Archive for March, 2010

PJM Region

Posted March 28th, 2010 by SRECTrade.

The PJM Interconnection is a regional transmission organization.  It serves to connect the electricity produced by the various utilities across a region.  In several states, the Renewable Portfolio Standard legislation lets utilities count renewable electricity produced within the PJM region towards meeting the state’s renewable goals.

In Pennsylvania, for example, a resident within the PJM region can apply for certification in the Pennsylvania SREC program.  If your system is convered in this map, you can sell SRECs to PA!

Washington, DC is similar to Pennsylvania in that both allow SRECs from anywhere within the PJM region, however DC will also qualify facilities that are eligible to deliver their electricity into the region. This may include facilities in states that are adjacent to the PJM region such as New York or Wisconsin.

Ohio is another state that allows SRECs from out of state. In that specific case, the utilities are limited to buying 50% from out of state and only from states within the region that are contiguous: Pennsylvania, West Virginia, Kentucky, Michigan and Indiana.

Washington, DC is similar to Pennsylvania in that both allow SRECs from anywhere within the PJM region, however DC will also qualify facilities that are eligible to deliver their electricity into the region.

For these reasons, it is important to know what constitutes the PJM region to determine whether or not you qualify.  Here is a map of the region, along with the retail electricity companies who are served by PJM.


NC SREC Market Launching Summer 2010

Posted March 17th, 2010 by SRECTrade.

Now that APX has been selected as the platform for the NC-RETS registry to track the creation and transfer of SRECs in the state, we are gearing up for the implementation of the SREC auctions in North Carolina later this year.  The registry should be implemented by July 1, meaning that systems can then begin registering and generating SRECs soon thereafter.  We expect to have our first auction for NC SRECs when the market has had enough time to develop the appropriate supply of SRECs. Specific details on the rules governing the market are still to be finalized.  We anticipate that the market will allow for exporting of SRECs out of NC-RETS and into other trading platforms for compliance outside of North Carolina.  In addition, since NC LSEs will be allowed to count a percentage of their SRECs from out-of-state generators, we expect that there will be an option to import your SRECs from other platforms such as GATS for compliance in the NC-RETS platform.  However, in-state SRECs will likely trade at a premium to out-of-state SRECs.

Many customers will ask us about registering in DC or PA first and selling there for now and then selling into NC.  Our only point of caution is that your facility may be treated as an out-of-state facility if the SRECs are imported from another platform.  In addition, it is unclear if you will be able to rescind registration in another registry at a later date and then re-register in NC. For this reason, we recommend that NC facilities wait to register in-state this summer before exploring opportunities out of state. This recommendation is based on there not being a dependable market in DC or NC to warrant the risk of being excluded from the NC in-state market.

Finally it is still unclear what the value of SRECs will be in NC since the NCUC has not and may not announce any penalty for non-compliance. Until clarity is reached on how the RPS will be enforced, the range of SREC values is undefined.  Currently, we have heard values as low as $70/SREC and in the high $100s on the upper range. Given uncertainty in pricing, it may make sense to enter into a long-term contract at a price in this range, however, that same uncertainty drives the argument behind not entering into a long-term contract, especially if the price is below $100. Given trends we have seen in other emerging SREC markets, prices are more likely to rise above these values than drop lower than some of the prices we hear in North Carolina. The bottom line is that if you are getting $70 an SREC, it is unlikely that you will see the market trade lower than that, especially as more states come online.  Whoever is buying your SRECs at that price will also stand to make a lot of money in the long run.  Our advice would be to hold off if you can until there is a stronger indication in this market of what the pricing will be in the next few years. You want to avoid what happened 3 years ago in New Jersey when solar owners entered into long-term contracts at $150/SREC only to see the price go up as high as $680 in the spot market!

P.S. We have already begun signing up our first North Carolina EasyREC customers!

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Delaware SEU to protect SREC market from 10MW Dover project

Posted March 12th, 2010 by SRECTrade.

The planned 10MW project in Dover, Delaware would have flooded the state’s SREC market and made it impossible for Delaware residents to sell their SRECs to Delmarva Power. Thanks to the Delaware Sustainable Energy Utility (SEU), the Delaware market will be protected from the potential harm that such an influx of SREC supply would cause to the market. The SEU decided today that it would purchase the SRECs from the 10MW facility in Dover to avoid flooding the market for residential and small commercial solar project SRECs. The current plan is to hold the SRECs until 2015 when the market is large enough to support such a supply.

This is great news for market participants in Delaware. Although most sellers will register their facilities out of state in Pennsylvania and DC where higher Alternative Compliance Payments (ACP) lend to higher SREC prices, it is important that Delaware establish its own SREC market to support the growth of the industry in-state without relying on legislation of neighboring states to do so.

On a related note, Delaware’s Governor Jack Markell has proposed the extension of the state RPS by 10 years through 2029, increasing the total requirement from 20% to 30% of electricity for renewables.  In addition to the proposed expansion of the program to include all of Delaware’s electricity suppliers (not just Delmarva Power), this could also be an opportunity to increase the ACP in Delaware.  We will see!

California SRECs (TRECs) coming soon!

Posted March 12th, 2010 by SRECTrade.

The California TREC market is here!

Yesterday California passed legislation to allow for a Tradable Renewable Energy Credit (TREC) market. This essentially means that utilities in California can now buy SRECs unbundled from the electricity. Prior to this ruling, any SRECs used to comply with the state’s Renewable Portfolio Standard had to be purchased with the electricity itself, i.e. the SRECs had to be bundled with the electricity and sold to the utility together.  The reason behind this ruling is that the utilities are not able to meet the growing requirement from projects sited within their territories and this new rule allows them to get credit for renewable energy produced elsewhere by purchasing the SRECs (or TRECs as the state calls them) from generators outside their territories.  The Alternative Compliance Payment (ACP) will start at $50, creating a cap, but that cap and other restrictions around the use of RECs is planned to be lifted after 2011 after the state has had time to get more comfortable with the program.  In the early stages, this means that TREC values will be significantly lower than values in other states where the Solar ACP (SACP) is anywhere from $250-$700. Currently TRECs include all forms of Renewable Energy, however, it is unclear if there will be a market in the future that places a distinction on Solar RECs, SRECs in the California market place. With this legislation, SRECs carry the same value as any other RECs.

We see this being an important opportunity for generators outside California who are now able to help the state meet its renewable energy goals by purchasing RECs. The RECs must be registered in WREGIS in order to be eligible.  SRECTrade will have more information regarding the online market place for California TRECs soon.