Archive for March, 2012

Delaware Pilot SREC Procurement Program

Posted March 30th, 2012 by SRECTrade.

SRECTrade was recently awarded the contract to administer the Delaware Pilot SREC Procurement Program on behalf of the Delaware Sustainable Energy Utility (SEU) and Delmarva Power. Since receiving the contract we’ve put up a website to answer questions about the program and to accept applications for the solicitation. An overview powerpoint and webinar recording can be viewed by clicking here.

This is the first essentially state-wide SREC program to take such a long-term approach to SREC contracts. Regulators and industry observers are eager to see how this “pilot” solicitation is reviewed. Should the “pilot” be deemed successful it is likely that the SEU will hold yearly solicitations for SREC contracts.

With the Pilot SREC Procurement Program, the  SEU and Delmarva have formed a partnership to provide stable, long-term pricing (20-year contracts) for a finite amount of SRECs from systems that are accepted into the program. Among the eligible systems for the program, preferential selection and pricing  is given to systems installed with Delaware parts and/or labor. Systems under 250 kW (DC) nameplate capacity apply into a lottery solicitation, whereas systems that are greater than 250 kW (DC) must apply through a competitive bid process.  The solicitation will likely be over-subscribed with applications from among the many eligible, in-state systems. Solar systems that are not successful in the solicitation will still be able to transact SRECs outside of the Delmarva program, and could remain eligible for future solicitations or this program.

Key items

  • DE-sited solar systems interconnected on or after 12/1/2010 are eligible.
  • Systems must have online monitoring.
  • Systems that received funding from a public source other than the Federal Investment Tax Credit and DE Green Energy Program are ineligible.
  • 4/2/2012 – Solicitation opens.
  • 4/6/2012 – Solicitation will stay open at least until this date for systems <250 kW (DC) capacity, but could stay open if not all capacity is filled.
  • 4/13/2012- Solicitation closes for systems >250 kW (DC).
  • 4/23/2012 – Results announced.
  • US-China Trade Dispute Update

    Posted March 23rd, 2012 by SRECTrade.

    Back in January we put up a blog post on the US-China solar module trade dispute.  The schedule of events has changed somewhat since the January posting. SolarWorld, a German-owned, module manufacturing company with operations in Oregon asked the Department of Commerce (DOC) and the United States International Trade Commission (USITC) to investigate the fairness of subsidies provided to Chinese manufacturers by the Chinese government. The complaint set in motion two types of investigations. The first is a countervailing duty investigation (CVD and the second is an anti-dumping (AD) investigation. On Tuesday, 3/20/12, the DOC levied tariffs on crystalline silicon modules produced in China of between 2.9 and 4.37 percent. On May 17th, the DOC is scheduled to issue a finding on the AD investigation. It’s possible that the AD ruling by the DOC will be for additional tariffs.

    The CVD tariffs specifically discuss Suntech and Trina solar. With Trina modules receiving the highest tariff and Suntech modules a lower tariff than the rest of the solar products impacted by the ruling. Click here for an official DOC summary of its CVD ruling.

  • Trina- 4.73%
  • Suntech- 2.9%
  • All others- 3.59%
  • Click here for additional analysis of the ruling written by James Montgomery of Renewable Energy World, an online renewable energy forum.

    Maryland Proposes New Solar Legislation

    Posted March 22nd, 2012 by SRECTrade.

    For a PDF copy of this analysis please click here: Maryland Proposes New Solar Legislation

    In February 2012, the Maryland legislature introduced legislation that directly impacts the MD solar industry. Two sets of legislation are proposed. The first set, House Bill 1187 (HB1187) and Senate Bill (SB791) seek to adjust the solar goals outlined in the MD Renewable Portfolio Standard (RPS). The second set House Bill 864 (HB864) and Senate Bill 595 (SB595) propose adjustments to the state law to allow for “Community Solar.”

    In order for either sets of legislation to be signed into law, both the House and Senate versions must be passed and a final bill signed by the Governor. We detail both sets of legislation below.

    Maryland RPS Adjustment

    Companion bills HB1187 and SB791, pull forward the percentage requirement of the solar portion of the MD RPS, reaching its 2.0% solar target in 2020 instead of 2022. In addition to pulling the RPS % forward, the percentage requirements in the interim, beginning in 2013, would also increase.

    The chart below demonstrates the existing RPS % versus the proposed percentage requirements under HB1187/SB791.

    MD Solar RPS Current vs. HB1187

    While the overall MD RPS solar goal does not change under HB1187/SB791, the amount of SRECs required increases in each of the interim years beginning in 2013 (SREC requirements are directly tied to the RPS % requirements). These increases could have a positive impact on SREC pricing if the market is unable to develop the needed supply during these future periods. Although the increases are meaningful (especially in the later years, see charts below), large projects such as First Solar’s20 MW Hagerstown, MDproject and Constellation Energy’s16.1 and 1.3 MW Emmitsburg, MDprojects can still substantially impact the SREC market.

    Current vs. Proposed and Additional

    As of March 7, 2012,PJM GATS reported 41.8 MWof operational MD eligible capacity. Under the existing MD2012 RPS requirements, Maryland needs an average of 56.1 MW operational all year long, or 67,310 SRECs. Additionally, any left-over supply from 2010 and 2011 also can be used to meet MD2012 compliance requirements. Given continued development in the state, which has averaged approximately 2.3 MW/month over the last 12 months (LTM), and the larger projects noted above, the increase in capacity as proposed by HB1187 and SB791 would help absorb continued solar build out.

    Maryland could expect to see approximately 102.2 MW of operational capacity at the beginning of 2013. This figure takes into consideration the online capacity as of 3/7/12, the impact of the Constellation and Maryland Solar projects (assumed to be fully operational by the end of 2012), and continued development at the same pace as the LTM period. The table below demonstrates how our estimated 2013 beginning balance capacity compares to the number of SRECs required under the current 2013 RPS requirements versus the proposed requirements under HB1187/SB791.

    estimated 2013 beginning balance

    Where Does HB1187/SB791 Currently Stand?

    Earlier this week, HB1187, the House version of the bill, was heard in the House Economic Matters committee. A couple panels with industry analysts and regional installation professionals presented their thoughts on the impact of pulling forward the Solar RPS requirements. After the reading and the presentations, the bill was unanimously passed out of committee.

    It is expected that the House bill will reach the floor for final vote later this week or early next week. Additionally, the Senate bill needs to be heard in the Senate Finance Committee before it can make it to the floor of the Senate. Should both sides of the legislature vote in favor of the bills, the final step would be to have it sent to Governor O’Malley to be signed into law.

    Community Energy Bills HB864/SB595

    In addition to HB1187/SB791, there are 2 bills in the MD House and Senate,HB864andSB595, which provide guidelines and regulations for investing, operating, and participating in the usage of electricity generated from shared community energy generation facilities. While Annapolis insiders suggest that these “community solar” bills have a way to go before they are implemented, important initial legwork is being completed to make community solar projects feasible. The highlights of the current versions of the bills include:

    – Defining that community energy-generating facilities and their subscribers or subscriber organizations are not considered Electric Companies or Electricity Suppliers

    – Provides a frame work for crediting generated electricity to the subscribers of the facility

    – Outlines who can be a qualified project owner

    – Explains how energy not fully allocated to users of the project’s electricity will be credited/purchased as wholesale electricity

    – Implements nameplate megawatt capacity caps, currently 2 MW, on projects that participate in a community energy project structure

    SRECTrade will continue to keep a close eye on the legislative process across these bills and provide updates as they become available.

    Massachusetts SREC Market Update – March 2012

    Posted March 16th, 2012 by SRECTrade.

    For a PDF copy of this analysis click here: Massachusetts SREC Market Update – March 2012

    The MA2012 SREC compliance year began in January 2012. There has been a lot of attention on the Bay State’s solar carve-out program and installation activity continues to pick up. A substantial under supply in 2010 and 2011 vintages resulted in SRECs pricing just shy of the alternative compliance payment (ACP). Moving forward many stakeholders are closely watching how supply will impact 2012 and future period valuations. The analysis below takes a look at current capacity levels and provides some insight into how the market may shape up in 2012.

    As of March 6, 2012, the MA Department of Energy Resources (DOER) posted updated total qualified solar capacity figures. The DOER noted that due to a delay from MassCEC, the entity that approves all renewable projects in the Commonwealth, the project-level details of the total qualified capacity is not yet available. As of this writing, the DOER was still awaiting the information from MassCEC and noted an updated report would be published when available.

    MA Chart

    The total qualified capacity noted as of the update is as follows:

    – Total Qualified Capacity (3/6/12): 63.6 MW (1,704 projects)
    – Total Operational Capacity (3/6/12): 52.6 MW (1,671 projects)
    – Total Operational Capacity (1/1/12): 48.3 MW (1,595 projects)

    Based on the historic capacity that has come online since December 2010, below is some analysis demonstrating capacity that could be expected to come online throughout the 2012 compliance period.

    Historic Capacity 3_15_12

    The table above demonstrates the amount of operational capacity as reported by the DOER based on the dates indicated. Note, these figures are (and were) readily available on the DOER’s public website.  Looking at the last 12 DOER reported periods (which we’ll refer to as Last Twelve Months, or LTM for our purposes), the average MW added per month was just above 4.0 MW.

    Using the January 1, 2012 starting capacity of 48.3 MW and the March 6 operational capacity of 52.6 MW, we have inferred that on average 2.2 MW became operational in January and February 2012. The analysis below demonstrates 3 cases. In each case, a different capacity scenario is presented based on the average amount of added capacity over the LTM. Case 1 assumes only half of the LTM average capacity is added per month; Case 2 assumes the same amount of LTM average capacity is added per month; and Case 3 assumes two times the amount of LTM average capacity is added per month. Note, these forecast figures were derived simply based on historic rates. The figures do not take into consideration the amount of capacity currently in the interconnection pipeline. Many factors can impact these figures, including the timing associated with interconnection, changes in federal incentive policies, and pricing and liquidity in the MA SREC forward market, to name a few.

    Forecast MA Capacity 3_15_12

    *Note the Estimated Production Factor per Period is based on a 1.13 MWh per installed kW per year adjusted for seasonal impacts.

    The 3 cases presented herein demonstrate a market that is slightly undersupplied (Case 1), a market that is slightly oversupplied, or almost flat (Case 2), and a market that is oversupplied by approximately 30% (Case 3). Also, it is important to note that expected volume in each case presented could change if the roll out of additional capacity is not evenly disbursed. Depending on each scenario, SREC prices will adjust accordingly.

    Through the Q3 2011 issuance period (1/15/12), 19,257 MA2011 SRECs have been minted. Additionally, more than 7,000 MWh have been reported to the PTS during Q4 2011. The Department of Energy Resources (DOER) projects approximately 29,000 SRECs to be generated in 2011, leaving the market short approximately 33,900 SRECs. As a result of this substantial undersupply, MA2011 SRECs have traded close to the 2011 ACP value of $550/SREC. In recent trading, the MA2012 market has priced at approximately 65% of MA2011 spot prices. Additionally, bidding for multi-year forward contracts beginning with 2012 delivery is currently below the Solar Credit Clearinghouse Auction price.

    Projects Installed by Size Category

    Given the relatively smaller MW capacity requirements in the early stages of the MA SREC program, the installation of larger scale (>1 MW) projects can easily have a substantial impact on the SREC requirements. Looking at the various cases presented above, they demonstrate that the installation of enough >1 MW projects could easily tip the market into oversupply. Additionally, it is possible that commercial size projects ranging from 100kW to 500kW could have an impact as well. While >1 MW projects quickly meet the 2012 requirements, many of these projects take much longer to come to fruition. The design, interconnection, construction, and financing processes for these projects can take several months. Installers and developers in MA have recently noted that smaller, multi-100kW commercial projects are much faster from inception to power generation. It is common that these projects are financed using all equity capital or debt sourced from an existing banking relationship established and backed by a corporate entity’s balance sheet. Considering these factors, it is very possible the multi-100kW size category will have a meaningful impact on the MA2012 SREC market.

    The table below analyses various size categories of systems and the number of projects installed and how these categories grew from DOER reported data as of July 11, 2011 vs. January 25, 2012.

    Project Categories 3_15_12

    As demonstrated above, both the residential (<50kW) and commercial (>50 kw to 500kW) categories grew at substantial rates during the periods presented. Given these historic growth rates and the amount of current solar development interest in MA, it is expected that we will continue to see more growth in these size categories throughout 2012.

    The final MA2011 issuance period for Q4 2011 SRECs is April 15, 2011. The first MA2012 spot trades will commence after the Q1 MA2012 issuance period on July 15, 2012.

    Solar Capacity in the SREC States – February 2012

    Posted March 8th, 2012 by SRECTrade.

    SRECTrade SREC Markets Report: February 2012

    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.

    Renewable Generators in GATS 3_7_12

    PJM Eligible Systems

    As of this writing, there were 23,036 solar PV and 272 solar thermal systems registered and eligible to create SRECs in the PJM Generation Attribute Tracking System (GATS). Of these eligible systems, 133 (0.57%) have a nameplate capacity of 1 megawatt or greater, of which 14 systems are greater than 5 MW. The largest system, the PSE&G utility pole mount project located in New Jersey, is 25.1 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 March 7, 2012, 27.1 MW of solar capacity was registered and eligible to create DE SRECs in PJM GATS. 11.2 MW of the 27.1 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 March 8, 2012, PJM GATS reported the issuance of approximately 17,300 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 compliance requirements are currently being finalized. The 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. The MD Public Services Commission recently announced that enough solar facilities were connected to the Maryland electric grid to satisfy the 2011 Solar RPS requirements with MD sited SRECs. The end of February marked the first issuance period of MD2012 SRECs in PJM GATS. As of March 7, 2012, 41.8 MW of MD sited solar capacity was registered to create MD eligible SRECs. 2012 Solar RPS requirements are estimated at 56.1 MW or approximately 67,310 SRECs. As of  March 8, 2012, PJM GATS reported the issuance of approximately 2,340 MD2012 SRECs. Additionally, all out of state MD systems are no longer eligible to produce MD certified SRECs and their MD certification numbers have been removed from their systems in PJM GATS. Lastly, there are MD sited SRECs available from prior eligible periods, which could be utilized for compliance needs in 2012.

    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, assuming all requirements were met with current vintage year SRECs. As of March 7, 2012, 637.1 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 637.1 MW figure. As of January 31, 2012 the NJ Office of Clean Energy (NJ OCE) reported that 649.2 MW of solar had been installed in NJ. Additionally, preliminary figures from the NJ OCE estimate another 39 MW installed in February 2012, totaling 689 MW of capacity. As of March 8, 2012, PJM GATS reported the issuance of approximately 327,000 NJ2012 SRECs.

    NJ Chart

    Ohio: Ohio’s 2012 RPS solar target requires approximately 95,300 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 March 7, 2012, 44.0 MW of in-state capacity and 81.3 MW of out-of-state capacity were eligible to generate OH SRECs. A large increase of in state capacity recently came from a 9.8 MW project sited at the Campbell Soup facility in Napoleon, OH. As of March 8, 2012, GATS issued approximately 1,904 in-state and 4,485 out-of-state OH2012 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 March 7, 2012, 182.0 MW of solar capacity was registered and eligible to create PA compliant SRECs. As of March 8, 2012, PJM GATS reported the issuance of approximately 115,700 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 2012 RPS amended solar target requires approximately 61,180 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 March 8, 2012, 23.1 MW of capacity was eligible to generate DC SRECs. Additionally, as of March 8, 2012, GATS reported the issuance of approximately 1,320 DC2012 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

    For a additional analysis on the current state of the MA SREC market see the following post published on March 16, 2012: Massachusetts SREC Market Update – March 2012

    As of March 6, 2012, there were 1,704 MA DOER qualified solar projects; 1,671 operational and 33 not operational. Total qualified capacity is 63.6 MW, 52.6 of which is operational and 11.0 not operational. Electricity suppliers providing power to the state need to acquire approximately 62,900 and 73,400 SRECs in 2011 and 2012, respectively. Through the Q3 2011 issuance period (1/15/12), 19,257 SRECs have been minted. Additionally, more than 7,000 MWh have been reported to the PTS during Q4 2011. The Department of Energy Resources (DOER) projects approximately 29,000 SRECs to be generated in 2011, leaving the market short approximately 33,900 SRECs. The next issuance period for Q4 2011 SRECs will be on April 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.