Archive for April, 2018

PJM GATS Solar – Registered Capacity Update as of April 2018

Posted April 26th, 2018 by SRECTrade.

The following post is a monthly update outlining the megawatts of solar capacity certified to create SRECs in the PJM GATS solar REC markets that SRECTrade serves. All data is based on the information available in PJM GATS as of April 18, 2018.

Notes: Due to the convergence of SREC prices across the DE, MD, OH, and PA SREC markets, methodology for calculating PJM GATS Registered MW figures was updated to represent cross-registration between similarly-priced markets. Please see the additional notes below for more information.

Following the passage of Act No. 40 (see HB118) in Pennsylvania last October, the PA Public Utilities Commission (PUC) is completing its rule-making proceeding on whether and how to grandfather certain out-of-state facilities already certified under the Alternative Energy Portfolio Standard (AEPS). On April 19, 2018, the PUC issued its Final Implementation Order on Act No. 40 of 2017. The Order clarified that PA-certified but out-of-state facilities will only retain their PA certification if they are 1) already certified as AEPS Tier I Solar Photovoltaic and 2) entered into an SREC contract with a PA electric distribution company (EDC) or electric generation supplier (EGS) serving PA customers. Solar facilities that meet the two Section 2804(2)(ii) criteria listed above are limited to maintaining Tier I solar qualification only for the amount of SRECs contractually committed to the EDCs or EGSs in their contracts. In addition, the Order clarified that SRECs generated by certified but out-of-state facilities prior to October 30, 2017 will retain their Tier I solar qualification for their standard banking lifetime (current reporting year and following two).

At this time, it remains unclear 1) whether PA-certified but out-of-state facilities will retain their (non-solar) Tier I certification and 2) whether SRECs generated by certified but out-of-state facilities after October 30, 2017 will also retain their Tier I solar qualification. The PA in-state capacity figure displayed in the chart below represents the final capacity that will be PA SREC eligible. The capacity that is currently PA SREC eligible is between the total PA capacity and in-state PA capacity figures below, due to the facilities that meet the two Section 2804(2)(ii) criteria.

 

The chart above compares the megawatts (MWs) registered in PJM GATS as of the date noted (the blue bar) to the estimated RPS solar MWs needed to be operational through the duration of the current reporting year (the green bar) to meet each market’s RPS targets. The Estimated RPS MW figure can be interpreted as the amount of active capacity that would need to be online throughout the year in order to produce the obligatory megawatt hours of electricity mandated by each state’s RPS schedule.

This chart is not meant to be a final representation of SREC supply for a given compliance period, but is instead a visualization of the relationship between installed capacity relative to each state’s estimated RPS requirements converted from a MWh to MW basis. Note that the Registered MW figures do not consider eligible SRECs carried over from previous reporting years and are only used as one aspect of current market supply drawn from the current MWs registered in PJM GATS. The installed capacity operational over the indicated time period will produce SRECs which, in addition to any eligible unsold SRECs from previous periods, will make up the final supply present in the market. For estimates on required number of SRECs per reporting year across the SREC markets SRECTrade covers, please visit our state market summary pages.

As of March 31, 2018, New Jersey had installed a cumulative total of 2,445.4MW of nameplate capacity. Their Solar Installation Report and Solar Pipeline Report can be found on the New Jersey Office of Clean Energy website here.

Additionally, please note the following in the figures presented above:

OH2018: Represents all OH eligible solar facilities and includes some facilities that are cross-registered in PA. If any facilities were eligible in higher priced markets, such as DC, the capacity was excluded from OH eligibility as it could be sold at a higher price in DC.

DE2017: Represents all solar facilities eligible for the DE solar RPS requirement and includes some facilities that are cross-registered in PA.

DC2018: Includes all facilities eligible for the DC SREC market. If a facility was eligible in another market, it was not included there given the current pricing for DC SRECs.

PA2018: Represents all solar facilities eligible for the PA SREC market. Some facilities are cross-registered in DE, MD, and OH as well. If a facility was eligible in any higher priced markets (i.e. NJ sited facilities that cross-registered in PA) they were not included in the total MW balance displayed above. Please note the additional figures for PA In-State facilities.

MD2018: Includes all MD eligible solar capacity registered in PJM GATS and includes some facilities that are cross-registered in PA. If facilities were cross-registered in Washington D.C., the capacity was not allocated to Maryland’s eligible MW total.

NJ2018: The balance noted above represents the March 31, 2018 Solar Installation Report reported by Applied Energy Group.

PJM GATS Registered Solar Facilities Summary

There are 174,323 facilities across 6,064.1MW registered in PJM GATS as of April 18, 2018.

621 facilities are 1MW or larger in capacity, representing 3,304.8MW or 54.5% of the qualified capacity. There are 145 facilities that are 5MW or larger, representing 1,981.7MW or 32.7% of all qualified capacity.

Note: SREC requirements for markets without fixed SREC targets have been forecast based on the EIA Report “Retail Sales of Electricity by State by Provider”. Projected SRECs required utilizes the most recent EIA electricity data applying an average 1.0% 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 1,200MWh, in PJM GATS states, generated per MW of installed capacity per year.

Disclaimer. This document, data, and/or any of its components (collectively, the “Materials”) are for informational purposes only. The Materials are not intended as investment, tax, legal, or financial advice, or as an offer or solicitation for the purpose or sale of any financial instrument. SRECTrade, Inc. does not warranty or guarantee the market data or other information included herein, as to its completeness, accuracy, or fitness for a particular purpose, express or implied, and such market data and information are subject to change without notice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Any comments or statements made herein do not necessarily reflect those of SRECTrade, Inc. SRECTrade, Inc. may have issued, and may in the future issue, other communications, data, or reports that are inconsistent with, and reach different conclusions from, the information presented herein.

Copyright. This document is protected by copyright laws and contains material proprietary to SRECTrade, Inc. This document, data, and/or any of its components (collectively, the “Materials”) may not be reproduced, republished, distributed, transmitted, displayed, broadcasted or otherwise disseminated or exploited in any manner without the express prior written permission of SRECTrade, Inc. The receipt or possession of the Materials does not convey any rights to reproduce, disclose, or distribute its contents, or to manufacture, use, or sell anything that it may describe, in whole or in part. If consent to use the Materials is granted, reference and sourcing must be attributed to the Materials and to SRECTrade, Inc. If you have questions about the use or reproduction of the Materials, please contact SRECTrade, Inc.

PA PUC Adopts Final Implementation Order of Act 40 – Impacts Out-of-State PA-Certified Solar Projects

Posted April 19th, 2018 by SRECTrade.

On Thursday, April 19th, the Pennsylvania Public Utilities Commission (PUC) adopted its Final Implementation Order of Act 40 of 2017. The Order amends the qualifications to certify Tier I solar photovoltaic facilities under Pennsylvania’s Alternative Energy Portfolio Standards (AEPS) Act. As summarized in our previous blog post, ambiguous language in Section 2804(2)(i) and Section 2804(2)(ii) of Act 40 made it unclear whether certified but out-of-state facilities would retain their certifications under the AEPS. The Order clarified the PUC’s interpretations of Section 2804(2)(i) and Section 2804(2)(ii) which are as follows:

  • Section 2804(2)(i) – “[a] certification originating within the geographical boundaries of this Commonwealth…” shall mean a facility located within PA having received an AEPS Tier I solar photovoltaic certification.
  • Section 2804(2)(ii) – shall only permit out-of-state facilities that are 1) already certified as AEPS Tier I Solar Photovoltaic and 2) entered into an SREC contract with a PA electric distribution company (EDC) or electric generation supplier (EGS) serving PA customers to maintain certification until the expiration of the contract.

Solar facilities that meet the two Section 2804(2)(ii) criteria listed above are limited to maintaining certification only for the applicable amount of Solar Renewable Energy Credits (SRECs) contractually committed to an EDC or EGS. EDCs and EGSs seeking to qualify SRECs under this interpretation must file a Petition with 60 days of the entry date of the Order.

In addition, the Order clarified that SRECs generated by certified but out-of-state facilities prior to October 30, 2017 will retain their Tier I solar qualification for their standard banking lifetime (current reporting year and following two). The Order did not clarify whether SRECs generated by such facilities after October 30, 2017 will also be able to retain their Tier I solar qualification.

At this time, it is unclear how implementation of these interpretations will be administered. SRECTrade will continue to monitor the proceedings and provide updates as they become available.

NJ Solar RPS Increase – New Jersey Assembly and Senate Pass AB-3723 / SB-2314

Posted April 13th, 2018 by SRECTrade.

On Thursday, April 12th, the New Jersey Assembly and Senate passed Assembly Bill 3723 (AB-3723) and Senate Bill 2314 (SB-2314). The bill now sits on the desk of Governor Phil Murphy (Dem) waiting to be signed, after passing the Assembly by a margin of 49-20-2 and the Senate by a margin of 29-8. The bill requires a number of action items to be carried out, including:

  • Requiring the New Jersey Board of Public Utilities to:
    • Administer an energy storage analysis
    • Advance, increase, and extend the solar carve-out schedule and reduce and extend the solar alternative compliance payment schedule
    • Introduce structural changes to the state SREC program
    • Implement energy efficiency and peak demand reduction programs
    • Implement a “Community Solar Energy Pilot Program”
    • Offer tax credits for specified offshore wind facilities
  • Requiring the Department of Labor and Workforce Development to establish job training programs for professionals in manufacturing and maintenance of offshore wind facilities

The bill requires 21% of statewide electricity sales to be derived from Class I renewable energy sources by January 1, 2020, 35% by January 1, 2025, and 50% by January 1, 2030. The cost of this requirement shall not exceed 9% of the electricity purchased by all NJ ratepayers for each energy year 2019-2021 and shall not exceed 7% in each energy year thereafter. In addition, all facilities filing SREC applications after the bill’s enactment date will be subject to a reduced SREC eligibility term of 10 years, down from 15.

No later than 180 days after the enactment of the bill, the board will implement rules to close the SREC program to new systems upon reaching the 5.1% solar carve-out target. The legislation intends to close the existing SREC program to new projects on or before June 1, 2021. Within 24 months from signing the legislation, the Board of Public Utilities will be required to conduct a study that evaluates how to modify or implement a new solar incentive program. A variety of market stakeholders will be consulted in the process to determine the next best steps forward for the NJ SREC market.

As shown below, the bill brings forward and raises the state’s solar carve-out requirements beginning with EY2019 and extends the requirements through EY2033. The requirement peaks at 5.10% in EY2021-2023 before gradually declining through EY2033. The reduction mechanic was introduced to account for solar facilities that will be reaching the end of their SREC production eligibility term.

The bill also reduces the solar alternative compliance payment (SACP) beginning with EY2019 and extends the SACP schedule through EY2033. The SACP level drops to $268 in EY2019 and then gradually decreases by $10 each year following.

For more information on the historical progress of the bill, please view our previous blog post on the topic here. SRECTrade will be publishing an updated New Jersey Supply and Demand Analysis to its blog shortly in consideration of this bill.

Changes to PTS SREC Production Reporting to NEPOOL GIS

Posted April 13th, 2018 by SRECTrade.

On April 5th the Production Tracking System (PTS) announced that it would update the process for reporting SREC production to the New England Power Pool Generation Information System (NEPOOL GIS). Previously, PTS rounded down production to the nearest MWh before reporting to NEPOOL GIS. This meant that even if a system had produced 1250 kWh (the production amount needed to receive an SREC after the 0.8 factor is applied), the system would not have received its first SREC until it produced 2000 kWh.

This change took effect on the Q4 2017 NEPOOL GIS reporting period (which was due on April 10th). PTS will no longer roll over month-to-month fractional MWh production. Total monthly production in MWh, rounded to the nearest whole kilowatt-hour will be reported to the NEPOOL GIS. For example, if a system produces 1775 kWh in a quarter, PTS will report 1.775 MWh to NEPOOL GIS, whereas previously PTS would have reported 1.0 MWh. The NEPOOL GIS will then apply the SREC-II Factor to the aggregate generation.  NEPOOL GIS will continue to carry-forward the partial SREC due to the SREC Factor.

 

Massachusetts SREC-I and SREC-II Update

Posted April 10th, 2018 by SRECTrade.

With the Q4 2017 NEPOOL GIS renewable energy certificate (REC) issuance nearly upon us, we figured it would be a good time to provide an update on the Massachusetts SREC-I and SREC-II markets. The SREC-I market is not subject to any new installed capacity and is capped at 653.3 MW of eligible capacity. The main factors driving supply and demand in the current state of the market are the 1) annual RPS SREC-I compliance obligations, 2) prompt year solar production and any eligible banked or reminted SRECs from prior years, and 3) total electric load served throughout the state. Given current RPS demand, as provided by the Massachusetts Department of Energy Resources (MA DOER) the 2017 compliance year for MA17 SREC-I is likely to be slightly over supplied by approximately 14,000 SRECs, less than 2% of estimated compliance obligation. For more specific details see our full presentation here. Note, this estimate is still subject to change due to final 2017 electricity supply figures and Q4 2017 SRECs issued. Pricing for MA2017 SREC-Is since the beginning of the year has ranged between $300 and $310, with recent transactions trading at the lower end of the range. Our enclosed presentation also provides a preliminary estimate for MA2018 SREC-I supply and demand. The analysis currently suggests under supply of approximately 85,000 SRECs, a little over 10% of the estimated obligation. Pricing for MA2018 SREC-Is since the beginning of the year for has ranged between $330 and $345, with recent transactions executed around $340/SREC.

With regards to MA SREC-II supply, the market is in the final stages of new solar capacity additions. The program will be capped to any new installed capacity once the Solar Massachusetts Renewable Target (SMART) program is finalized and implemented, expected for late Q2 / early Q3 2018. Recent capacity added has slowed month over month, but continues at a decent pace considering the market is limited to new commercial and reduced SREC factors for all project typees. During the last 6 months of 2017, installed capacity has been 37.2 MW per month on average and 92.1 MW for Q4 2017.

The outlook for the MA2017 SREC-II market is one of oversupply for 2017, with an estimate of more than 186,000 SRECs exceeding the estimated compliance obligation by almost 16%. For more details see the presentation here. Pricing for MA17 SREC-IIs has ranged between $265 and $270 as of late. While 2018 is still subject to capacity additions, the compliance period will also be impacted by the SCCA auction and banked SRECs from 2017 and prior. Our estimated outlook for 2018 is one of slight oversupply, almost equilibrium. Estimates point to over 17,000 SRECs in excess, exceeding the estimated compliance obligation by approximately 1%. Pricing for MA18 SREC-IIs has ranged between $270 and $280 since the beginning of the year.

Should you have any questions about the enclosed analysis or need transaction and management services, please contact us.