Carolina Renewable Energy Tracking System (NC-RETS) designed by APX, Inc. launched earlier this week.  This will be North Carolina’s online mechanism for the issuance and tracking of SRECs.  Both solar photovoltaic and solar hot water projects are eligible to receive Solar Renewable Energy Certificates (SRECs) through NC-RETS, and North Carolina electricity producers will use this system to demonstrate their compliance with North Carolina’s Renewable Energy Portfolio Standard.

Registration of a solar project with NC-RETS requires the creation of a NC-RETS general account and prior registration of the project with the North Carolina Utilities Commission (NCUC). Projects under 1 MW will be able to self-report their energy production data into the NC-RETS system to receive SRECs, while larger projects will require a designated “Qualified Reporting Entity” with a separate NC-RETS account to upload generation data on their behalf.    There are no fees associated with the creation of NC-RETS accounts, and the cost of operating the tracking system will be billed to NC electric power suppliers based on each one’s percentage of load in the state.

RECs are readily transferrable between NC-RETS accounts and will be “retired” in the accounts of NC electricity suppliers in order to demonstrate their portfolio compliance.  NC-RETS also allows account holders to import SRECs from and export SRECs to tracking systems in other states.   As of now, there is 2-way transferability with the North American Renewable Registry (NARR) tracking system.  Transferability with PJM GATS is expected shortly and conversations are ongoing with WREGIS, ERCOT, and MRETS.  There is a negligible $.01 fee per SREC exported but imports will be free.

Although there is a “bulletin board”, no financial agreements will take place on NC-RETs, and SRECTrade is accepting bids from both sellers and buyers in NC in anticipation of a North Carolina SREC auction.  Our EasyREC program will streamline the process for solar power generators looking to receive and sell their SRECs efficiently in North Carolina.  When a solar facility owner signs up with EasyREC, SRECTrade will quickly take care of registering the project with the NCUC  and NC-RETS!  As always, the solar facility owner retains ownership of all SRECs until they are sold at auction, at which point SRECTrade takes care of transferring the SRECs to the buyer through NC-RETS.  Our EasyREC service also covers annual updates required for continued NCUC registration.

Find out more on North Carolina’s SREC program here