Archive for May, 2011

Pennsylvania legislature commences efforts to fix SREC program

Posted May 30th, 2011 by SRECTrade.

The Pennsylvania SREC market has had its design flaws. After HB 2405 and HB 1128 fell by the wayside last year, the Pennsylvania SREC market took the expected turn for the worst. SREC prices have dropped from a high of $310 to a low of $80 per SREC. Representative Chris Ross, who spearheaded the initial Alternative Energy Portfolio Standard in Pennsylvania has proposed an amendment to address some of the issues facing the Pennsylvania solar industry. Here are the two major changes that he is proposing as an amendment to the original Act:

1. After January 1, 2012, PA will no longer register solar technologies from out-of-state

2. The requirements for the 2013, 2014, 2015 Energy Years will increase from approximately 70 MW, 118 MW and 205 MW to 207 MW, 238 MW and 290 MW respectively.

These two changes would make a positive impact on the market. Closing the doors to out-of-state facilities would allow Pennsylvania to focus the opportunities created by the program on local businesses and local projects. Though the wording is a bit vague, it also seems that facilities registered prior to 2012 will be allowed to continue to sell their SRECs in the state market. This is an important distinction for the facilities that have been financed and accepted into the PA program with the expectation of participating in the market. Meanwhile, the increase in the requirements is a necessary step in order to make SRECs relevant again, though it may not be enough.

The market has been flooded with SRECs from facilities throughout the PJM region. The 2011 Energy Year SREC requirement only had room for about 18 MW of solar. To date, there is 78 MW registered to generate SRECs, with more facilities built and awaiting approval. 33 of the 78 MW are located within Pennsylvania. With the requirement only growing to 44 MW and 70 MW in the next two years respectively, the SREC market in Pennsylvania will face a prolonged collapse in pricing. Even with the proposed increases in 2013-2015, this could still be a problem. The oversupply from the 2011 and 2012 Energy Year will carry into the 2013 Energy Year, meaning that even with an increase to 205 MW of needed capacity in 2013, unsold SRECs from previous years will keep downward pressure on SREC prices.

One of the more fundamental flaws with the SREC program in Pennsylvania was reported on recently by the Central Penn Business Journal. The article accurately highlights how, in addition to out-of-state supply, local incentives skewed the role that SRECs were playing in the solar economics. The most-obvious culprits in the Pennsylvania SREC collapse are the out-of-state facilities that were flooding the market, but if you look at the numbers, Pennsylvania would still be over-supplied if you excluded all the out-of-state facilities. When attractive upfront incentives mitigate the influence of SRECs in the decision to go solar, many facilities will be built without SRECs in mind. When these projects enter the market, they undermine the credibility of the market and out-compete facilities that need to factor in a value for SRECs, driving prices below sustainable levels.

To promote a healthy SREC market, the long-term solution (once the current oversupply has been addressed) is, ironically, to shift towards a greater reliance on SRECs. A greater reliance on SRECs means that market prices will track closely with the value needed to cover the gap between developing solar and utilizing other electricity sources. When that happens the market will act as it should, trending downwards as costs come down, while remaining at levels that sustain development. If Pennsylvania continues to put upfront incentives in front of developers, the SREC market will never rebound.

In contrast, New Jersey has moved away from upfront incentives and promoted the SREC-only concept. The importance of SRECs in financing solar projects in New Jersey is why the market won’t see the collapse that some of the skeptics are predicting. Growth in the market will have to slow, but it is unlikely that SREC prices collapse the way they have in Pennsylvania. This is because when SREC prices come down in New Jersey and contracts become scarce, solar projects won’t be built (assuming rational behavior). In Pennsylvania, overly-attractive upfront incentives over the past two years have made SRECs an afterthought. If the market is ever going to function properly, the state will need to either come up with the appropriate combination of SREC values and incentives to promote solar at a rate in alignment with the growth of the RPS, or it will have to take a cue from New Jersey and shift away from the upfront incentives all together.

Final SRECTrade Auction for MA 2010 SRECs is Friday, June 3rd

Posted May 27th, 2011 by SRECTrade.

The trading year for 2010 Massachusetts SRECs is coming to a close. The deadline to opt-in to the Massachusetts Department of Energy Resources (DOER) administered auction is June 15th, however there is still time to sell through the SRECTrade MA auction! SRECTrade’s final 2010 MA SREC auction closes on Friday, June 3rd at 5 pm EST and is open to any market participant. The May 2011 SRECTrade auction posted a $570/SREC clearing price (95% of the MA SACP) and is indicative of the high demand for unsold MA SRECs.

Participants in the June 3rd Massachusetts SRECTrade auction will be notified of the auction results by Wednesday, June 8th- well before the opt-in period for the DOER auction. SRECs sold in the DOER auction will receive a maximum price of $285/SREC after DOER administrative fees. After the SRECTrade June 3rd auction any unsold 2010 MA SRECs that are not placed in the DOER auction by June 15th will be retired and will no longer be eligible for sale.

Massachusetts SRECs are created on a quarterly basis following a January 1st to December 31st energy year. According to the rules outlined by the DOER, SRECs created from generation in Q4 of each year (October, November, December) are first available for sale on the open market at the beginning of Q2 (April 15th) the following year. Following the same cycle, SRECs created from solar generation in Q1 of 2011 are not available until the beginning of Q3 (July 15th). For this reason SRECs created at the end of 2010 are still being traded in SRECTrade’s monthly auctions through the June auction. Due to high demand for unsold SRECs there should be little activity, if any, in the DOER auction.

Please visit for more information on SRECTrade and Massachusetts SREC pricing.

MD to Accept In-state Solar Water Heating Systems for SREC Market

Posted May 27th, 2011 by SRECTrade.

Maryland recently passed legislation which will allow residential-scale in-state solar water heating systems (SWH) installed on or after June 1st 2011 to sell SRECs into the MD SREC market.  Eligible systems will, at a maximum, be able to produce 5 SRECs per year. The law does not go in to effect until January 1st 2012, so even if the system is installed now it will be another few months before they can monetize their SRECs. The bill states that eligible SWH systems are those that are not used solely for heating a pool or hot tub and are either metered by a device that meets the standards of the “International Organization of Legal Metrology” (OIML) or be OG-300 certified.

Another requirement is that the SWH collectors (the product that captures the sun’s heat) must be a “glazed liquid-type flat-plate or tubular solar collector by the OG-100 standard of the Solar Ratings and Certification Corporation (SRCC).”

Because SWH systems produce heat and not electricity, output is measured in British Thermal Units (BTUs) and not kW-hrs. In order for these systems to produce SRECs equivalent to their PV-system counterparts, they must be certified and metered in a way that can allow for accurate measuring and unit conversions. By multiplying each BTU by a conversion factor of .000293, one can determine the kWh equivalent production from the system. As a point of reference, a single a 21 ft2 flat plate solar thermal collector located in Baltimore, MD that has a conversion efficiency of 60% may produce as many as 2 SRECs per year.  Conversion efficiencies and BTU output will vary depending on the type of SWH panel used.

NJ Backs Out of RGGI, Support Remains Strong For NJ SREC Market

Posted May 27th, 2011 by SRECTrade.

Yesterday Governor Chris Christie of New Jersey announced that he would be removing the state from the Regional Greenhouse Gas Initiative (RGGI), a 10-state program intended as a carbon dioxide cap-and-trade program intended to reduce the power sector’s emissions levels of the greenhouse gas 10% by 2018.

The move, according to Governor Christie, seeks to cut state budget costs by eliminating participation in a program that he deemed “a failure”.  The regional program, however, remains backed by the other Northeast states, and the consequences of the New Jersey withdraw to the RGGI market will most likely be nominal.

Most important for solar customers in New Jersey is to understand that Governor Christie’s decision is not connected to the state’s SREC program.  Participation in RGGI does not affect the state’s participation, goals, or support for the SREC market in NJ.  Please see our March post describing Christie’s previous endorsement of the SREC market.

SRECs coming to NY?

Posted May 23rd, 2011 by SRECTrade.

This year’s solar carve-out bill introduced in NY, S4178A-2011, is looking promising.  It was co-sponsored by 8 Republicans, and since the Republicans have only a small majority in the Senate and the Democrats have nearly a supermajority in the NY House, its a good sign, although it’s notoriously difficult to get a bill that even everyone agrees with through the NY legislature.  Gov. Cuomo ran on a strong solar platform so chances are high he will sign any bill that comes to him.  The bill itself is very promising, it starts out with a .33% requirement in 2012, which given the size of NY’s load would catapult them even with NJ in absolute terms for required solar build-out with about a 500,000 MWh requirement in 2012.  It allows the NY Public Service Commission (PSC) to set the alternate compliance (ACP) schedule, but it has a floor mechanism specified at $300 that is nearly identical to Massachusetts, so the ACP will have to be somewhat higher than that.  Overall this is a well-written bill that meets almost all the Effective SREC Market Design criteria outlined in our recent blog post.  As of May 18th it had been amended and recommitted to the Energy and Telecommunications Committee,  so there is plenty of time for those living in New York to contact their legislators regarding the bill.


Effective SREC Market Design

Posted May 13th, 2011 by SRECTrade.

The full text of this post by SRECTrade CEO Brad Bowery can be found on

Since 2004, several U.S. states have designed and implemented markets for Solar Renewable Energy Certificates (SRECs). These markets are intended to serve several purposes in supporting the growth of solar energy within the state. 2010 was a banner year for the SREC concept as solar growth in these 7 markets outpaced the rest of the U.S., turning the East Coast into a focal point for solar companies in California and across the world. No two SREC programs are the same and some markets will fair better than others. Understanding why some markets are successful while others faulter will become increasingly important as other states look to SRECs as the way to incentivize solar.

In 2007, SRECTrade conceived an online marketplace powered by competitive monthly auctions for SRECs. Since launching in New Jersey, the transaction platform has expanded to all 7 key SREC markets, adding Massachusetts, Maryland, Ohio, Delaware, Pennsylvania, and Washington, DC. Through the experience gained developing SREC markets and aggregation services, SRECTrade takes a look at the components of an effective SREC market, the challenges that they face and some recommendations for how to avoid some of the design flaws found in existing SREC programs.

Read the entire post at


Solar Capacity in the SREC States – April 2011

Posted May 4th, 2011 by SRECTrade.

SRECTrade SREC Markets Report: April 2011

The following post outlines the megawatts of solar capacity certified and/or registered to create SRECs in the SREC markets SRECTrade currently serves.


PJM Eligible Systems

As of the end of April, there were 14,598 solar PV (14,344) and solar thermal (254) systems registered and eligible to create SRECs in the PJM Generation Attribute Tracking System (GATS) registry. Of these eligible systems, 52 (0.36%) have a nameplate capacity of 1 megawatt or greater, of which only 3 systems are greater than 5 MW. The largest system, currently located in Ohio, is 12 MW,  and the second largest, located in Chicago and eligible for the PA, DC, and MD markets, is 10 MW. The third largest system, located in NJ, is 5.6 MW.

Massachusetts DOER Qualified Projects

As of April 13, 2011, there were 524 MA DOER qualified solar projects; 467 operational and 57 not operational. Of these qualified systems, 11 (2.1%) have a nameplate capacity of 1 megawatt or greater, of which only 3 are between 1.5 and 2 MW. Three of the projects greater than 1 MW are currently operational.

Capacity Summary By State

The tables above demonstrate the capacity breakout by state. Note, that for all PJM GATS registered projects, each state includes all projects certified to sell into that state. State RPS programs that allow for systems sited in other states to participate have been broken up by systems sited in state and out of state. Additional detail has been provided to demonstrate the total capacity of systems only certified for one specific state market versus being certified for multiple state markets. For example, PA includes projects only certified to sell into the PA SREC market, broken out by in state and out of state systems, as well as projects that are also certified to sell into PA and Other State markets broken out by in state and out of state systems (i.e. OH, DC, MD, DE, NJ). PA Out of State includes systems sited in states with their own state SREC market (i.e. DE) as well as systems sited in states that have no SREC market (i.e. VA). Also, it is important to note that the Current Capacity represents the total megawatts eligible to produce and sell SRECs as of the noted date, while the Estimated Required Capacity – Current and Next Reporting Year represents the estimated number of MW that need to be online on average throughout the reporting period to meet the RPS requirement within each state. For example, New Jersey needs approximately 255 MW online for the entire 2011 reporting year to meet the RPS requirement. Additionally, the data presented above does not include projects that are in the pipeline or currently going through the registration process in each state program. This data represents specifically the projects that have been approved for the corresponding state SREC markets as of the dates noted.