Archive for August, 2013

New Jersey SREC Market Webinar (Thursday, 9/12 at 2 p.m. Eastern)

Posted August 26th, 2013 by SRECTrade.

On Thursday, September 12th at 2 p.m. Eastern, SRECTrade will host a webinar covering the New Jersey SREC market. Registration for the webinar is open to anyone, but the focus will be on providing market information to commercial and institutional market participants.

Register for the webinar by clicking this link:

About the speakers

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Steven Eisenberg is the Vice-President of Business Development. Steven has been with SRECTrade since 2010 and is responsible for starting and managing SRECTrade’s growing brokerage and institutional SREC asset management business units.
Alex mug
Alex Sheets comes to SRECTrade from SunEdison. As SRECTrade’s Director of Environmental Markets, Alex assists buyers and sellers in originating, executing, and negotiating SREC transactions in the over the counter markets.
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Sam Rust is the Director of Business Development and Channel Operations, a role he has been in since 2011. Sam focuses on working with SRECTrade’s installer partners and commercial clients.

SRECTrade SREC Markets Report: July 2013

Posted August 19th, 2013 by SRECTrade.

SRECTrade SREC Markets Report: July 2013

The following post is a monthly update outlining the megawatts of solar capacity certified to create SRECs in the Solar REC markets SRECTrade serves. All PJM data is based on the information available in PJM GATS as of the date noted. All MA data is based on the information provided by the DOER as of the date noted. This analysis does not include projects that are not yet registered and certified with the entities noted herein.

A PDF copy of this table can be found here.

Capacity_July2013 copy (1)

Overview of PJM Eligible Systems

As of August 7, 2013 there were 36,732 solar PV and 734 solar thermal systems registered and eligible to create SRECs in the PJM Generation Attribute Tracking System (GATS). Of these, 249 (0.66%) have a nameplate capacity of 1 megawatt or greater. Twenty-seven of these projects have a nameplate capacity of 5 MW or greater (unchanged from the last few months). New Jersey continues to host most of the larger scale facilities, claiming home to 63.0% of the projects, 17 of 27 facilities, that are equal to or greater than 5 MW. The three largest projects are a 29.1 MW FirstSolar project in MD, the 25.1 MW PSE&G utility pole mount project located in NJ, and the 16.1 MW Mount St. Mary’s project in MD.

NJ Office of Clean Energy Estimated Installed Capacity Through 7/31/13: On August 13, 2013, the New Jersey Office of Clean Energy announced total installed solar capacity reached 1,105.9 MW; an increase of approximately 12 MW over June’s total capacity.

Massachusetts DOER Qualified Projects

As of June 28, 2013, there were 6,326 MA DOER qualified solar projects; 6,165 operational and 161 not operational. Total qualified capacity is 401.9 MW; 221.6 MW of which is operational and 180.3 MW is not operational under the current 400 MW SREC program. Also on July 12, 2013, the MA DOER published a new Pending SQA list demonstrating the projects that are currently under review for a statement of qualification under the current solar carve-out program.  There are 1,435 projects (862 operational and 573 not operational) totaling 277.3 MW on this list (21.3 MW operational and 256.0 MW not operational). Fore more information refer to our blog posts covering the current SREC program.

How to Interpret This Table

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 with only that particular compliance period vintage. For example, New Jersey needed approximately 496.7 MW online for the entire 2013 reporting year to meet the RPS requirement with 2013 vintage SRECs only. SRECs still available from prior eligible periods can also impact the Solar RPS requirements. 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.

Note: SREC requirements for markets without fixed SREC targets have been forecast based on EIA Report “Retail Sales of Electricity by State by Provider” updated 10/1/12. 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.


August 2013 Auction Results

Posted August 16th, 2013 by SRECTrade.

SRECTrade’s August 2013 SREC Auction closed on 8/01/13. Below are the clearing prices by vintage across the markets sold in the auction.

August SREC Prices SREC Vintage Year
State 2011 2012 2013 2014*
Delaware $25.00
Maryland $122.00 $128.00 $133.00
Massachusetts $236.62
New Jersey $116.00 $121.00 $130.00
Ohio In-State $40.00
Ohio Out-of-State $13.00
Pennsylvania $4.01 $5.01 $13.00 $13.00
Washington, DC $480.00 $480.00

*Delaware, New Jersey and Pennsylvania operate on a June-May energy year. For example, current vintage SRECs are generated beginning in June of 2013.
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 SRECs available for sale in that vintage or there were no matching bids and offers to determine a clearing price.

State Market Observations:

Delaware: Current vintage DE SRECs traded at $25/SREC- up from $10 in the previous auction. The DE SREC market is highly illiquid. The primary buyer for DE SRECs is Delmarva Power and Light (DPL). Most SRECs are sold through DPL’s SRECDelaware program, for which SREC asset owners submit competitive applications in order to obtain 20 year SREC contracts. There continues to be some need for SRECs outside of DPL’s program and compliance buyers with a need for DE sited but non-DPL derived demand will decline over time. SRECTrade administers both the DPL spot auction as well as the software behind the the SRECDelaware solicitations.

Maryland: All eligible MD SREC vintages sold in the August auction. As SRECs age they tend to become less valuable and demand for older vintages tends to decrease.  MD2011s, MD2012s and MD2013s  transacted at $122.00, $128.00, and $133.00/SREC in the August auction.

Massachusetts: The August SRECTrade auction sold available 2013 vintage SRECs at $236.62.  This occurred ahead of news on 2012 vintage SRECs deposited in the MA Solar Credit Clearinghouse Auction. For the latest info on the MA market read our MA blog posts.

New Jersey:  NJ2012,  NJ2013, and NJ2014 SRECs traded at $116.00, $121.00, and $130.00/SREC, respectively. Pricing for the 2012 and 2013 vintages represent slight increases from the July auction. This period was the first period in which NJ2014s transacted through our auction.

Ohio: The Ohio Adjacent market tends to mimic the PA SREC market. OH2013 adjacent vintage SRECs traded at $13/SREC, the same price as equivalent vintage SRECs in the PA market. OH2013 Sited SRECs traded at $40 and continues to experience minimal demand.

Pennsylvania: PA2011s, PA2012s, PA2013s, and PA2014s traded at $4.01, $5.01, $13.00 and $13.00/SREC respectively. SREC oversupply has kept pricing low. 

Washington, DC: DC SRECs continues to see high transaction values relative to the $500 SACP. DC2012 and 2013 vintage SRECs traded up to $480.00/SREC. It is expected the market will continue to experience under supply into the 2013 trading year.

For historical auction pricing please see this link. The next SRECTrade auction for all SREC markets closes on Friday, September 6th at 5 p.m. ET. To place an order, login here.

The Next Massachusetts SREC Program

Posted August 14th, 2013 by SRECTrade.

On Monday, the Massachusetts Department of Energy Resources (DOER) held a Stakeholder Meeting to discuss the most recent updates to the RPS Solar Carve-Out II Proposed Design (SREC II). Our CEO, Brad Bowery, was in attendance. The specific details of the program can be found in the presentation posted on the DOER website. Here we’ll take a crack at understanding each of the design elements.

Declining ACP and Price Support Schedules
Like the original RPS Solar Carve-Out (SREC I), SREC II will have a declining ACP schedule that projects 10-years forward and sets an upper bound for the market. However, instead of a flat lower bound of a $285 Last-Chance Clearinghouse Auction price, SREC II will have a 10-year declining auction price schedule. The schedule initially drops from $285 to $271 in 2017 and continues down to $189 in 2024.

Auction and ACP Schedule


Analysis: The auction price is intended to provide price support for the market, but it also has the potential to lead to artificially inflated prices if the costs of installing solar drop dramatically over this period. In the last proposal, the DOER introduced a schedule for a declining SREC factor as a solution for addressing decreasing costs. This change reduces the complexity of the SREC factor (as we’ll see) while the decreasing upper and lower bounds of the market guides SREC prices downward over time, which is reasonable given that installation costs are expected to decrease over time.

Market Segments and SREC Factors
Unlike SREC I, SREC II will create 5 market segments that are treated differently in the market. Generally speaking, the segments are: 1) residential (<25kW, as well as parking canopies and emergency energy backup projects), 2) all commercial used on-site, 3) landfills/brownfields, 4) small-commercial off-site use (<500kW) and 5) large-commercial off-site use (>500kW). To qualify for on-site, 67% of the production must be used at the site. Each segment will have its production adjusted by a factor that ranges from competitively bid (segment #5) to 0.7 to 0.9 for the other segments. Once established, the SREC Factor remains fixed for the life of the project. So, for the residential segment, 90% of the generation counts towards SRECs. Any remainder is ineligible for RECs.

SREC Factors

Analysis: The idea here is that different segments of the market have different cost structures. This is similar to the underlying idea behind the concept of an SREC market. Since other renewables have different cost structures, it is unfair to force them to compete on the same playing field, so a solar-specific SREC market is created. In this case, the various segments of the solar industry also have different cost structures. Instead of creating separate markets for each segment, the SREC Factor is used to even the playing field. Considering the alternative of separate markets for each segment, this is the simplest way to address the underlying issue. This proposal includes a couple other changes. Most notably, the declining SREC Factor schedule was removed in favor of the aforementioned declining Auction price schedule to address declining costs. In addition, the remainder of generation that is factored out of SREC production no longer can be counted towards RECs. This was an onerous twist to the program that would have required participants to follow both the REC and SREC markets. To account for the potential loss of revenue, the DOER increased the SREC Factors across the board in this proposal.

SREC Factors and New Projects
With 3 months notice, the DOER can reduce the SREC factor for new projects only if the program is reaching its cap, or if substantial external forces are putting downward pressure on costs. Inversely, the DOER can also increase the SREC Factor immediately to respond to external forces that dramatically increase costs. One example is if the federal tax incentive were to go away.

Analysis: This tool allows the DOER to slow or speed up growth of supply in the market in response to external forces. It should serve to reduce volatility in boom and bust times. The key here is that under no circumstances can the DOER change the SREC Factor for an existing project. So each potential project affected will know of any changes before it is completed. That said, this does complicate things for larger projects that take more time to plan.

Managed Growth Segment
As mentioned above, the segment of the market above 500 kW where less than 67% of the production is used on-site will have their SREC factor competitively bid. For these projects, the DOER will host no fewer than 2 solicitations per year for a capacity amount determined by the DOER based on the existing supply in the market.

Analysis: Previously, the SREC market in Massachusetts was limited to 6 MW projects or less. With this rule in place, the DOER has shifted the focus away from size and towards whether or not the project is built to service it’s own on-site needs or if it is designed to sell power into the grid like any other electricity generator. This latter segment seems to be most likely to drive significant capacity growth, so this tool could be a very effective way to reduce volatility in the market, without throttling the majority of solar projects. It leaves room for these projects, while also forcing them into a competitive process in order to qualify for the program.

Forward Minting of SRECs for Residential
Residential solar projects will be allowed to create 10 years worth of SRECs at the onset of the project. The forward-minted production will be based on PV Watts estimates and the facility owner will be required to report production and fall within 80% of the estimate or face a penalty. The DOER may discount the number of SRECs that are forward-minted. Sellers will have 3-years to sell their forward-minted SRECs.

Analysis: This rule was put in place to promote more direct ownership at the residential level, which according to the DOER, has seen a drop off in penetration. If your system is estimated to produce 10 SRECs per year for 10 years, you can opt to receive them all in one batch of 100 SRECs (or less as determined by the DOER discount) to sell in the market in one of the next 3 years. This will greatly simplify the offering to residential customers for a few reasons. First, they won’t need to analyze the long-term prospects of the SREC market. At a minimum, a seller can estimate what the forward-minted SRECs can sell for in today’s market. Second, it effectively converts a long-term, uncertain cash payment into a rebate that will most-likely be paid back within 12-months. This should help considerably with cash-financing systems. The tricky part will be the impact that forward-minting has on the market. That said, if 100% of the cash-financed residential systems forward-mint and sell all their SRECs in year one, none of them will have SRECs to sell in any subsequent year. Given the small portion of the market that this applies to, it shouldn’t be a significant factor. In this simplified scenario, while the SREC capacity of other segments will grow cumulatively, the forward-minted potential of the residential sector will reset every year and will only grow based on the incremental growth of residential solar in any given year. When modeled out, it shouldn’t have as much of an impact as one might suspect on the surface.

Compliance Obligation Schedule
Based on DOER assumptions of installation weights, solar factors and forward-minting, the compliance obligations for 2014 and 2015 are proposed to be set in regulation at 129,338 SRECs in 2014 and 256,686 in 2015. Beyond that, similar to SREC I, a formula will be used to set the requirement by August 30 of the previous year.

Analysis: This is a positive development for projects currently planned that were unable to qualify for SREC I as it provides certainty that there will be a requirement for SREC II in 2014. The requirement allows for 143 MW to be added in 2014 and another 152 MW in 2015.

We were a bit concerned with the complexity of the last proposal, particularly around the introduction of forward-minting and SREC factors. It appears that the DOER is sticking with these concepts, but has made some changes that reduce complexity and move this proposal in a positive direction, without compromising the underlying benefits of the new design. While we will leave the specifics of appropriate values for ACPs, Auction prices, SREC factors, forward-minting discounts and compliance obligations to the solar finance experts, our comments will focus on the implementation and mechanics of the marketplace.

The biggest difference between SREC I and SREC II is that the newer program seeks to address the different cost structures of the various types of solar installations. To this effect, structurally, the most-recently proposed SREC factoring scheme accomplishes this in a relatively simple way considering the alternative of creating separate SREC markets for each segment. While the alternative would be the purest way to promote a fair, competitive market for each segment, the administratively set SREC factors allows the state to maintain one SREC market that caters to all segments. That is the beauty of this proposal. All the complexity occurs before the point at which SRECs are created. Once the SRECs are created, they will trade, unencumbered in an open market. Every participant will be able to point to the same set of market rules and the very same SREC prices. How they interpret those prices will vary based on the SREC factor of the project, but once a participant has his or her SRECs, the monetization of those SRECs will happen in a uniform, increasingly liquid market.

Now there are two caveats to that statement. First, re-minted auction SRECs from 2012 (and any other year moving forward) have a different set of attributes, that would result in buyers valuing them differently than normal SRECs. This could lead to a separate market for re-minted SRECs in 2013. Similarly, the forward-minted SRECs, could also carry a different set of attributes since they will be good for 3 years. This could lead to a 3rd market price for Massachusetts SRECs. In an ideal world, a MA 2012 SREC is a MA 2012 SREC is a MA 2012 SREC. There is one market, one price and one large pool of liquidity. When that isn’t the case, there will be one large pool of liquidity and two smaller pools of compromised liquidity. This is the only area of the current proposal where the complexity plays out AFTER the SRECs are created.

Next Steps
DOER is interested in receiving public comments on the final proposed design. Comments are due by August 26th and can be sent electronically to In the Subject line, they ask that you put “Comments: SREC-II Final Proposed Design”

MA DOER Clarifies Purchasing Plan for Massachusetts 2012 SRECs

Posted August 6th, 2013 by SRECTrade.

Last Friday the Massachusetts Department of Energy Resources (DOER) announced that it would purchase any unsold SRECs deposited in the Solar Credit Clearinghouse Auction (SCCA) for $285 per SREC. Unlike the SCCA, this is a voluntary option. Depositors with SRECs in the SCCA will need to notify the DOER that they would like to take advantage of the offer by Wednesday, August 14th (an MA DOER set deadline). Any SRECs not purchased will be returned by the DOER to depositors’ accounts following the August 14 due date. Returned SRECs will be eligible to be transacted for 3 more years (2013, 2014, and 2015), but will not be eligible for any future Solar Credit Clearinghouse Auctions.

SRECTrade has made it easy for clients to sell their eligible SRECs to the DOER by including the DOER’s bid as a feature in their online account. SRECTrade clients with EasyREC accounts will need to log in to their accounts and indicate they would like to sell the applicable SRECs. All SRECs eligible for the DOER’s offer will sell for $285 per SREC, less SRECTrade’s EasyREC fees.

SRECTrade clients will have until Wednesday, August 14th at 9:00 am ET to log in to their SRECTrade account and opt to sell their eligible SRECs. Not all SRECTrade clients with facilities in Massachusetts are eligible for this transaction option. Only clients that had SRECs produced during 2012 and deposited in the SCCA are eligible.

SRECTrade account log in.

For additional information on the SCCA and the DOER’s bid for MA2012 SRECs please read our previous blog posts on the subject.

Massachusetts DOER Offers to Buy All Unsold 2012 SRECs after 3 SRECs sell in the Solar Credit Clearinghouse Auction

Posted August 2nd, 2013 by SRECTrade.

Participants in the Massachusetts  SREC market waited with bated breath today for the third and final round results of the first MA Solar Credit Clearinghouse Auction (SCCA). The SCCA is the hallmark price support mechanism of the Massachusetts SREC market. In over-supplied compliance years, the SCCA is meant to act as a potential last chance for excess SRECs to transact. For more information on the SCCA please see the official DOER page here and previous SRECTrade posts here.

Today, we learned that only 3 out of 38,866 available SRECs were sold. However, the DOER immediately sent an email following the news that they are offering to purchase all remaining 38,863 SRECs for a fixed price of $285 per SREC. The DOER explained its ability to purchase these SRECs on a compliance exemption it provided power suppliers on electricity load already under contract. The adjustment, implemented on June 7, 2013, revised the 2013 compliance requirement upward from 135,495 SRECs to 189,297. The DOER estimates that the incremental compliance obligation exempt from the 2013 adjustment to be approximately 40,000 SRECs.

Effectively the DOER increased the 2013 SREC requirement, but allowed power suppliers the equivalent of a 40,000 SREC exemption from the increase. This exemption is due to the fact that the compliance requirement increase was made retroactively after some power suppliers had already entered into 2013 electricity contracts. Instead of buying the 40,000 exempt SRECs in the open market, the DOER is purchasing SRECs available from the SCCA auction pool. From its email the DOER states that, “World Energy, on behalf of DOER, will directly contact early next week all depositors or their aggregators of this “after-auction” purchase option by DOER, and provide complete instructions on how to opt-in to this opportunity and execute the financial transaction.” Also of note, the DOER is using alternative compliance funds from previous years to cover the cost of purchasing these SRECs. The notice sent to stakeholders did state that that market should not expect the DOER to take this action in any future auction.