New Jersey SREC Program Expected To Close In Late April

Posted April 2nd, 2020 by SRECTrade.

April 6, 2020 EDIT: The BPU ordered the following earlier today:

  • The registration portal for new projects to the SREC Registration Program will be closed on April 30, 2020.
  • Only previously approved Subsection (t.) projects dated prior to October 29, 2019 will be exempt from the market closure on April 30th.
  • Projects must have a PTO granted from an electric distribution company by April 30, 2020 to qualify for inclusion in the legacy SREC program. The post-construction (as built) certification package will be due 90 days after the PTO date (not 90 days after April 30th).
  • The registration portal will be closed on the 91st day after April 30th (July 30th).
  • All extensions granted by Board staff (either 1st or 2nd extensions) will expire on April 30th. Post-construction (as built) certification package due 90 days after April 30th.

On Tuesday, March 31st, the New Jersey Board of Public Utilities (BPU) announced that it forecasts that 5.1% of state electricity sales will be supplied by operational solar projects around or before May 2020. It is therefore expected that the current SREC program (“Legacy Program”) could close to new applications as soon as April 30th.

In order to qualify for the current SREC Program, solar projects 1) need to obtain a Permission to Operate (PTO) by the SREC program closure date (estimated April 30th) and 2) submit their final-as-built application within 90 days from receiving PTO.

Solar systems that receive PTO after the SREC market closure date will be eligible for the new Transition Incentive program (“TREC Program”). Many details regarding the 15-year, fixed-price TREC Program structure have been finalized, including a flat pricing schedule of $152.00 per SREC. However, many important details surrounding the implementation and administration of the TREC Program Administrator have not been finalized yet. As a result, it is expected that TREC approvals and payments will not be made for several months after the program opens.

SRECTrade will continue to monitor the Legacy Program’s closure and the development of both the TREC Program and the eventual Successor Incentive program.

The Effects of COVID-19 on SREC Markets

Posted March 30th, 2020 by SRECTrade.

With the COVID-19 pandemic impacting financial markets across the globe, we wanted to provide an update on the SREC markets and how this crisis could affect pricing and liquidity in the near-to-medium term.

On the supply side of the market, production of SRECs from existing systems should remain largely unaffected, since solar assets will continue to generate electricity at their typical rates. However, depending on the extent of the economic damage caused by COVID-19, build rates of new solar assets may see a decline during the current period. While the extent of this impact cannot be determined with certainty, it is likely that the market will see a slowdown of new solar asset build during this economic downturn, which will slightly decrease overall SREC production.

A larger question mark lies on the demand side of the equation, where the severity of the crisis’ impact on electricity load remains unknown. While residential electricity usage will likely increase as a result of more people working from home and spending time indoors, the commercial and industrial sectors will see a drop-off in electricity demand. In the PJM and Massachusetts markets, commercial and industrial electricity demand makes up approximately 62% of total load demand, significantly outweighing residential load demand. Depending on how long the economy remains shut down, we will likely see overall electricity load falter in the back-end of Q1 and at least the first half of Q2.

In states where the SREC market may be closer to relative equilibrium, in the prompt period, and sensitive to shifts in market fundamentals (i.e. solar build and electric load), such as New Jersey, Maryland, and Massachusetts, we may experience a near-to-medium term decrease in pricing. However, for those states, such as Washington D.C., where the market is currently under-supplied, the drop in load will likely be insufficient to shift the underlying balance in the market.

Another near term impact of this crisis may be a lack of liquidity. Natural buyers of SRECs may take a less active approach and wait until this crisis unfolds further to determine their demand for SRECs for the current compliance year. This would mean less liquidity in the markets and could result in fewer credit transactions.

It is important to understand that while a temporary drop in SREC demand is possible, if the crisis resolves in the next couple of months and economic activity goes back to normal, the effect on the SREC markets will be temporary and short lived.

With so much uncertainty surrounding the fallout from this virus on the economy, it is hard to determine the exact impacts this will have on the SREC markets in the medium-to-long term. In the short term, we may expect lower pricing and less liquidity, which will likely persist until the United States starts to round the corner with the COVID-19 virus. SRECTrade will keep its clients, partners, and constituents updated as we push through this unprecedented time.

SRECTrade current status: A message from our CEO

Posted March 18th, 2020 by SRECTrade.

Dear Valued Clients and Partners,

As concerns about the novel coronavirus (COVID-19) continue to rise, the health, safety, and well-being of our employees and clients remains paramount. In difficult times like these we need to prioritize supporting one another to weather the storm and ensure a successful return to our normal standards of well-being.

Our San Francisco, CA and Somerville, MA offices are closed, and we have transitioned all employees to work from home. Currently, our staff is healthy and safe. We are still operating normal business hours and providing the same high level of service that you have grown accustomed to. As of now, you should notice very little change in communication and response times.

Moving forward, we are encouraging all employees and clients to follow the guidance and recommendations of local, state, and federal officials. Together we can help speed up the return to normalcy.

Thank you for choosing SRECTrade to help enable your clean energy use and reduce carbon emissions. We will continue to do everything we can to support your clean energy investments and improve our environment.

Please do not hesitate to let the SRECTrade team know how we can help you in the coming weeks.

All the best,
Steven & the SRECTrade team

Steven Eisenberg
Chief Executive Officer
SRECTrade, Inc.

Low Carbon Fuel Standard (LCFS) Program Overview Video

Posted March 5th, 2020 by SRECTrade.

At SRECTrade, we strive to make the Low Carbon Fuel Standard credit market straightforward and easy to understand. We focus on accelerating the adoption of clean fuels by providing services and technology that minimizes the time, cost, and risk associated with achieving the benefits from LCFS credits.

We are happy to announce that we have released an educational video on the Low Carbon Fuel Standard (LCFS) Market and how fleet operators can take advantage of its benefits.

To view the video, please click the image below.

CA LCFS Update – February 2020

Posted February 14th, 2020 by SRECTrade.

2020 is proving to be another record-breaking year in the California Low Carbon Fuel Standard (CA LCFS) market. Credit pricing remained strong throughout Q4 2019 and January 2020 with spot pricing sustaining levels over ~$200 per credit. Despite the cost containment provisions the California Air Resources Board (CARB) implemented in late 2019, the market recently has transacted above the implied ~$213 cap. The enclosed update provides highlights on news impacting the market, a recent price trend overview, and a closer look at the Q3 2019 credit and deficit report released by CARB at the end of January.

SRECTrade offers LCFS credit management and brokerage services to electric vehicle (EV) fleet operators, OEMs, EV charging station owners, and other clean fuel asset owners. We help our clients navigate the entire LCFS process including asset registration, ongoing reporting requirements, transacting, settlement, and remittance of funds. Our domain expertise in environmental commodity markets allows us to provide our clients with industry leading regulatory and market knowledge. Please reach out to cleanfuels@srectrade.com for more information.

Pennsylvania SREC Market Update: What Will the Market Look Like If SB600 Passes?

Posted February 5th, 2020 by SRECTrade.

In November of 2018, the Pennsylvania Department of Environmental Protection (“DEP”) released the Pennsylvania Solar Future Plan. The 152-page document outlines strategies to help the state meet a goal of 10 percent in-state solar electricity generation by 2030. As part of this plan, the DEP recommends that the state consider revising their Alternative Energy Portfolio Standard Program (“AEPS”) and increase the target to help bolster SREC prices and solar build rates. In response, on April 10, 2019, Senate Bill 600 was introduced in the Pennsylvania General Assembly. Most notably, the Bill:

  1. Expands AEPS Tier I requirement from 8% by 2021 to 30% by 2030
  2. Expands AEPS solar carve-out from 0.5% by 2021 to 10% by 2030, including 7.5% for grid-supply solar and 2.5% for distributed generation (DG) solar
  3. Introduces fixed alternative compliance payment (ACP) schedules and a 15-year SREC eligibility term for solar facilities (beginning on June 1, 2021)

While the future of this Bill is still uncertain, SRECTrade has prepared an analysis that illustrates the projected market dynamic if SB600 were to pass as well as baseline scenario cases assuming the current AEPS policy stays in place.

In reaction to these bullish signals from policymakers and the closure of PA borders to out-of-state systems, SREC prices have seen an appreciation in value over the past 12 to 18 months to values around $35-45. SRECTrade will continue to monitor progressions with this Bill and update our clients, partners, and stakeholders accordingly.

 

New Jersey Governor Murphy Signs SB S-4275, Resolving Transition Incentive “Kink Year” Issue

Posted January 22nd, 2020 by SRECTrade.

On Tuesday, January 21st, New Jersey Governor Phil Murphy signed Assembly Bill 6088 (AB-6088) / Senate Bill 4275 (SB-4275) into law in a victory for New Jersey “Transition Incentive” program stakeholders. A New Jersey Board of Public Utilities (BPU) order last month established that the Transition Incentive program’s structure will feature a factorized, fixed-price, 15-year Transition Renewable Energy Certificate (TREC), but did not finalize the pricing schedule that will be used throughout the program.

SB-4275 helps address a “kink year” component in one of the pricing schedule options by allowing the BPU to increase costs to electricity customers in energy years (EY) 2022-2024, such that the average cost to electricity customers from EY2019-2024 does not exceed a 9% cost cap during EY2019-2021 and a 7% cost cap for EY2022-2024. This cost cap flexibility allows the BPU to set higher TREC prices in the near term while still remaining below the legislated cost cap. Prior to this legislation adding flexibility, the BPU had proposed drastically lower TREC pricing during the first three “kink years” of the program, followed by higher pricing in later years.

For example, the two pricing schedules that the BPU had considered are: 1) a flat 15-year price of $152 and 2) a lower price of $65 for the first three years followed by a higher price of $189 for the last twelve years. The BPU still has not finalized some key aspects of the TREC program, including the final price levels. SRECTrade will continue to monitor the development of the Transition Incentive program and provide updates.

CA LCFS Update – December 2019

Posted December 27th, 2019 by SRECTrade.

2019 has proven to be a dynamic year in the California Low Carbon Fuel Standard (CA LCFS) market. The beginning of the year brought the implementation of a new rule making followed by continued growth in a variety of low carbon fuels including Renewable Diesel, Ethanol, Electricity and others. Credit pricing remained strong throughout the year and in Q4 2019 spot pricing experienced sustained levels over ~$200 per credit. The enclosed update provides highlights on news impacting the market, a recent price trend overview, and a closer look at the Q2 2019 credit and deficit report by fuel type. Q3 2019 credit issuance is just around the corner and we look forward to continuing to work with market participants in the new year.

SRECTrade offers LCFS credit management and brokerage services to electric vehicle (EV) fleet operators, OEMs, EV charging station owners, and other clean fuel asset owners. We help our clients navigate the entire LCFS process including asset registration, ongoing reporting requirements, transacting, settlement, and remittance of funds. Our domain expertise in environmental commodity markets allows us to provide our clients with industry leading regulatory and market knowledge. Please reach out to cleanfuels@srectrade.com for more information.

New Jersey Board of Public Utilities Approves Solar Transition Incentive Program

Posted December 18th, 2019 by SRECTrade.

On Friday, December 6th, the New Jersey Board of Public Utilities (BPU) issued an order approving a new SREC program to aid in the transition from the current SREC program to the yet-to-be-determined “Successor Incentive” program. This “Transition Incentive” program will feature a factorized, fixed-price, 15-year Transition Renewable Energy Certificate (TREC). All projects that submitted complete SREC Registration Program (SRP) applications after October 29, 2018, but do not reach commercial operation at the time the BPU determines the 5.1% target has been reached, will qualify for TRECs.

The BPU will hold a cost-cap proceeding in early 2020 to finalize the annual value of the fixed-price TREC. Specifically, the BPU will evaluate two pricing scenarios: 1) a flat 15-year price of $152 and 2) a lower price of $65 for the first three years followed by a higher price of $189 for the last twelve years.

The different TREC project types and factorizations are displayed below:

TRECs will have a useful life of two energy years, including the energy year in which they were generated. If a TREC is not issued or sold during its two-year useful life, it will become an NJ Class I REC. The order further clarifies that Transition Incentive projects will be eligible to generate NJ Class I RECs after their 15-year TREC Qualification Life.

The BPU order also directs electric distribution companies to procure a TREC Administrator. Although the exact mechanics for how TRECs will be transacted are still being determined, the TREC Administrator will ultimately purchase all generated TRECs and allocate them to load-serving entities for compliance based on their market share of retail sales.

SRECTrade will continue to monitor the development of the final TREC levels and the Successor Incentive program.

NJ SREC Market Update: Market Nearing Closure and Transition Program

Posted December 2nd, 2019 by SRECTrade.

The Clean Energy Act, signed by New Jersey Governor Phil Murphy in May 2018, states that new rules and regulations will be adopted to close the NJ SREC program upon attainment of 5.1 percent of the kilowatt-hours sold in the state by solar electric power generators. Based on recent build rates, the NJ SREC market is expected to reach the program’s maximum capacity of 5.1% by mid-2020, at which point, the New Jersey Board of Public Utilities (NJ BPU) will transition the state to a new program. While the NJ BPU released a straw proposal in 2018 on the anticipated market closure, the exact strategy of determining the 5.1% attainment and eventual transition program is yet to be confirmed.

The enclosed analysis further details the implications of this market close and SRECTrade’s estimated market dynamics through 2022. The analysis assumes flat load through 2022 and utilizes a capacity factor of 12.56%, the approximate running average capacity factor across NJ certified solar facilities since 2012. In each depicted build scenario, the market will close to new capacity once 3,460 MW is hit, or on June 1, 2021, whichever occurs first.

On September 6, 2019, the NJ Board of Public Utilities (“BPU”) released a memo that detailed Basic Generation Service Provider (“BGS”) load exemptions in 2019. This exempt load dynamic has an impact on market demand through EY 2023 and is further detailed in the analysis.

Data from the New Jersey Office of Clean Energy (“NJOCE”) shows that solar build rates have increased slightly over the past six months in comparison to the past twelve months, increasing by 3.6% in that time frame. With this data from NJOCE and credit data from GATS, SRECTrade estimates that the market is over-supplied by 7.5% for the 2020 Energy Year. Assuming flat load growth and no drastic increase in build rates, the market will likely become under-supplied in 2021 and 2022.

In line with this market dynamic, NJ SREC pricing has seen an upward trend over the past twelve months. The enclosed analysis further details the current standing as well as future scenarios for the NJ SREC market.