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U.S. Senators Push Renewable Electricity Standard (RES)

Posted August 13th, 2010 by SRECTrade.

There have been several groups lobbying for the inclusion of a Renewable Electricity Standard (RES) in the Senate’s energy legislation.  In addition to several senators, a coalition led by several trade groups and forward thinking utilities have written a letter to Senator Reid.

According to E&E News, more than half of the U.S. Senate’s Democrats have signed a letter urging Senate Majority Leader Harry Reid to include a national RES in any energy legislation that comes to the floor this summer. The senators indicated that they are willing to work together to facilitate the passage of a strong RES.

In addition to the Democrats, some Republicans have demonstrated that they want to support the passage of a national RES. Initial indications have shown that the legislation could require utilities to produce up to 15% of their power from renewable sources. Some Democrats have stated they would like this number to be at least 20% and would prefer to see something in the range of 25%.

The House-passed climate and energy bill sets a combined 20 percent renewable electricity and efficiency standard by 2020.

You can find the full letter here.
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Posted in Federal SRECs, SREC Markets |

NY Candidate for Governor Suggests SREC Program in Energy Plan

Posted August 12th, 2010 by SRECTrade.

Andrew Cuomo, the New York attorney general and Democratic candidate for governor, published an energy plan that suggests increased production of solar and wind energy.  The document, titled “Power NY,” suggests New York adopt an SREC program similar to those that have been so successful in other states such as New Jersey. It declares, “A programmatic commitment to solar power would go a long way toward stimulating the growing solar industry in New York.” Cuomo sites that significant economic growth experienced by California and Arizona upon making commitments to promote expansion of solar power within the states. Both states saw global solar manufacturers locate headquarters within their boarders (China’s Suntech Corp. in Arizona, and SunPower Corp. in California).

The candidate’s plan would create a system of solar renewable energy credits called NY-Sun. The Renewable Portfolio Standard of the state would include a solar carve-out, making utilities purchase SRECs to meet their solar requirement or suffer a compliance fine. He argues that the state should establish specific targets for the adoption of solar energy generation that utilities and electric service companies would have to meet, with the requirements to be suspended if solar costs do not drop to the extent expected.

Mr. Cuomo is the first candidate in the race for Governor to release an energy plan. The length and centrality of the document to the campaign indicates the importance of the worldwide energy transformation in the future of New York.

See the article on the Gubernatorial Candidate’s solar and SREC plan for more information.

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Posted in New York |

First Massachusetts SREC Auction closes, Q1 SRECs sell for $500

Posted August 6th, 2010 by SRECTrade.

Massachusetts now has its first SREC sale on the books.  On July 15th, the first SRECs from the first quarter (Q1: Jan-Mar) of 2010 were created by NEPOOL GIS for the new Massachusetts Solar Carve-Out program. The first transaction has now occurred on SRECTrade.com.  The SRECs cleared at a price of $500 per SREC.

There are still Q1 SRECs that did not sell in this auction.  They will continue to be available in the September and, if necessary, October SREC auctions on SRECTrade.com.  Meanwhile, the second quarter (Q2: Apr-Jun) generation will be added to the supply in the November auction.

This great news for the Massachusetts solar industry and an excellent start to what should be one of the healthiest and most robust SREC markets in the nation.

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Posted in Massachusetts |

Delaware Governer Signs Law Strengthening SREC Market

Posted August 6th, 2010 by SRECTrade.

SB119, a bill amending the Delaware RPS, was signed into law by the Governor last week.  This bill increases and extends the required minimum percentage of electricity coming from renewable sources, and will contribute to the growth and longevity of the SREC market in Delaware.  The new mandate is that 25% of electricity come from renewables by 2026, up from 20% by 2021 and will begin to have an impact on the market in June of 2011.  The requirement for solar has also been increased, which will trigger an increased demand for SRECs.   For example, the estimated SRECs needed by electicity suppliers to meet their 2011-2012 mandate has increased from 6,137 to 25,571.  These changes represent great news for solar owners and installers, as are the other provisions of the bill.

Key Changes:
1. The number of SRECs required will dramatically increase
2. The SACP which sets a ceiling price for SRECs will be raised to levels competitive with other states
3. The municipal utilities that have been exempt thus far will now be required to comply

For more information, please see our previous post on the Delaware SREC Bill or our newly updated Delaware SREC page.

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Posted in Delaware |

Solar Capacity in the SREC States in 2010

Posted July 28th, 2010 by SRECTrade.

SRECTrade’s State of the SREC Markets in 2010
The New Jersey, Pennsylvania and Delaware Energy Years came to a close on May 31, 2010.  The following is a report of the solar capacity in megawatts (MW) certified and registered to create SRECs in all states at that time.

Solar generators by state located: This table is based solely on the location of the facility and does not include multiple state listings. All facilities must have been registered by May 31st, 2010.

As you can see New Jersey has by far the largest amount of solar installed and eligible for SRECs with 146 MW. Pennsylvania is a distant second at 17 MW.  Meanwhile, Ohio and Illinois are third and fourth respectively, however of the 16 MW in Ohio, 12 come from one facility and of the 10.1 MW in Illinois, 10 come from one facility. Delaware and Maryland both have sizable markets at around 6 MW each. Volumes in other state are much smaller since there is no local SREC market.

Solar generators by size: Projects certified for SREC markets range in size from as small as 0.5 kW to as large as 12 MW, however, only 20 out of the 7,700 projects are over 1 MW.  Of those 20 projects all are well below 5 MW, with the exception of a 10 MW facility in Illinois and 12 MW facility in Ohio. The lack of multi-MW facilities in the SREC markets is a function of both the complexity involved and constraints on demand. The only state SREC market today with any legitimate appetite for multi-MW facilities is New Jersey.

Solar generators by state eligibility: Because some states accept out-of-state SRECs, the in-state supply listed above differs from the total supply available to buyers in that state.  For instance, Ohio’s market also includes facilities located in PA, WV, KY, IN, and MI.  The table below lists the total solar capacity in megawatts eligible for each SREC market, along with the percent of the market that is sourced in-state.  Note: many facilities will be counted multiple times in this table since they are eligible in several states. For example, the 10 MW facility in Illinois is eligible in both DC and PA.

In Ohio 89.6% of the market is in-state SRECs. Some of our customers have asked why in-state Ohio SRECs do not sell at a premium because of the 50% in-state requirement. The reason is that, as you can see, buyers are not having difficulty meeting the 50% requirement with the large supply of in-state SRECs. In the future as the requirements increase, in-state SRECs could be harder to come by and may indeed sell for more than out-of-state SRECs.

Interpreting the data: One important thing to notice is that the 2010 Capacity Requirement column details the capacity required to be sustained throughout the entire energy year. The Volume column shows the capacity registered through May 2010. For example, New Jersey needed approximately 160 MW of capacity running on average from June 2009 through May 2010 in order to meet the 2010 SREC requirement. The state is actually farther away from the 160 MW capacity mark than the 145.69 MW volume would suggest.  Capacity in New Jersey grew approximately 65 MW over the course of the year and so there were probably only enough SRECs created to meet approximately 110-115 MW of the 160 MW requirement. That requirement increases in the 2011 Energy Year to approximately 260 MW. For more information on the growth of the New Jersey market and any other state market, please visit our page devoted to State SREC Markets.

Assumptions used in calculations: Solar capacity required is based on 2007 Department of Energy electricity sales figures, assuming a 1.5% growth rate. The resulting solar megawatt-hours required (i.e. SRECs) are converted to megawatt capacity requirement at a rate of 1200 MWhs per MW.

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Posted in Delaware, Maryland, New Jersey, Ohio, Pennsylvania, SREC Markets, Washington, DC |

Massachusetts Solar Credit Clearinghouse Auction Explained

Posted July 26th, 2010 by SRECTrade.

MA Energy Year: January 1st – December 31st.

SREC Life: Two years for compliance buyers who may bank up to 10% of their requirement but sellers must sell SRECs in the year they are generated or deposit them in the DOER Auction. So an SREC produced in 2010 can be counted towards the 2010 or 2011 Solar Carve-Out.

When is the last SRECTrade Auction of each Energy Year?

The final SRECTrade auctions will occur in May and June of the following year, immediately before the DOER Solar Credit Clearinghouse last chance auction which closes on June 15th of each year. SRECs are generated quarterly in Massachusetts on a 4-month delay.  SRECs for Q1 (January-March) are available on July 15th and can be sold in auction at the beginning of August. Q2 SRECs are available on October 15th and can be sold in the November auction, Q3 SRECs are available on January 15th and sold in the February auction and Q4 SRECs are available on April 15th and can be sold in the May auction. Any SRECs remaining after the final SRECTrade auction can be entered into the DOER auction.

What happens if at the end of the year I still haven’t sold my SREC(s)?

If you are an SRECTrade client and you have any SRECs that were not sold then SRECTrade will automatically transfer your SRECs to the  DOER Solar Credit Clearinghouse auction.  You do not need to tell SRECTrade to transfer your SRECs if SRECTrade manages your SREC account. SRECs entered into the auction are “Re-Minted” meaning the eligibility of the SREC is adjusted. For example, a 2010 SREC is originally eligible for compliance in 2010 and 2011. If it enters into the DOER auction, the SREC is Re-Minted to be eligible for compliance in 2011 and 2012. It is no longer eligible for compliance in 2010. Buyers may then bid to purchase the SREC to get a start on meeting their requirements for 2011. The DOER auction will be open May 16th to June 15th each year.  SRECs will be sold at a gross fixed price of $300 less a 5% fee resulting in a net price of $285 to any sellers.

Am I guaranteed to sell my SRECs in the DOER Solar Credit Clearinghouse auction?

No, you are not guaranteed to sell your SRECs in the DOER auction. However, it is unlikely that the SRECs don’t sell. If there is an oversupply of SRECs in the DOER auction, the SRECs will all be granted a third year of eligibility and a second auction will be held. So, in our example, the 2010 SREC will now be eligible in 2011, 2012 and 2013. If there still aren’t enough bids to clear all of the SRECs, DOER will increase the requirements to the buyers by the number of SRECs that are available. The buyers bidding in the auction will now be required to purchase more SRECs in 2011. If after this third attempt, there still aren’t enough bids, the SRECs are returned to the owner as Re-Minted SRECs. These SRECs will be more valuable in the open market than any new SRECs that are created. Going back to our example, the original SREC was a 2010 SREC, eligible in 2010 and 2011 before the auction. Once it was entered in the DOER auction, it became eligible in 2011 and 2012. After an unsuccessful DOER auction it was released back to the owner as an SREC eligible in 2011, 2012 and 2013. This SREC now has a 3-year useful life, making it more valuable to a buyer than the new SRECs created in 2011 which only have a 2-year useful life.

If I’m unsuccessful in the DOER auction, how can I be assured that my SREC will still sell above $300?

Following the DOER last chance auction, SRECTrade will resume its monthly competitive auctions. If there was a surplus of SRECs in the DOER auction, they can be immediately listed in the SRECTrade auction the following month and made available to buyers who are now looking to meet their requirements – which have now been increased by the DOER. At this point, buyers will likely resume buying SRECs in the competitive market in order to ensure that they are able to meet their new requirement and avoid the $600 SACP. SREC prices should stay above $300 in the SRECTrade auctions since the DOER auction at the end of the year will guarantee that price.

Why would a buyer of SRECs ever pay more than $300 when they could just wait to buy their SRECs in the Solar Credit Clearinghouse?

Buyers cannot wait for the DOER auction to buy their SRECs for 2010. When an SREC enters the DOER auction, it is stripped of its 2010 eligibility and cannot be used to meet the requirement for the year in which it was generated. The 2010 SRECs placed in the DOER auction can therefore only be used to meet the 2011 or 2012 requirements. Meanwhile, buyers will want to purchase their 2010 SRECs in the competitive market prior to the DOER auction – otherwise they face the $600 fine.

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Posted in Massachusetts |

Australia Creates Separate Target for Small-scale Renewables

Posted July 26th, 2010 by SRECTrade.

On June 28th, the Australian government decided to split the REC trading environment within the country into two parts: one REC market for large-scale technologies like wind (LRECs) and one market for small-scale technologies like solar (SRECs). The law will go into effect on January 1, 2011. Of the original Australian target—45,000 GWh by 2020—LRECs are to account for 41,000 GWh and SRECs 4,000 GWh. This separation is theoretically akin to the “carve out” for solar energy development seen in several US states, but has been created with the opposite intention: to aid large-scale renewable energy development that would otherwise be dampened by a tendency toward small-scale systems.

The original Australian Renewable Energy Target law was passed last year with a target of 20% renewable electricity generation by 2020, along with a system for requiring utilities to buy all Renewable Energy Certificates (RECs – equivalent to 1 megawatt-hour, like in the US) created within the country.

The government also created a “Solar Credits Multiplier” which effectively multiplied by 5 the number of RECs produced by solar installations less than 1.5kW. This program, however, quickly flooded the market with RECs from small household solar thermal heaters and pumps. These government-discounted systems ultimately lead to a steep decline in REC prices. At values as low as $29 per REC (~$25 USD) large-scale renewable technology developers could no longer take on the financial risk of new projects. The Australian government, aware that larger wind and solar projects have greater potential to provide baseload power, decided to reinvigorate incentives for investment in large-scale renewable energy technologies.

Under the amended law, small-scale SRECs can be sold at a fixed price of $40 per MWh in a clearinghouse set up by the government. These SRECs will be sold quarterly in the order that they are produced. If supply of SRECs is greater than demand, then the government can lower this fixed price or reduce the Multiplier. Yet, if demand outpaces supply, then the government can sell “advance” SRECs to keep the price stable at $40.

The government does allow for SRECs to be traded outside of this clearinghouse, but this will most likely only attract sellers who do not want to wait if their SRECs are too far down the “first-come, first-served” list. Their SRECs will not be purchased for more than the fixed price clearinghouse, as utilities will be able to buy “advanced” SRECs at $40 if necessary. Without a true market for these SRECs, an efficient market price in Australia will be impossible to establish.

In the other market, LRECs will be sold and purchased annually, but it is important to note that those RECs that are produced from small-scale systems before January 1, 2011 will still be eligible. Critics have pointed out that the oversupply of RECs from 2010 will keep prices in both markets low until around 2014 when utilities will need to replenish their supply.

This decision was an important step for the Australian government in creating a more balanced mix of renewable energy technologies within the country. Nonetheless, one of the most pervasive elements of the initial law was the Solar Credits Multiplier. This policy instrument, coinciding with high rebates for solar thermal systems that were also eligible to create RECs, created too much overcapacity in the market. This multiplier provided the overwhelming incentive to install small solar installations. With a REC market flooded by credits that did not accurately represent the electricity produced from small systems, REC prices faced continued downward pressure. With both large- and small- scale renewable developers looking to this same pool of RECs as a means of financing their projects, most large projects (solar and wind alike) were pushed aside.

Multipliers have also been utilized within the United States as well, yet nearly always create an imbalanced mix of renewable technologies within the state’s portfolio. For Australia, it was small-scale solar that overtook the market. The government was forced to amend the law to create a “carve out” for larger-scale projects such as wind. This “carve out” mechanism has worked in the United States to provide the necessary developmental period for high-value, nascent technologies to become competitive in an otherwise hostile market. Yet, Australia may soon find that it’s support will simply create a new dominant technology. The Australian government has opted to favor large-scale projects in proposing that they should inhabit 90% of the total renewable target. These projects, given the current economic superiority of large-wind in a separated LREC market, will most likely be filled entirely with wind power.

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Posted in International Markets |

California Sues Fannie Mae and Freddie Mac

Posted July 22nd, 2010 by SRECTrade.

Last week, the state of California filed a lawsuit against mortgage giants Fannie Mae and Freddie Mac. California’s Attorney General, Jerry Brown, hopes the legal action will realign the momentum of the Property Assessed Clean Energy (PACE) financing program. Earlier this month the Federal Housing Finance Agency (FHFA) instructed the mortgage lenders to avoid homes or tighten lending standards in geographies with PACE financing in place.

The lawsuit filed claims that the FHFA violates California law, which approved the PACE programs, and “severely hampers California’s efforts to assist thousands of California homeowners to reduce their energy and water use, help drive the state’s green economy, and create significant numbers of skilled, stable and well-paying jobs.”

Additionally, the lawsuit states, “the actions of these government-sponsored, shareholder-owned private corporations have placed California’s PACE programs – and the hundreds of millions of dollars in federal stimulus money supporting them – at immediate risk while benefiting their own pecuniary interests.”

The FHFA’s response focused on the additional credit risks PACE programs could impose in the event of a mortgage default. The PACE financing structure puts the clean energy loans in a position ahead of the home mortgage. If a property were to go through a foreclosure process, the PACE loan would be paid off prior to the home mortgage.

In addition to the California lawsuit, representatives from the California Public Utilities Commission and the U.S. House of Representatives took action against the FHFA’s decision. Click here to see the full blog post from the New York Times.

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Posted in California, Solar Financing |

Importing and Exporting SRECs across Registries

Posted July 21st, 2010 by SRECTrade.

With the launch of the North Carolina Renewable Energy Tracking System (NC-RETS), North Carolina is paving the way for what could be the future for SREC markets. For the first time, an SREC created in one region’s registry will be transferable to a buyer in another region’s registry. This cooperation amongst registries could be the first step towards a permeable nationwide SREC market.

North Carolina is currently working with other renewable energy certificate tracking systems to approve a process for importing and exporting SRECs. The approval of exporting SRECs from other tracking systems and importing them into NC-RETS would allow solar system owners located in states without viable SREC markets to sell into the North Carolina SREC market. This is all possible because almost all of the registries were built with similar technology developed by APX.  More information on all of the registries can be found here: APX Primer on REC Registries.

NC-RETS is working with the parties responsible for maintaining the other regional registries to develop the importing and exporting process.  Here is a list of those registries and an update on the status of importing and exporting:

NARR: The North American Renewables Registry (NARR) was developed by APX to serve the needs of states and regions that have not implemented a REC tracking system.  This covers most of the Southeastern U.S., Alaska and Hawaii.  NARR has already established importing/exporting procedures with NC-RETS.

MRETS: The Midwest Renewable Energy Tracking System (M-RETS), the registry that tracks the generation of SRECs in 8 Midwest U.S. states and the Canadian province of Manitoba, has approved the exportation of SRECs and is implementing the necessary software upgrades.

GATS: Generation Attribute Tracking System covers the Mid-Atlantic states and currently tracks the majority of SREC volume due to member states like New Jersey, Pennsylvania and Maryland.  GATS is expected to allow importing/exporting soon.

WREGIS: The Western Renewable Energy Generation Information System (WREGIS), the registry that tracks the generation of SRECs in 14 Western U.S. states, Baja California, and the Canadian provinces of Alberta and British Columbia, is capable of managing exports and is in the process of making a policy decision to allow the system to export SRECs.

ERCOT: Texas, the sixth state to adopt an RPS in 1999, was the first to implement a procedure for meeting the RPS.  The Electric Reliability Council of Texas (ERCOT) was the first registry of its kind.  Unfortunately, it does not currently have the capability to export SRECs and it may require legislative approval to make the necessary changes to the system’s software. However, NC-RETS and APX are working with ERCOT to come up with a solution.

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Posted in Arizona, California, Cross-Listing, Illinois, Michigan, New Mexico, North Carolina, Ohio, SREC Markets, Texas, Wisconsin |

Florida Solar Industry Turns Attention To SRECs

Posted July 21st, 2010 by SRECTrade.

We often are asked about Florida SRECs and have decided to keep a static update of the opportunities for Florida solar owners on our Florida SREC page.  In addition, we will continue to update this blog as we learn more about the potential for selling SRECs in Florida.  Here is what we know now:

No renewable portfolio standard currently exists in Florida, but there have been significant efforts to bring one into existence.  In 2009, The Florida Public Services Commission sent a draft RPS plan to be considered by the Florida legislature.  The RPS has been considered but never ratified in the two legislative sessions since the draft was submitted.  New bills pertaining to renewables are expected to be submitted in the 2011 legislative session, or possibly sooner in a special session being called in September to address the economic and environmental impacts of the BP oil spill.  Whether new submissions will include a Renewable Portfolio Standard draft is unknown.

However, Florida solar facilities are eligible to register with the state of North Carolina and can sell generated SRECs into the new North Carolina market.  This would also require that the facility register and generate SRECs through either the NC-RETS or NARR tracking systems.  North Carolina energy suppliers are allowed to meet 25% of their compliance requirements with SRECs from out-of-state generators.  The prices on out-of-state SRECs are expected to be low as supply will flood the market pretty quickly, but this remains a possibility for Florida solar facilities and more importantly, perhaps, a sign of things to come in the southeastern states.

Although North Carolina offers some limited potential for solar owners in Florida, it is not a viable long-term solution for the industry.  The Sunshine State needs to implement its own solar RPS and establish an in-state SREC market before it can really live up to its nickname!  Perhaps the New York Solar Jobs Act could serve to be a blueprint for driving legislative change in the solar industry in Florida.

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Posted in Florida |

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