Archive for December, 2011

MA DOER Releases Solar Carve-out ACP Guideline

Posted December 29th, 2011 by SRECTrade.

On December 28, 2011, the Massachusetts Department of Energy Resources (DOER) announced that after reviewing the public comments on the suggested 10-year Forward Schedule for the Solar Alternative Compliance Payment (SACP or ACP) rate, they published a guideline to establish the 10-year rolling ACP rate schedule. This guideline will act as an interim step to implement permanent regulatory change. The DOER will be working to revise the existing regulations to implement the new ACP schedule into the Solar Carve-Out program. It will replace the existing ACP rules that provided the DOER the discretion to reduce the ACP on an annual basis.

The DOER noted the following in its release:

“DOER recognizes the importance for project developers and project financers, along with retail electric suppliers with compliance obligations, to have greater certainty of the ACP Rate further into the future.  Additional certainty is expected to enhance parties’ abilities to estimate expected SREC revenue streams and to facilitate project financing and negotiations for long-term contracts for SRECs.  The ACP rate must be sufficient to ensure sufficient project profitability to stimulate market growth to meet the program goals, but avoid unnecessary costs to ratepayers”

DOER recognizes the importance for project developers and project financers, along with
retail electric suppliers with compliance obligations, to have greater certainty of the ACP Rate
further into the future.  Additional certainty is expected to enhance parties’ abilities to estimate
expected SREC revenue streams and to facilitate project financing and negotiations for long-term
contracts for SRECs.  The ACP rate must be sufficient to ensure sufficient project profitability to
stimulate market growth to meet the program goals, but avoid unnecessary costs to ratepayer

The ACP schedule to be implemented is at the values initially proposed. The table below outlines the schedule. Over the course of the 2012 and 2013 compliance periods, the rate will stay set at $550 per SREC and decline by 5% per year thereafter. Additionally, by January 31 of each year, the DOER will announce the new 10th year price in order to maintain a complete 10 year schedule at all times.

MA SACP Schedule 8_2_11

Solar Capacity in the SREC States – December 2011

Posted December 28th, 2011 by SRECTrade.

SRECTrade SREC Markets Report: December 2011

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

A PDF copy of this table can be found here.

Capacity_December2011

PJM Eligible Systems

As of the end of December, there were 20,967 solar PV and 252 solar thermal systems registered and eligible to create SRECs in the PJM Generation Attribute Tracking System (GATS). Of these eligible systems, 95 (0.45%) have a nameplate capacity of 1 megawatt or greater, of which 10 systems are greater than 5 MW. The largest system, currently located in New Jersey, is 18.3 MW, and the second largest, located in Ohio is 12 MW. The third largest system, at 11.2 MW, is located in Delaware.

Delaware: The reporting year 2011-12 (6/1/11 – 5/31/12) requirement for DE equates to approximately 23,700 SRECs being retired. If all retired SRECs were of DE2011-12 vintage, approximately 19.8 MW would need to be operational all year long. As of December 27, 2011, 25.5 MW of solar capacity was registered and eligible to create DE SRECs in PJM GATS. 11.2 MW of the 25.5 MW currently eligible is from the Dover Sun Park project developed by LS Power. In the 2011-12 compliance year, Delmarva Power has contracted to purchase 9,846 SRECs from the project, of which 7,000 are being held by the Sustainable Energy Utility (SEU) until 2015-16*. As of January 3, 2012, PJM GATS reported the issuance of approximately 13,560 DE2011-12 vintage SRECs. Additional SRECs from prior eligible periods may also impact the market should there be a demand for these older vintage SRECs.

DE Chart

Maryland: Maryland’s 2011 Solar RPS target requires approximately 33,160 SRECs to be retired. To meet this using only 2011 vintage SRECs, approximately 27.6 MW would need to be operational all year long. As of December 27, 2011, 62.0 MW of solar capacity was registered to create MD eligible SRECs. 37.8 MW of this capacity was sited in the state of MD. The RPS currently requires electricity suppliers to acquire SRECs from in-state sited solar systems before looking to outside systems. As of January 3, 2012, PJM GATS reported the issuance of approximately 29,000 MD2011 SRECs from MD sited systems. There are also MD sited SRECs available from prior eligible periods, which could be utilized for compliance needs in 2011.

MD Chart

New Jersey: The New Jersey 2012 reporting year requires 442,000 SRECs to be retired. This equates to approximately 368 MW of capacity being operational all year long. As of December 27, 2011, 483.2 MW of solar capacity was registered and eligible to create NJ SRECs in PJM GATS. While this figure represents all projects registered in GATS, there are recently installed projects awaiting issuance of a New Jersey state certification number. This delay results in a portion of installed projects not yet represented in the 483.2 MW figure. As of November 30, 2011 the NJ Office of Clean Energy (NJ OCE) reported that 531.7 MW of solar had been installed in NJ. As of January 3, 2012, PJM GATS reported the issuance of approximately 240,800 NJ2012 SRECs.

NJ Chart_v2

Ohio: Ohio’s 2011 RPS solar target requires approximately 46,940 SRECs to be retired by the end of the compliance period. At least 50% of the SREC requirement must come from systems sited in the state. As of December 27, 2011, 29.0 MW of in-state capacity and 68.0 MW of out-of-state capacity were eligible to generate OH SRECs. Additionally, as of January 3, 2012, GATS issued approximately 28,180 in-state and 60,580 out-of-state OH2011 eligible SRECs. Additional SRECs from prior years are also eligible for the current compliance period, which may impact the current year’s requirements.

OH Chart

Pennsylvania: The reporting year 2012 requirement for PA equates to retiring approximately 49,450 eligible SRECs. If all compliance obligations were met using 2012 vintage SRECs, approximately 41.2 MW would need to be operational all year long. As of December 27, 2011, 158.3 MW of solar capacity was registered and eligible to create PA compliant SRECs. As January 3, 2012, PJM GATS reported the issuance of approximately 93,370 PA2012 SRECs. Given the oversupply during previous reporting years, there are also SRECs from the 2010 and 2011 reporting years eligible for the PA2012 compliance period.

PA Chart

Washington, DC: DC’s 2011 RPS amended solar target requires approximately 48,220 SRECs to be retired by the end of the compliance period. The figures displayed above demonstrate the capacity of systems eligible to create DC SRECs moving forward. These SREC and capacity figures do not take into consideration the amount of electricity delivered into the district that may be exempt from complying with the Distributed Generation Amendment Act increases, considering some electricity contracts may have been signed prior to the amendment’s implementation. As of December 27, 2011, 21.7 MW of capacity was eligible to generate DC SRECs. Additionally, as if January 3, 2012, GATS issued approximately 21,800 DC2011 eligible SRECs. SRECs from prior years are also eligible for the current compliance period, which may impact the current year’s requirements.

DC Chart

Massachusetts DOER Qualified Projects

As of December 22, 2011, there were 1,264 MA DOER qualified solar projects; 1,244 operational and 20 not operational. Of these qualified systems, 11 (0.9%) 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. Electricity suppliers providing power to the state need to acquire approximately 62,900 SRECs in 2011. Through the Q2 2011 issuance period (10/15/11), 9,499 SRECs have been minted. The Department of Energy Resources (DOER) projects approximately 29,000 SRECs to be generated this year, leaving the market short approximately 33,900 SRECs. The next issuance period for Q3 2011 SRECs will be on January 15, 2012.

MA Chart

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 368 MW online for the entire 2012 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.

*Source: State of Delaware Pilot Program For the Procurement of Solar Renewable Energy Credits: Recommendations of the Renewable Energy Taskforce

Note: SREC requirements for markets without fixed SREC targets have been forecast based based on EIA Report updated 11/15/11 “By End-Use Sector, by State, by Provider”. Projected SRECs required utilizes the most recent EIA electricity data applying an average 1.5% growth rate per forecast year. The state’s RPS Solar requirement is then multiplied by forecast total electricity sales to arrive at projected SRECs required. Projected capacity required is based on a factor of 1,200 MWh in PJM states and 1,130 MWh in MA, generated per MW of installed capacity per year.

End of year installation rush amid repeat of 1603 concerns

Posted December 13th, 2011 by SRECTrade.

The 1603 Grant Program is set to expire on December 31st 2011, prompting a rush of end-of-year installations and a strong industry push to extend the program for another year. The  Treasury Department’s, 1603 Program is a 30% grant on the cost of renewable energy systems. The Program was created after the financial crisis in 2008 when it was difficult to find tax equity investors to take advantage of tax incentives like the federal Investment Tax Credit (ITC). In order to qualify for 1603 Grant funds projects must have invested 5% of the cost of the system prior to 12/31/11 or have done “physical work” on the project, prompting a surge in end-of-year equipment purchases and contract negotiations. It’s unclear if the program will be extended and many solar developers are not taking chances. The necessity of the 1603 Grant and uncertainty about its future is the likely culprit responsible for the recent surge in solar installations in NJ despite, the crash in SREC prices from $640 this spring to $225 this month.

This is not the first time that the solar industry has seen a 1603 driven end-of-year rush to go solar. The program was set to expire on 12/31/10, but was extended at the last minute after heavy industry pressure. Visit SEIA for more information on the 1603 Program and how you can support its extension.

New York Solar Jobs Coalition Sets Aggressive Targets

Posted December 7th, 2011 by SRECTrade.

Solar industry representatives in New York are teaming up with organized labor and other environmental advocacy groups to put forth ambitious goals to build a sustainable solar industry in the Empire State. The organizations collectively form the New York Solar Jobs Coalition, and their agenda goes beyond just getting more solar power tied to the grid. The proposal supports strong labor protection and wage laws for solar industry jobs to attract a skilled workforce that will create a more independent energy infrastructure.

New York has been slow to implement solar targets for their energy sector, lagging behind neighboring states New Jersey, Massachusetts, and Pennsylvania. Now, the Solar Jobs Coalition is calling for a program that will install 5,000 megawatts (MW) of solar power, or roughly 3% of the state’s energy portfolio, over a 15-year period. With the benefit of observing other state-based solar industries, the Coalition is wisely tying these targets to strong workforce standards that ensure efficient, quality work.

“Here in New York, we want to be able to do this work in a way that is cost efficient and that we attract the people with the highest skill,” stated Denis Hughes of the AFL-CIO in a local public radio interview last week.

The legislation supported by the Coalition would create an SREC market that differs from other neighboring states as well. The new SREC market would support distributed generation from residential and small commercial systems by requiring a minimum of 20% of eligible SRECs to come from systems under 50 kW. To attract financing, particularly for large-scale projects, utilities would be required to offer long-term contracts for periods up to 15 years, subject to negotiation for exact length and pricing. The one potential weakness of the proposed legislation is that it does not set a non-compliance penalty, or ACP, that would push buyers into the market and set a price ceiling for the SRECs.

Leaning on Governor Cuomo and state legislators, the Coalition predicts their proposal will build a $20 billion industry to New York while increasing the state’s  energy independence and reducing its carbon footprint. The Coalition has garnered support from national and state chapters of solar industry representatives, organized labor, and environmental advocacy groups.

Rhode Island National Grid Seeks Standard Contracts

Posted December 7th, 2011 by SRECTrade.

National Grid Rhode Island is currently procuring applications for standard contracts from eligible Distributed Generation projects. The enrollment started on December 1, 2011 at 9am EPT, and will close on December 14, 2011 at 5pm EPT. The contracts will last for 15 years, and will cover a total of 5MW of capacity, with 1.5 MW allocated to wind and 3.5 to solar in the following distribution and ceiling price.

2011 Class Nameplate 2011 Target(kW) Nameplate 2011 Ceiling Price (cents/kWh)
Solar-PV: 10-150 kW 0.5 MW 33.35
Solar-PV: 151-500 kW 1.0 MW 31.60
Solar-PV: 501-5,000 kW 2.0 MW 28.95
Wind 1.5 MW 13.35

In order to be eligible for this procurement, systems must

  • Be an electric generation unit that uses exclusively an eligible renewable energy resource (as defined under R.I.G.L S39-26-5  and section 5 of the rules and regulations governing the implementation of a renewable energy standard)
  • Neither have begun operations, nor completed financing for construction
  • Be located in the Narragansett Electric Company ISO-NE load zone
  • Not have a nameplate capacity greater than 5MW
  • Be connected to the electric distribution company’s power system.

In addition, project owners must have submitted an Interconnection application and have a completed Feasibility or Impact study as defined in the Rhode Island Distributed Generation Interconnection Act and The Narragansett Electric Company Standards for Connecting Distributed Generation.

A performance guarantee deposit will have to be paid at the time of execution of the contract. It will be assessed based on $15.00 per REC for small distributed generation projects (<500kW), and $25 per REC for large distributed generation projects (>500kW) estimated to be generated per year. The total sum will be no lower than $500 and not more than $75,000. Should the distributed generation facility not produce the output proposed in its enrollment application within (18) months of contract execution, the contract will be voided automatically, and the performance guarantee deposit forfeited.

For facilities that are also being employed for net metering, a proposal may be submitted to sell the excess output from the project. In this case, the class in which the project belongs is determined by total project size, not the excess output offered.

The project must obtain qualification as a renewable resource as per Rhode Island’s Renewable Energy Standard, and must register with NEPOOL-GIS. Once qualified, National Grid must be designated to receive all the RECs produced by the project through NEPOOL-GIS.

More information and the application forms can be found on the National Grid Procurement Website.

Hearing on Pennsylvania SREC Bill (HB 1580) delayed again

Posted December 7th, 2011 by SRECTrade.

A critical Pennsylvania House Consumer Affairs Committee hearing on the Pennsylvania Solar Jobs Bill (HB 1580) scheduled for Thursday, December 8th was delayed again, according to a news flier sent out by the Pennsylvania advocacy group PennFuture. This is the 2nd time that the hearing has been delayed in as many weeks. According to the PennFuture flier, the bill hearing was delayed due to a death in Committee Chair Rep. Godshall’s family. No reschedule date has been announced yet.

Governor Christie backs solar in New Jersey’s final 2011 Energy Master Plan (EMP)

Posted December 7th, 2011 by SRECTrade.

Governor Christie’s administration has released the 2011 Energy Master Plan, which can be viewed in its entirety here.  The Plan is generally positive for the stability of NJ SREC markets, and signals overall support by the Governor’s Office for solar in NJ.  The plan specifically lists support for the following:

1. Accelerate the RPS:

A temporary acceleration of the RPS would provide some interim relief for the current market in SRECs and an opportunity for the industry to adjust. This acceleration would require increasing the RPS over the next three years and reducing the outlier years of the RPS schedule to minimize the impact to ratepayers.”

and

2. Give preference to smaller, distributed projects:

Projects that offer a “dual benefit” should take priority for approval and any legislative expansion of SREC eligibility by modifying the definition of “distribution system” should also provide the BPU with the ability to review and approve subsidies for grid-supply projects to ensure compatibility with land use, environmental and energy policies. Additionally, the development of solar projects should not impact the preservation of open space and farmland.

We read that second bullet as support for giving the BPU the ability to manage large utility scale projects so that they don’t flood the SREC market.

Other interesting points include support for extending Electric Distribution Company contracting programs and support for a requirement to set up a supply queue that will give the market insight into pipeline of future non-residential systems.

The Governor also calls for reducing the Solar Alternative Compliance Payment (SACP) schedule to minimize impact of the previous changes to ratepayers.  This seems to be a reasonable concession on the part of SREC sellers, especially given that the current oversupply situation makes the SACP irrelevant.

The EMP by itself does not make policy or change the current NJ renewable portfolio standard.  However, it does signal the Governor’s position on any legislation that he may be asked to sign that would change the portfolio standard law, like Assembly Bill 4226 which contains many of the items listed in the EMP.

The EMP process itself has been illuminating, revealing a Governor’s office that is responsive to stakeholder input and seems to be responsive to data over dogma.  The draft EMP released earlier in the year was far less positive toward solar, however over several public meetings and hundreds of public comments the Governor’s office heard a great deal about the impact of solar on jobs and NJ’s energy supply.  The final Plan reflects much of this input and is a very different document from the draft.

Overall, the 2011 EMP indicates that the Governor supports solar, but he isn’t willing to write the industry a blank check.  The solar industry will need to continue to prove it’s value to New Jersey, and as long as it continues to do so it appears to have the support of Governor Christie.

 Accelerate the RPS
A temporary acceleration of the RPS would provide some interim relief for the current market in
SRECs and an opportunity for the industry to adjust. This acceleration would require increasing
the RPS over the next three years and reducing the outlier years of the RPS schedule to minimize
the impact to ratepayers.

December 2011 SREC Auction Results

Posted December 2nd, 2011 by SRECTrade.

SRECTrade’s December 2011 SREC Auction has closed. Below are the clearing prices at which SRECs traded this month.

December SREC Prices Energy Year Ending
State 2010 2011 2012*
Delaware $60.00 $60.10
Maryland In-State $210.00
Maryland Out-of-State
Massachusetts $530.00
New Jersey $225.00 $225.00
Ohio In-State $370.00
Ohio Out-of-State $30.00 $30.00
Pennsylvania $20.00 $10.00 $18.00
Washington, DC $176.00 $201.00

Notes:
*Delaware, New Jersey and Pennsylvania operate on a June-May energy year.
Green text represents a price increase over the last auction clearing price for that vintage, red text represents a decrease.
“-” reflects no sale, which would result if there were no matching bids and offers that cleared for a sale in the auction.

State Market Observations:

Please note, all capacity references are from the latest SRECTrade capacity analysis and reference the amount of supply registered as of the end of November. Additional details regarding SREC issuance are provided in the capacity analysis.

Delaware (Supply: 22.8 MW | Demand: 19.5 MW): Legislation increasing the SREC requirement went into effect this past June but the market has yet to pick up in response. The Delaware PSC approved the SREC Procurement Pilot Program for long term contract solicitations. Meanwhile, the SREC market will likely pick up at the end of the energy year when electricity suppliers are more active.

Maryland (In-State Supply: 33.5 MW | Demand: 26.9 MW): SRECs increased 5.0% in value to $210 this past auction period. The state seems on pace to maintain a balanced supply relative to demand for the compliance year. As 2011 comes to an end, a shortage of SRECs in the state, if any, will be reflected by an increase in prices at the end of the trading period in the first quarter of 2012. Out-of-state SRECs continue to be a non-factor in Maryland.

Massachusetts (Operational Supply: 30.9 MW | Demand: 55.7 MW): Mass SREC values declined slightly to $530, from $535, in the December 2011 auction. Volume during this period was lower as most supply traded in the auction post the Q2 2011 issuance on October 17, 2011. The next big quarterly MA SREC auction will close on Monday, January 16, 2012.

New Jersey (Supply: 448 MW | Demand: 368 MW): The 2012 market stayed flat at $225 this trading period. Oversupply continues to grow as the state has averaged 27.1 MW installed per month since the beginning of the compliance period. Estimates for October 2011 are forecast at approximately 44 MW. For a more in depth look at New Jersey’s capacity and SREC issuance see this post.

Ohio (In-State Supply: 27.7 MW  Out-of-State Supply: 61.3 MW | Demand: 37.7 MW) : In-State SRECs dropped 2.5% to $370/SREC. The out-of-state SREC market saw activity, but declined in value from $55/SREC to $30/SREC.

Pennsylvania (Supply: 152.0 MW | Demand 40.4 MW): PA2011 SRECs stayed flat at $10/SREC and PA2012 declined from prior periods to $18/SREC. HB 1508 was recently introduced to address the state’s SREC market. This marks the beginning of a long process to rescue the PA SREC market. Until then, SRECs will continue to bottom out.

Washington, DC (Supply: 21.5 MW | Demand: 41.9 MW): Prices continue to increase as new legislation closing the DC market borders and increasing requirements take effect on the market.

For historical pricing please see this link. The order window for the January 2012 auction will close on Friday, January 6, 2012 at 5:00 p.m Eastern. For more information, please visit www.srectrade.com.