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Solar Capacity in the SREC States – January 2011

Posted February 2nd, 2011 by SRECTrade.

SRECTrade SREC Markets Report: January 2011

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

SREC Supply January 2011

PJM Eligible Systems

As of the end of January, there were 12,240 solar PV (12,001) and solar thermal (239) systems registered and eligible to create SRECs in the PJM Generation Attribute Tracking System registry. Of these eligible systems, 38 (0.3%) have a nameplate capacity of 1 megawatt or greater, of which only 3 systems are greater than 5 MW. The largest system, currently located in Ohio, is 12 MW,  and the second largest, located in Chicago and eligible for the PA, DC, and MD markets, is 10 MW. The third largest system, located in NJ, is 5.6 MW.

Massachusetts DOER Qualified Projects

As of January 10, 2011, there were 206 MA DOER qualified solar projects; 183 operational and 23 not operational. Of these qualified systems, 9 (4.4%) have a nameplate capacity of 1 megawatt or greater, of which only 2 are between 1.5 and 2 MW. None of the projects greater than 1 MW are currently operational.

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 255 MW online for the entire 2011 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 date noted.

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Posted in Capacity Summary, SREC Markets |

DOER lowers Massachusetts SREC SACP from $600 to $550

Posted February 1st, 2011 by SRECTrade.

As we have written previously, the DOER’s Massachusetts Solar Carve-out has established an SREC market that could become the model that many states move towards in order to promote solar in the U.S. For an industry accustomed to the promotion of the feed-in tariff model, the Massachusetts market represents a hybrid between the market-based approach of SREC programs popular on the East Coast and the fixed-subsidy approach of the feed-in tariff model popular in Europe, though nearly non-existent in the U.S.

Through the use of a ceiling price set by a $600 SACP and a floor price set by a $300 last chance auction mechanism, the DOER is able to keep SREC prices within a manageable range. One of the significant caveats of the rules by which the DOER implements the solar carve-out is that it can, at its discretion (and with proof of justification) reduce the SACP by up to 10% in any given year. That announcement needs to be made by January 31st of that year and the DOER did just that yesterday on January 31st, 2011

According to the DOER, the ACP will drop by $50 from $600 to $550 for the 2011 SREC year. This means that any SRECs generated beginning in January and subsequently created beginning in July will have a ceiling of $550 instead of $600. The announcement and justification are found here:

COMMONWEALTH OF MASSACHUSETTS
EXECUTIVE OFFICE OF ENERGY & ECONOMIC AFFAIRS
DEPARTMENT OF ENERGY RESOURCES

RENEWABLE ENERGY PORTFOLIO STANDARD (RPS) – CLASS I
SOLAR CARVE-OUT

Reduction of the Alternative Compliance Payment (ACP) Rate

January 31, 2011
 DOER is authorized under 225 CMR 14.08(3)(b)2 to reduce the Alternative Compliance Payment (ACP) rate pertaining to the Solar Carve-Out portion of the RPS Class I obligation. Any such rate reduction may be no more than 10% in any one Compliance Year, must be announced by January 31st of that year, and must be accompanied by an explanation.

DOER hereby reduces the Solar Carve-Out ACP Rate to $550 per MWh, down by 8.3% from the program’s 2010 initial rate of $600/MWh. The new $550/MWh rate is effective for Compliance Year 2011 and thereafter, unless and until DOER makes a further reduction by January 31st of any subsequent year.

DOER has reached this decision after careful consideration and deliberation on the market conditions facing solar development in Massachusetts since 2009, when the original $600 ACP level was set. During this time, solar developers have enjoyed declining PV module costs and have used conservative financial assumptions.

Globally, over the past two years, PV module prices have experienced significant price drops, and some European solar feed-in tariff rates have been reduced. Locally, installed costs for projects qualified for the Solar Carve-Out have trended downward between 5% and 10% since the beginning of the program. Elsewhere, Lawrence Berkeley Laboratory reports installed solar PV prices dropping in 2010 about $1/W in the major PV markets in California and New Jersey (http://eetd.lbl.gov/ea/ems/reports/lbnl-4121e.pdf). DOER remains committed to the growth of our solar market and to achieving this growth at lowest cost to Massachusetts electric customers.

The discretion of the DOER in making this change has been clear from the rules set at the outset of the program. It is surprising that this adjustment would happen so early in the adoption of the program, particularly given the shortfall of SRECs in Massachusetts in the first year of the program. However, the 2010 shortage is not necessarily a reflection of the feasibility of financing solar in Massachusetts with the solar carve-out in place. It likely has more to do with the amount of time it takes to implement the program logistically, the time it takes to educate stakeholders, and the time it takes to go to the retail and institutional markets with the new, SREC-driven economics. In the states that have come before, the full adoption of SREC-based economics has taken 3-4 years. Ohio is a full two-years into the program and the industry is still catching up (though Ohio’s problem has more to do with a flawed design). Massachusetts may see adoption quicker given a growing industry consciousness around SRECs and a program that can *almost* be simply described as you install solar, you get back $300-$600 per megawatt-hour that your system produces in addition to your electricity savings/sales for 10-years.

That *almost* is where we are today as the implications of a reduced SACP brings some of the caveats of the program to the forefront. That range of pricing has now been squeezed to $300-$550, and it also means that anyone following the SREC market should start to wonder if $550 will be $500 in 2012 and $450 in 2013 and at some point this just turns into a fixed feed-in tariff at $300. One thing is clear: the DOER has created a program that gives it the levers necessary to make it flexible enough to keep pace with solar industry trends and that the DOER will not hesitate to pull those levers.

As we mentioned, the ability of the DOER to adjust the ceiling price was apparent in the rules, but there is no mention that anything can be done to change the $300 fixed-price in the last chance auction. We believe that this was a cornerstone to the program. And the only apparent variable with the floor price is the Opt-In term which sets the number of years a facility may be eligible for the last-chance auction – initially set at 10 years.

Finally, as the largest aggregation and market in Massachusetts, SRECTrade has been partnering with buyers to extend various options to our network of installers. These options now include upfront payments and 5-year+ fixed-price contracts for facilities of all sizes. Our goal is to ensure that our customers have every possible option available when making a decision on how best to go solar with the Massachusetts solar carve-out. Installers can learn about joining our network here: SRECTrade Installer Network.

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Posted in Massachusetts |

TRECs approved by California Public Utilities Commission

Posted January 18th, 2011 by SRECTrade.

A segment of the California solar industry got a small boost last week as the CPUC approved the TREC program in California. This was essentially a re-affirmation of the original TREC order in March, 2010.

Unfortunately, the TREC market is geared towards large solar farms and not accessible to the rest of the solar industry. The biggest problem is that TRECs can only be produced by “RPS-Eligible” facilities and California currently excludes “Distributed Generation” from RPS Eligibility. The rules are loosely written to define Distributed Generation as coming from facilities where the energy is used close to the source. This pretty much limits the TREC market to solar farms and the companies that build a business out of creating more utility companies (the solar kind). This is somewhat counter-intuitive to the benefits that tradable REC markets bring to promoting local, distributed generation, a reduced reliance on the grid, and the safety of distributed power sources – not to mention all the small businesses that pop-up to support the growth. Either way, this is a decision for the California Energy Commission (CEC).

In addition to the RPS-Eligibility issue, a couple things need to change prior to this having a substantial impact on the solar industry in general. First, the $50/MWh cap on the price of TRECs will not be effective in promoting small-scale solar. The relatively minimal amount of energy generated by rooftop facilities and the amount of effort required to register and sell the TRECs makes it difficult to justify the benefits. The good news is that this cap will be removed in 2014.

The second issue with the legislation is that it creates a generic REC market where solar competes with wind, hydro and other renewable technologies that operate on a scale that is unmatched by solar. This makes it very difficult for the small players looking for access to this market in order to finance solar projects. The only “REC” markets that have been successful in promoting retail residential and commercial solar is an “SREC” market.

As with many states before it, California is taking a cautious approach to implementing TRECs. Hopefully by 2014, the state will make the necessary changes to make this a market that can serve as the foundation of the entire California solar industry. In doing so, it will take a step towards keeping pace with the SREC states on the East Coast. The 33% target in California is aggressive and if solar is going to be a big part of the mix, then the state will need to find a market-based, sustainable solution beyond the budget of the CSI and the pitfalls of the FiT mechanisms so often promoted by industry advocacy groups.

Meanwhile, California solar owners should keep an eye on the other SREC markets. North Carolina in particular is an open market that takes SRECs from out-of-state. The only issue is that, since it is open to everyone, it has gotten oversubscribed pretty quickly. Either way, the takeaway is that opportunities will develop, even if it is outside California, so it does make sense to register if you have a facility in the ground already.

Here is some more information on the most recent decision:

The TREC legislation had been held up by a joint petition of the utility companies essentially lobbying to allow them to procure the RECs from out-of-state, presumably at a cheaper cost. That petition has now been denied and California is back to implementing a TREC program, after a 9 months delay.

The new TREC order of January, 2011. includes the following rules:

1. TRECs can be created by RPS-Eligible facilities (Distributed Generation is excluded)

2. TREC trading begins on the effective date of the decision: January 13, 2011

3. TRECs can be created dating back to the beginning of 2008

4. TRECs have a 3-year life, so the 2008 TRECs will expire

5. All TRECs must be created and tracked in WREGIS

6. If your facility is in a bundled contract, you can unbundle the electricity and trade your RECs separately unless your contract was signed prior to 2005 with California RPS-obligated LSEs (unless stated otherwise in the contract) or if your contract is associated with RPS-eligible energy pursuant to the Federal PURPA Act.

7. TRECs have a 3-year life, inclusive of the year in which it was created

8. LSEs can procure up to 25% of their obligation from TRECs, the rest must come from bundled electricity sales from within their territory. This cap will remain in place until 2014

9. There is a $50 price cap on TREC purchases until 2014

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Posted in California |

Maryland and out-of-state SRECs

Posted January 14th, 2011 by SRECTrade.

The recognition of out-of-state SRECs in Maryland has been a fairly ambiguous topic for quite some time now. According to the RPS solar carve-out law in Maryland, statute §7–701:

(i)“Renewable energy credit” or “credit” means a credit equal to the generation attributes of 1 megawatt–hour of electricity that is derived from a Tier 1 renewable source or a Tier 2 renewable source that is located:

(1)   in the PJM region; or

(2)   outside the area described in item (1) of this subsection but in a control area that is adjacent to the PJM region, if the electricity is delivered into the PJM region.

This means that Maryland buyers can procure SRECs from anywhere in the PJM region or a “control area” bordering the region if the electricity is delivered into the region.

Later, the law gets even trickier in §7–704 to say:

“On or before December 31, 2011, energy from a Tier 1 renewable source under § 7–701(l)(1) of this subtitle that is not connected with the electric distribution grid serving Maryland is eligible for inclusion in meeting the renewable energy portfolio standard only if offers for solar credits from Maryland grid sources are not made to the electricity supplier that would satisfy requirements under the standard and only to the extent that such offers are not made.”

Note that § 7–701(l)(1) refers to solar specifically. This makes things even more confusing because what it attempts to say is that Maryland buyers can purchase SRECs from facilities not connected to the grid serving Maryland until the end of 2011 as long as they can prove they cannot source SRECs from within the grid serving Maryland.

What does that even mean? Is the “electric distribution grid serving Maryland” the same as the PJM Region? Is it just the state of Maryland? Is it the PJM Region plus adjacent control areas as long as the electricity is delivered into the PJM Region? Furthermore, how does a buyer prove that they can’t fulfill their requirements within the electric distribution grid, so that they can get approval to buy from facilities not connected to the grid?

Our interpretation: If you’re not connected to the electricity grid serving Maryland, it’s probably not worth the trouble to apply. For starters, if you can sell them, your SRECs are only usable in 2011. In addition, the buyer would need to provide proof that they can’t procure SRECs from within the grid serving Maryland. Assuming that this refers to the PJM Region, then it is highly unlikely that buyers in Maryland would not be able to procure SRECs from within the grid. And finally, onerous requirements like “Mail the original and 14 paper copies of all documents” in the Maryland application process make it one of the most tedious state certifications out there.

What we do know is that there are 2.3 MW of projects outside Maryland that are currently registered in the state and generating SRECs in GATS. These facilities are from: DC, DE, IL, NC, NY, OH, PA, VA, WV.  Of the 107 facilities from outside Maryland, 63 were built in 2010. All of these states are within the PJM Region with the exception of NY, which had 4 facilities from 2004-06 approved. It is likely that the Maryland Public Service Commission has since stopped accepting NY facilities and other facilities from outside the PJM Region.

While we can’t predict how buyers view out-of-state SRECs in Maryland, we now have an in-state/out-of-state option for buyers in the Maryland SREC auction. If you have a facility that is located in the PJM region, we would encourage you to apply to the Maryland SREC market (despite the impact that 14 copy requirement might have on the environment). Instructions can be found on our State Certifications page. We can also do it for a fee if you are an EasyREC customer.

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Posted in Cross-Listing, Maryland |

DC Bill introduced to limit out-of-state facilities

Posted January 14th, 2011 by SRECTrade.

Washington, DC Councilmember Mary M. Cheh has introduced a Bill to amend the solar carve-out in the District. It is called the Distributed Generation Amendment Act of 2011. The announcement can be found here. Among the changes, the most notable will restrict the DC SREC market to facilities located in the District, starting in 2012. The Bill will grandfather any facilities registered in DC prior to January 31, 2011. In addition to this notable change, the requirements in each year will increase significantly through 2020 and the SACP will be extended until 2020. Here are the key details:

1. Facilities sited outside D.C. will remain eligible as long as they were registered with the D.C. Public Service Commission prior to January 31, 2011.

2. Starting in 2011, solar requirements will increase as follows:

Year Old RPS Solar Requirement New RPS Solar Requirement SACP
2011 0.04% 0.25% $500
2012 0.07% 0.50% $500
2013 0.10% 0.75% $500
2014 0.13% 1.00% $500
2015 0.17% 1.25% $500
2016 0.21% 1.50% $500
2017 0.25% 1.75% $500
2018 0.30% 2.00% $500
2019 0.35% 2.25% $500
2020 0.40% 2.50% $500

This is good news for what has been an oversubscribed D.C. SREC market, though it will have a negative impact on facilities across the region that will not be registered by January 31, 2011. Facilities that are registered and included after any changes are made will benefit from inclusion in the D.C. SREC market which should see a rebound in pricing. Unlike the unsuccessful efforts of Pennsylvania earlier this year to exclude out-of-state facilities, this effort by D.C. has been done with the consideration of the solar owners that have committed to solar on account of the opportunity to sell SRECs in D.C. Regardless of the merits of a move to a closed SREC market, the inclusion of previously registered facilities is a crucial aspect of any changes that are made.

Note: It is still too early to tell if this Bill will pass. It is highly unlikely that it would be passed before January 31. Therefore it is unclear what the deadline will be if/when such a bill were to pass. Anyone considering submitting an application to the D.C. market that should file one directly with the D.C. Public Service Commission. Instructions can be found on our State Certifications page.

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Posted in Washington, DC |

Solar Capacity in the SREC States – December 2010

Posted January 5th, 2011 by SRECTrade.

SRECTrade SREC Markets Report: December 2010

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

PJM Eligible Systems

As of the end of December, there were 11,241 solar PV (11,015) and solar thermal (226) systems registered and eligible to create SRECs in the PJM Generation Attribute Tracking System registry. Of these eligible systems, 35 (~0.3%) have a nameplate capacity of 1 megawatt or greater, of which only 3 systems are greater than 5 MW. The largest system, currently located in Ohio, is 12 MW,  and the second largest, located in Chicago and eligible for the PA and DC markets, is 10 MW. The third largest system, located in NJ, is 5.6 MW.

Massachusetts DOER Qualified Projects

As of December 10, 2010, there were 180 MA DOER qualified solar projects; 156 operational and 24 not operational. Of these qualified systems, 9 (~5.0%) have a nameplate capacity of 1 megawatt or greater, of which only 2 are between 1.5 and 2 MW. None of the projects greater than 1 MW are currently operational.

Capacity Summary By State

The tables below 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. For example, PA In State includes projects eligible to sell into the PA SREC market as well as projects that may also be eligible to sell into OH and DC. 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 255 MW online for the entire 2011 reporting year to meet the RPS requirement. Additionally, the data presented below 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 to date.

Dec JPEG Image updated

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Posted in Capacity Summary, SREC Markets |

Solar Capacity in the SREC States – November 2010

Posted December 1st, 2010 by SRECTrade.

SRECTrade SREC Markets Report: November 2010

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

PJM Eligible Systems

As of the end of November, there were 10,447 solar (10,234)  and solar thermal (213) systems registered and eligible to create SRECs in the PJM Generation Attribute Tracking System registry. Of these eligible systems, 31 (~0.3%) have a nameplate capacity of 1 megawatt or greater, of which only 3 systems are greater than 5 MW. The largest system, currently located in Ohio, is 12 MW,  and the second largest, located in Chicago and eligible for the PA and DC markets, is 10 MW.

Massachusetts DOER Qualified Projects

As of November 9, 2010, there were 156 MA DOER qualified solar projects. Of these qualified systems, 8 (~5.0%) have a nameplate capacity of 1 megawatt or greater, of which only 2 are between 1.5 and 2 MW.

Capacity Summary By State

The tables below 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. For example, PA includes projects eligible to sell into the PA SREC market, but are not necessarily sited in PA. 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 255 MW online for the entire 2011 reporting year to meet the RPS requirement. Additionally, the data presented below 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 to date.

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Posted in Capacity Summary, SREC Markets |

PA Solar Bills HB 2405 and HB 1128 Are Done

Posted November 22nd, 2010 by SRECTrade.

Pennsylvania House Bill 2405 and House Bill 1128 are no longer on the table in Pennsylvania. The Bills were intended to strengthen the PA SREC market but both included critical flaws such as the exclusion of previously qualified facilities in HB 2405 and incredibly low ACPs in HB 1128.  At this point it is unlikely that there will be any changes to the PA SREC market any time in the near future.

HB 2405 was sponsored by Democratic Representative DePasquale who confirmed that the recent election squashed any chances that the Bill would be up for a vote any time soon. The Bill had proposed to strengthen the Pennsylvania Renewable Portfolio Standard solar carve-out to require 3% of the state’s electricity supply to come from solar generation facilities by the 2025 reporting year. This would have increased the current requirement by 6 times the 2025 reporting year target. In addition to the increase in capacity, HB2405 also intended to set the solar alternative compliance payment at a level of $450/MWh in the 2012 reporting year and slowly decline the SACP each year over the life of the program.

HB 1128 was created as a watered down version of 2405. It was viewed as a Bill that had fewer contentious points and was initially focused on simply increasing the solar requirements in the state moving forward. The Bill garnered the support of the solar lobby until it was amended by the Department of Environmental Protection (DEP) to include a drastic decrease in the ACPs paid out by non-compliant energy company. This decrease would have devastated the SREC market in Pennsylvania.  As a result of the DEP’s changes, HB 1128 was dead on arrival.

What’s Next?

The open SREC market in Pennsylvania is vulnerable to a collapse in pricing. Unlike in states like New Jersey (approximately 255 MW required) where requirements are high enough to outpace significant growth, the PA SREC market (approximately 27 MW required) is still small enough to be vulnerable to oversupply, especially given the influx of solar from the entire PJM region.  There is a growing disconnect between the supply in the market relative to demand that could create challenges for the solar industry. Facilities are being built based on current SREC pricing that may not be available at the current pace of installation in the state and surrounding regions.

The PA legislature needs to take into consideration bringing another Bill forward to continue to support the solar industry and SREC market in the state. The key issues would need to focus on increasing the solar capacity requirement, setting a competitive alternative compliance payment, similar to other SREC states, restricting the size of SREC eligible facilities in the early years and allowing for electricity suppliers to meet their compliance requirements through the most efficient means possible. In addition, real-time, transparent information regarding the rate of installation and SREC pricing paid by utilities needs to be addressed along with steps taken to prevent a market collapse.

If there is any good news coming from the demise of these two Bills, it is that buyers that have adopted a “wait and see” approach can now move forward with business as usual.  There is no reason to think that out-of-state SRECs in Pennsylvania will be excluded any time soon, nor is there any reason for buyers to hope for a lower ACP payment. If anything, the demise of HB 1128 is an indication that attempts to set below market ACPs will not be successful.

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Posted in Pennsylvania |

Announced 50MW Ohio solar farm threatens SREC market

Posted November 16th, 2010 by SRECTrade.

In October AEP Ohio announced a 50 MW solar project to be built in southeastern Ohio.  The facility will be developed by Turning Point Solar and the electricity and SRECs will be purchased by AEP.  The announced project will be phased in over 3 years, starting with 20 MW by 2013, 15 MW by 2014 and the remaining 15 MW by 2015.  This is not the first time that AEP has elected to procure SRECs from utility-scale facilities. AEP met its 2010 and 2011 SREC requirement primarily from a 10 MW facility built in Upper Sandusky, OH.

Although the announced project may still see some hurdles before all contracts are finalized and construction commences, the prospect of 50 MW worth of SRECs flooding the market in the next few years will likely have an impact on the growth of the Ohio solar industry. Ohio currently allows buyers to source 50% of the SRECs from out-of-state. Since there is more supply in the out-of-state market, prices will likely be lower than the in-state market. In 2011, the existing 10 MW project will represent 23% of the total market in Ohio, meaning that roughly half of the SRECs required from in-state will come from the Upper Sandusky project next year. In 2012, the Upper Sandusky project will represent 11% of the overall market, roughly one-fourth of the in-state market. Then, in 2013, when the first 20 MW of the Turning Point project comes online, the 30 MW available to AEP will represent 23% of the total market, again, roughly half of the in-state market.  These percentages increase slightly to 25% and 26% in 2014 and 2015 when the additional 15 MW tranches are turned online.

Although the argument can be made for the jobs created by the project and the progress towards the ultimate goal of solar energy, projects of these size can impact SREC markets in a way that could halt the development of a sustainable in-state solar industry. Other states have dealt with this issue in various ways that could hopefully serve as an example for Ohio to follow.

In New Jersey, up until 2010, facilities over 2 MW were ineligible for the SREC program. When the requirements increased to 160 MW, while the state only had 80 MW installed, the legislature passed a bill opening the doors to larger projects. This made sense both because New Jersey was so far behind and because the exponential growth in the increasing requirements made it impossible to keep pace without projects above 2 MW. The legislature also limited the ability of investor-owned utilities from building large projects, requiring approval from the BPU based on the projected impact in SREC pricing.

In Delaware, a 10 MW Delmarva Power project threatened to collapse the SREC market when it was still in its infancy. The Delaware Sustainable Energy Utility (SEU) stepped in to purchase the SRECs and take them out of the market. The SEU is a quasi-governmental organization that used its funding to support the SREC market. In response to this, and the fact that most Delaware solar owners were selling in Pennsylvania, the Delaware legislature increased the fines and requirements in Delaware in 2010.

In Massachusetts, the state recently voted to increase the ceiling on solar project sizes eligible for the solar carve-out from 2 MW to 6 MW. This increase was needed to help the state kick-start the SREC market which was well-behind the target midway through 2010.  Though the market will do very well for reasons stated here, the 6 MW cap re-iterates Massachusetts commitment to developing a solar industry, not just a few giant solar farms.

If more states could follow the lead put forth by New Jersey, Massachusetts and Delaware, the SREC program would be far more effective in promoting solar in a way that best benefits society. While the utility lobby would prefer to maintain the status quo of centralized power generation since generation and distribution are their primary purposes, the solar industry is best suited to promote distributed, decentralized power generation. If every SREC market were overcome by the generation of a few behemoth solar farms, each state would be left with several solar projects and a few successful developers, instead of an industry. Meanwhile, the states that temper the growth of utility-scale solar and focus the SREC markets on residential and commercial solar will see electricians, general contractors, roofing companies and heating & air conditioning companies build sustainable businesses around solar. This will lead to jobs and job growth far more effectively than the influx in short-term construction jobs created by the occasional 50 MW solar project.

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Posted in Ohio |

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