Archive for August, 2016

D.C. RPS Bill Published in Register

Posted August 23rd, 2016 by SRECTrade.

Following Mayor Bowser’s signature last month, the Renewable Portfolio Standard Expansion Amendment Act of 2016 is now published in the D.C. Register.

A21-466 was published in Volume 63, Number 33 of the District of Columbia Register on August 5, 2016 under the Actions of the Council of the District of Columbia. The PDF of the issue is available here.

As enacted, B21-0560 raises the renewable portfolio and solar requirements to 50% and 5% by the year 2032, respectively, and adds waste heat from combined and sanitary sewage systems and effluence from wastewater treatment to the list of Tier 1 renewable sources. In addition, the bill increases financial penalties for electricity suppliers who fail to comply with the annual renewable energy portfolio standard requirements. This financial penalty is known as the Alternative Compliance Payment, or ACP. Finally, the bill establishes a program within the Department of Energy and the Environment to assist low-income homeowners with installing solar systems on their homes.

MA DOER Issues Draft Guidelines for Revised SREC-II Market Factors

Posted August 16th, 2016 by SRECTrade.

Yesterday, the Massachusetts Department of Energy Resources (DOER) announced its draft Guidelines relating to the revised SREC factors for the Solar Carve-out-II program. The draft Guidelines can be found on the DOER’s website, which includes the Adjusted SREC Factor Guideline Draft as well as draft versions of the 225 CMR 14 Solar Guideline – Extension Guideline and Detailed Construction Costs Form. The draft Guidelines follow the July 1, 2016 promulgation of the Emergency Regulations. As the DOER explains, “Recognizing that a long-term sustainable solution will take time to develop and that many projects are in advanced stages of development, the emergency regulation is intended to address market uncertainty and establish a smooth transition from SREC-II to the next incentive program.”

The draft Guidelines contain both clarification on construction timeline extensions and the revised SREC factor guidelines. For construction extensions, as provided in 225 CMR 14.05(9)(s)(4), a qualified Solar Carve-out II Renewable Generation Unit that is larger than 25 kW DC that has not received the authorization to interconnect or permission to operate by January 8, 2017, and cannot demonstrate that it is mechanically complete by January 8, 2017, can request a construction deadline extension to May 8, 2017. Extensions will be provided if a project can demonstrate to the satisfaction of the DOER that the project has expended at least 50% of its total construction costs by January 8, 2017.  The 225 CMR Solar Guideline – Extension Guideline sets forth the procedures and requirements for Solar Carve-Out II Renewable Generation Units that seek this extension. The draft Guideline also includes an Excel Spreadsheet and Attestation Form to be completed and submitted to the DOER.

The new SREC factors, as provided for by 225 CMR 14.05(9)(l)5, shall apply to any Solar Carve-out II Renewable Generation Unit that meets the following criteria:

  1. Nameplate capacity less than or equal to 25 kW and authorized to interconnect after January 8, 2017; or
  2. Nameplate capacity greater than 25 kW that receives an extension pursuant to 225 CMR 14.05(9)(s)4.a.

The Adjusted SREC Factor Guideline provides new SREC Factors for each SREC Market Sector. Under the revised Guideline, all projects that meet the criteria outlined above shall receive an SREC Factor that is reduced by approximately 15-20% from current values. A comparison of the current SREC Factors and the revised SREC Factors is provided below:

Screen Shot 2016-08-16 at 5.13.34 PM


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The DOER invites comments on the draft Guidelines through August 22, 2016 at 5:00PM. Comments can be sent to with the subject line “SREC-II Guideline Comments”.

Additional information concerning the SREC-I & SREC-II markets in Massachusetts can be found on our Massachusetts market page.

New Jersey SREC Update – August 2016

Posted August 15th, 2016 by SRECTrade.

We recently received an update on the New Jersey solar market from the office of New Jersey’s Clean Energy Program, bringing us up to date on new solar capacity built through June.  As of June 30th, New Jersey had a total installed capacity of 1,793.79MW – a 61.49MW addition from the figure previously reported as of the end of May.

The 61.49MW addition is obviously noteworthy at first glance, and the market has immediately responded by selling off significantly in the days that followed the report’s release.  A closer look into the data, however, provides a more nuanced understanding of what that figure really represents.  Given the magnitude of the market reaction after this release we took the opportunity to update our New Jersey capacity models to provide a framework to better understand the data.

You can find our updated New Jersey SREC capacity presentation here.

While it is true that 62MW of new projects were added to the cumulative total of installed capacity, that number actually represents revised figures for monthly installations dating back to January 2015.  The 62MW can be broken out as follows:

  • 11MW of upward revisions attributed to 2015 monthly figures
  • 32MW of upward revisions attributed to 2016 monthly figures
  • 19MW of new build attributed to June 2016

Given the distribution of the newly reported capacity increase, the result on the observed average build rates is not quite as extreme as we have seen other groups report.  Using the newly updated numbers, the trailing twelve month average build rate is about 22.5MW/month and the 2016 YTD average is 25.7MW/month.

In aggregate, the New Jersey RPS is quite large and this recent surge in build in and of itself does not necessarily tip the overall balance of the SREC market.  While we have seen a broad sell off in New Jersey SRECs across most vintages, we believe the New Jersey market can maintain current pricing even if the build rate remains elevated in the short term.  What has most likely sent SREC prices lower is the possible impact that a more long-term increase in build rates might have on the balance of the NJ SREC market.

Looking ahead there are two very different possible scenarios.  For the sake of keeping RPS comparisons constant through this analysis, we will make the assumption that NJ SB2276 (which increases the NJ RPS solar requirement slightly) successfully makes its way through the legislative process and is formally adopted.   First, the solar sector could react to the recent drop in SREC values and regress from its current trend to a less aggressive – though still above the historical average – rate of 17MW per month.  A build rate averaging somewhere close to 17MW per month would keep solar installations just slightly ahead of goals set by the current RPS schedule, leaving us no more than 5% oversupplied in any given year through 2021.  This would likely leave SREC prices stable and trading at consistently strong levels.

The alternative is to presume that the most recent increase represents a “new normal” for New Jersey solar.  An average build rate of 34MW per month, which more closely tracks the current trend, extrapolated out over the next five years would result in a very significant oversupply that would almost certainly push SREC prices lower in 2019 and beyond.   A build rate anywhere near 34MW per month eventually outpaces the growth built into the current RPS schedule and overwhelms the market structure that has been put in place through recent legislation.

We will focus on following how this trend develops over the coming six months.  If the solar industry does indeed respond to the price signals being sent by the NJ SREC market, and build rates normalize to more sustainable rates, then New Jersey solar economics will continue to benefit from strong SREC prices.  If, however, developers ignore these signals and continue to aggressively install new assets irrespective of RPS support we will likely see SREC prices continue to retreat in a manner that reflects the underlying shift in the balance of SREC supply and demand.

As always, we will continue to monitor these trends and share our analysis as new information becomes available.  In the meantime please feel free to reach out to your SRECTrade coverage with any questions or comments.


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MA DPU Establishes Net Metering “Notification Date” as September 26, 2016

Posted August 3rd, 2016 by SRECTrade.

On July 29, 2016, the Massachusetts Department of Public Utilities (the “DPU”) issued its Order Announcing Notification Date and Directives to Distribution Companies in its proceeding under 16-64-D, establishing the Net Metering “Notification Date” as September 26, 2016. Pursuant to Chapter 75 of the Acts of 2016D.P.U. 16-64-C, and as confirmed by this Order, there are three strict criteria that must be met for a private net metering project to receive net metering credits under the old regime:

  1. Submission of an Application for Cap Allocation (ACA) to the Massachusetts System of Assurance of Net Metering Eligibility (System of Assurance) for a net metering cap allocation prior to the Notification Date of September 26, 2016 by 2:00pm;
  2. Receipt of confirmation from the System of Assurance Administrator that the application (ACA) is complete; and
  3. Receipt of a ACA cap allocation by January 8, 2017.

In its Order, the DPU determined that “the best option to result in a smooth transition to a stable and equitable solar net metering market” was to align the timing for transition to the new net metering credits policy with the Massachusetts Department of Energy Resources (DOER)’s SREC-II program. In selecting September 26, 2016 as the “Notification Date”, the DPU calculated the maximum amount of time that could be required to obtain a cap allocation on or before January 8, 2017, which was determined to be 70 business days. In addition, the September 26 date is exactly 60 calendar days after the Order’s announcement of the Notification Date. In consideration of these two timelines, the DPU determined that this date would provide enough time for systems to plan for, apply for, and receive a net metering cap allocation under the existing framework.

For more information on the current and new net metering regulation in the state of Massachusetts, please visit our previous blog post on the topic.