Posts Tagged ‘Pennsylvania SREC’

Why are Pennsylvania SREC prices so low?

Posted February 16th, 2012 by SRECTrade.

SRECTrade has printed auction prices for Pennsylvania ranging from a high of $310 in June 2010 and a low of $20 for SRECs created in the same energy year. The drop in Pennsylvania SREC prices is due to a severe over-supply of SRECs above the amount of SRECs that buyers (electricity producers) need to acquire each year, but how did the market become over-supplied and is anything being done to address the over-supply?

Background

The Pennsylvania SREC market was created as a state-level, long-term incentive for homeowners and businesses to go solar, but around the same time that the SREC market was created, other, more generous solar rebate programs like the Pennsylvania Sunshine Program were created that caused a short-term boom in solar installations. In addition to this, the Pennsylvania SREC market is one of two markets (OH is the other) that accept SRECs from out-of-state sited solar systems, including from states that don’t have their own SREC markets. This means that Pennsylvanians are effectively subsidizing solar in other states and ensuring that Pennsylvania SREC prices remain low.

The Proposed Fix

The Pennsylvania SREC market was created by the state legislature and amendments to the market must go through the legislature first. In the spring of 2011, Rep. Chris Ross (R-Chester) proposed House Bill (HB)-1580 to address some of the key factors behind low Pennsylvania prices. The crux of HB 1580 is a proposal to move up the SREC requirement by three years. This would mean that if the bill passed, Pennsylvania SREC requirements would increase beginning in 2013. A detailed schedule of the proposed increase can be found in the bill.

We’ve followed the progress of HB 1580 over the last year and periodically posted updates to our blog.  Most recently the bill went before the House Consumer Affairs Committee on January 11, 2012 where it met resistance from Committee Chair Rep. Bob Godshall (R-Montgomery) and various entrenched groups representing the Pennsylvania electricity industry. Since the January hearing Rep. Chris Ross has worked hard to develop compromise amedments to HB-1580 that might help the bill survive a tough Committee vote. If the bill makes it out of Committee it has 110 co-sponsors in the House and substantial Senate support in a companion bill.

According to PennFuture, a Pennsylvania environmental and renewable energy advocacy group, Ross’ proposed the following compromises:

  • Capping the Alternative Compliance Payment (ACP) for solar at $325, with a 2% annual decline
  • Offsetting early-year increases in the solar requirement with decreases in later years and extending the SREC program through 2026
  • Allowing solar hot water (SHW) systems to qualify for SREC sales
  • Making slight adjustments to the language of the in-state requirement, aimed at preventing net-metered systems from inadvertently being disqualified
  • Ensuring that utilities cannot procure any AEPS resource above the ACP price

What Can You Do?

Pennsylvania solar advocates are hoping that they can convince the House Consumer Affairs Committee to vote on HB 1580 when the legislature reconvenes in mid-March. If you are a Pennsylvania resident, please feel free to contact House Majority Leader Turzai at 717-772-9943 to express your support for seeing the bill go up for vote.

Pennsylvania Solar Bill Goes to Committee

Posted January 17th, 2012 by SRECTrade.

On Wednesday, 1/11/12, Pennsylvania House Bill (HB) 1580 sponsored by Rep. Chris Ross (R-Chester) was presented to the House Consumer Affairs Committee for debate.  HB 1580 is a proposal to move forward the Pennsylvania SREC requirement to the current compliance requirement for 2015 without changing the overall number of SRECs required after 2015. This would alleviate the over-supply of SRECs and increase the value of Pennsylvania SRECs.  While the hearing was a critical first step for HB 1580, followers of the Pennsylvania solar industry will have to wait on the Consumer Affairs Committee’s vote before the fate of the bill is known. Should the bill make it out of committee it will also need to pass the House and Senate where both the House and Senate have voiced initial majority support for bill.

During the hearing solar industry representatives and solar consumers testified in support of the bill while utility groups and the Pennsylvania Chamber of Business spoke against it. The PA Environment Digest put together a detailed account of the testimonies. Generally those in support of the bill argue: 1) that the bill is essential for maintaining highly skilled solar jobs in Pennsylvania; 2) doesn’t increase the overall requirement for SRECs; 3)merely accelerates the requirement and 4) brings Pennsylvania’s SREC market more in line with the design of other SREC markets by closing the market to out-of-state sited systems (currently PA accepts SRECs from anywhere in the PJM region i.e most states in the mid-Atlantic and some states in the Midwest). Utility companies that testified against the bill argue that it would place an undue burden on rate payers by forcing utilities to charge more for the electricity that they supply. According to the PA Environment Digest article, there was some disagreement over the actual cost of the bill to rate payers, but on the high side utilities estimate that it would be an increase of $120 million over four years to four million Pennsylvania rate payers, which equates to an increase of about $3.33 per year to each rate payer.

SRECTrade will continue to closely monitor the development of HB 1580. Stay tuned to our blog for updates.

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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SRECTrade launches its service in Pennsylvania

Posted June 18th, 2009 by SRECTrade.

We are really excited to announce that we will be launching our auction in Pennsylvania next month! We are adding seven new states in our July 10th auction and giving Solar Alternative Energy Certificate sellers (AEC sellers or SREC sellers as they are referred to in other states) the ability to cross-list their SRECs.

The Pennsylvania SREC market is going to be significant and increase rapidly every year. Our estimates show that there will be a demand for 14,000 SRECs in Pennsylvania this year. These numbers represent the 0.0063% solar requirement for utilities and this number will grow to 0.5% by 2021.

Utilities that fail to comply will have to pay a Solar Alternative Compliance Payment (SACP) for each SREC (i.e. 1 Mega Watt Hour of electricity) they are short. Pennsylvania has a unique SACP structure where the penalty is not pre-fixed but is actually set 6 months after the end of the energy year. The energy year of Pennsylvania runs from June 1 to May 31 of the next year (for example, the 2009 energy year was from June 1, 2008 to May 31, 2009). The SACP for the 2009 energy year will be declared on December 20, 2009 and will be 200% of the average SREC trading price in Pennsylvania in that year. This means that the SRECs will be sold without really knowing their true value. We plan on providing information on the average SREC trading price in the state to give our Pennsylvania customers a rough idea of what they should sell their SRECs for.

PA, MD, DC, NC and OH are the states accept out of state SRECs for now. For those of you who wish to be able to sell your certificates in these states, your system needs to be registered in that state and have a separate State Certification Number. This will be done with GATS, and we will soon put up information on the procedure.